LINCOLN — Health advocates filed a lawsuit Thursday targeting Nebraska’s two-tier system of Medicaid benefits for low-income, working-age adults.
The suit takes aim at what state officials called Heritage Health Adult, under which most Medicaid expansion patients get only a basic tier of benefits.
The state’s plan had been to require that those people meet wellness, personal responsibility and community engagement goals to qualify for dental, vision and over-the-counter medication benefits, which are part of traditional Medicaid coverage.
Nebraska Appleseed attorney Sarah Maresh called the system unlawful because it created “barriers and burdens” for enrollees, in violation of the Medicaid expansion law passed by voters in 2018.
“With coverage beginning last October, community members are ecstatic to finally be able to see a doctor without worrying about receiving a high bill they cannot afford,” she said. “However, we’ve also heard of the frustration and confusion caused by the unnecessary complexities of the tiered benefits system.
“This lawsuit seeks to fully implement the will of Nebraska voters and undo the unlawful actions of the (state Department of Health and Human Services),” Maresh said.
An HHS spokeswoman said the department does not comment on pending litigation.
The National Health Law Program joined Appleseed in filing the lawsuit. The program’s managing attorney, Sarah Somers, said the ballot measure prohibits Nebraska from imposing additional obligations on those who enroll in Medicaid expansion.
“The experiences of other states that have imposed similar burdens show that they deprive people of the coverage they need and put heavy financial and administrative burdens on the state,” she said.
State Sen. Adam Morfeld of Lincoln, who led the petition drive to get the issue on the ballot, cheered on the legal challenge.
“The additional requirements and barriers that the governor implemented on the voter-approved Medicaid expansion initiative are unlawful and today Nebraskans are holding him accountable,” he said.
The lawsuit was filed on behalf of Christopher Etheredge, 23, and Mellissa Ely, 47, both of Lincoln. Etheredge now has coverage for the basic tier of benefits. Ely originally was placed in the basic tier, despite having a serious heart condition and other health problems. She had to make multiple attempts to be classified as medically frail so she could receive the additional benefits.
The class-action suit claims that both are being subjected to additional burdens and restrictions, compared to traditional Medicaid recipients.
The suit was filed the same day that Nebraska’s Medicaid director, Kevin Bagley, told members of the Appropriations Committee that the state was putting the wellness and personal responsibility requirements on hold. He said federal officials have made it clear they are unlikely to approve the implementation of those requirements in time for the planned April launch.
That decision means that low-income, working-age adults — the bulk of those covered under the expansion — will have no way to receive dental, vision and over-the-counter medication benefits for the foreseeable future.
Earlier this month, the federal Centers for Medicare and Medicaid Services alerted Nebraska officials that the Biden administration was looking to withdraw approval for “community engagement” requirements. Under those requirements, which were to start next year, patients would have had to work, volunteer or do other specified activities for 80 hours a month to get full benefits.
Under the two-tier system, the state does not apply the same requirements to pregnant women, people considered medically frail and young adults ages 19 and 20. Although included in Medicaid expansion, they automatically receive all the benefits available under traditional Medicaid.