The new Centers for Medicare & Medicaid Services, which allows states to seek federal permission to establish restrictions, could threaten the Medicaid coverage of the many adults with disabilities, children and the elderly who cannot work.
The state will still have to apply for a waiver and undergo the full federal review process, but CMS will now support state efforts to "test incentives that make participation in work or other community engagement a requirement for continued Medicaid edibility", according to the January 11 letter.
The waiver also allows Kentucky to require healthy adults using the program to pay premiums.
The state was among 11 seeking work-requirement approvals from CMS.
Critics expressed skepticism. They say the work requirement proposal - which was repeatedly rejected by the Obama administration on the argument it would interfere with providing health coverage - is a more subtle way to reduce the number of non-disabled adults added to Medicaid under the Affordable Care Act.
Dr. Richard Pan, a California state senator and pediatrician in Sacramento who sees Medicaid patients, said the idea just "doesn't make sense". "Kentucky HEALTH also provides the opportunity for multiple cabinets within state government to coordinate and strengthen efforts to improve the quality of life for Kentuckians".
New Hampshire is one of 33 states that opted to expand eligibility for Medicaid to embrace a larger portion of the population through the Affordable Care Act (Obamacare).
For people in exceptionally vulnerable positions - say, someone who just lost his job after failing a drug test and can't find an available space at a substance abuse program in his area - adding another bureaucratic hurdle could make it even more hard to get back on track.
Because people got needed care, the report found that they were able to work more steadily. We know from experience with other benefit programs that eligible people already working or deemed exempt from working are likely to lose coverage simply because of added paperwork and enrollment hurdles - not because they are ineligible. Solomon estimates that fewer than 2 percent of the 74 million people covered would be directly affected by a work requirement. Kentucky's expansion brought health coverage to more low-income adults, but the state's Republican Governor, Matt Bevin, has expressed his dislike for the expanded program.
The conditions would exclude individuals eligible for Medicaid due to disability, elderly beneficiaries, children and pregnant women.
Kerri Wyland, a spokeswoman for Gov. Rick Scott, did not directly answer whether Scott would support work requirements or co-payments for the Medicaid program.
CMS said states would have to test whether the work requirement improves enrollees' health - a point Solomon ridiculed.
The new rule, to be rolled out in July, would mandate able-bodied Kentuckians on Medicaid to work or volunteer 20 hours per week.
Before the payment increases, Medicaid fees for primary care services for all age groups were typically 59 percent of the amount paid by Medicare, the USA health program for the elderly, researchers note in Pediatrics.
Jeff Myers, president and CEO of the Medicaid Health Plans of America, another trade group, noted that most people on Medicaid already work.
But work requirements have strong public backing. "Such programs may also, separately, be created to help individuals and families rise out of poverty and attain independence, also in furtherance of Medicaid program objectives".