Algorithmic Medicaid Cuts: Arkansas and Idaho

Medicaid pays for home- and community-based supports under state programs and waivers; the cases below concern the amount of services or individual budgets, not broad termination of Medicaid coverage. Arkansas’s ARChoices waiver provides home services, including attendant care. In 2016 the state replaced nurse discretion with the Resource Utilization Groups (RUGs) methodology, using the ArPath assessment and a computer algorithm to assign beneficiaries to service tiers. Litigation described substantial care-hour reductions after reassessment. The Arkansas Supreme Court’s 2017 Ledgerwood decision addressed an improperly promulgated RUGs rule and upheld an injunction; it did not declare every algorithm unlawful. A federal court later required adequate, specific notice when service reductions were based on assessments. Arkansas moved to the ARIA assessment and Task and Hour Standards in 2019, using assessment inputs and nurse judgment to develop person-centered service plans; the historic RUGs cuts should not be presented as the current allocation system. Idaho’s K.W. v. Armstrong case involved adults with intellectual and developmental disabilities whose Medicaid home-support budgets were reduced using an automated budget tool based on the SIB-R assessment. Courts found due-process problems with the notice and budget-review process and required an accessible way to challenge inputs and calculations. A 2016 class settlement required Idaho to develop a new budget tool and set interim protections. As of August 2026, Idaho’s Department of Health and Welfare says the lawsuit remains active and the state is still working on a new process; while that replacement is developed, budgets remain protected at the highest level received on or after July 1, 2011. These are related examples of formula-driven benefits decisions, but Arkansas and Idaho had different tools, legal proceedings and current transition status.