Matt Bevin, governor of Kentucky, speaks during the 2017 International Finance and Infrastructure Cooperation Forum in New York, U.S., on Monday, April 24, 2017. The forum brings together U.S. and Chinese government officials and global business executives from Fortune 500 companies. Photographer: Misha Friedman/Bloomberg Kentucky Gov. Matt Bevin (Photo: Misha Friedman/BB)

A federal judge blocked a plan to impose work requirements on Medicaid recipients in Kentucky days before the new rules were set to take effect, dealing a blow to the Trump administration’s efforts to remake the safety net health care program.

The Alex Azar II,  the U.S. secretary of Health and Human Services “must adequately consider the effect of any demonstration project on the state’s ability to help provide medical coverage,” Judge James Boasberg of U.S. District Court in Washington wrote. “He never did so here.” Boasberg remanded the decision back to HHS.

(Related: Kentucky Governor Countersues Residents Challenging State’s New Medicaid Work Rules)

Kentucky is one of four states that received approval this year from President Donald Trump’s administration to make significant changes to Medicaid, the state-federal health program for low-income Americans. Kentucky’s plan, known as Kentucky Health, was proposed by Republican Gov. Matt Bevin. It would have required many recipients to pay monthly premiums and document at least 80 hours of work or other community activity each month to remain eligible for coverage.

A lawsuit filed in January on behalf of 15 Medicaid beneficiaries challenged the Trump administration’s decision to approve the work plan. The requirements would have affected about 350,000 Kentuckians, according to an estimate by the state.

Trump’s HHS department “never adequately considered whether Kentucky Health would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid,” Boasberg wrote. That made the decision to approve Kentucky’s plan “arbitrary and capricious,” he wrote.

Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, called the decision disappointing.

The Trump administration “will continue to support innovative, state-driven policies that are designed to advance the objectives of the Medicaid program by improving health outcomes for thousands of low-income Americans,” she said in an emailed statement.

Bevin’s office didn’t immediately respond to a request for comment.

New Policy

In the program’s 53-year history, Medicaid benefits have never been subject to work requirements. The Trump administration signaled to states in January that it was open to changing that, and four including Kentucky had been approved, with seven pending, according to the Kaiser Family Foundation, a health policy research group.

It’s unclear how Boasberg’s decision vacating the approval of Kentucky’s requirement might affect those plans.

The Kentucky Health plan was set to begin rolling out July 1, with Medicaid patients in Campbell County outside Cincinnati the first to be subject to work requirements. The plan would have expanded to the rest of the state later this year.

Kentucky expanded eligibility for Medicaid under the Affordable Care Act, adding more than 400,000 new members to the state’s program. Bevin, a conservative Republican, campaigned on reversing the state’s Medicaid expansion in 2015, and has said he would do so if the work requirement were not approved. Kentucky officials estimated that the plan would save the state $2.4 billion over five years and reduce enrollment in the Medicaid program by 95,000 people.

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