CMS pressures states to restore Medicaid coverage for some beneficiaries who have been disenrolled

CMS says a recent edict to state Medicaid programs has partially stanched the ongoing wave of disenrollments in the program, with about 500,000 beneficiaries set to regain coverage they had lost and “many” others protected from disenrollment going forward.

As described in a Sept. 21 summary, 29 states plus Washington, D.C., have acknowledged a systemic glitch in which children and some other household members are disenrolled when they should be automatically renewed.

The summary was published in the aftermath of an Aug. 30 letter to Medicaid administrators in all 50 states in which CMS wrote that a programming error was causing individuals to fall through the cracks when it was time to reenroll. Specifically, the error caused ex parte (i.e., automatic renewal) processes to apply at the family level rather than the individual level.

“As a result,” the letter says, “while a state may have sufficient information during the ex parte process to renew Medicaid or CHIP coverage for some individuals in a multimember household, states are sending renewal forms requesting information for all household members, and, if the renewal form is not returned, states are disenrolling all individuals in the household, including those who should have been determined to be eligible through the ex parte process.”

Concern for children and others

Beneficiary groups that primarily are being affected, according to the letter, include:

• Children in households with at least one adult enrolled in Medicaid
• Eligible individuals in a household in which additional documentation is needed to verify eligibility for other members

CMS required the affected states to pause procedural disenrollments for people in those groups. Failure to comply would leave the states subject to further action by CMS, potentially including an immediate loss of enhanced federal Medicaid funding, which is being phased out during the final three quarters of 2023 following the end of the COVID-19 public health emergency (PHE).

The order was based on a state-by-state assessment of whether Medicaid systems could check eligibility for automatic coverage renewal at the individual level. The review found that 23 states and territories, including Puerto Rico and the U.S. Virgin Islands, could proceed as required.

CMS also found that 29 states and D.C. lacked the capability to conduct automatic renewals at the individual level or were still trying to reinstate those who had been disenrolled contrary to guidelines.

Among states dealing with the issue, Nevada and Pennsylvania estimated that more than 100,000 residents have been affected, while New York put the total at more than 50,000 and eight states (Colorado, Connecticut, Hawaii, Iowa, Kansas, Ohio, Virginia, Wyoming) projected an impact of more than 10,000.

Numbers continue to rise

The 500,000+ enrollees whose enrollment is being protected are a small share of those affected by the so-called Medicaid unwinding, which followed the end of the continuous-enrollment provision that had been in place during the PHE.

The Kaiser Family Foundation’s tracker found that more than 7.4 million beneficiaries had been disenrolled as of Sept. 22, based on reporting from 48 states and D.C. Meanwhile, coverage had been renewed for 12.2 million. Those numbers could increase significantly because eligibility redeterminations are set to continue through the end of the year, with reporting likely to stretch well into 2024 Q1.

The final disenrollment tally is expected to overstate the impact on uninsured rates because many who have lost Medicaid will find coverage through, for example, an employer or healthcare.gov. Some may have gained such coverage while still enrolled in Medicaid.

A key issue for CMS is that among those who had been disenrolled, KFF found 73% of cases happened because of procedural reasons rather than a determination that the enrollee no longer was eligible.

“That [trend] has been very concerning for us,” Daniel Tsai, CMS deputy administrator and director of the Center for Medicaid and CHIP Services, said during a July stakeholder call.

“We see low awareness, among most of our Medicaid enrollees, of what’s happening,” he also said.

KFF also found that among a sampling of 16 states, children represented nearly 1.4 million out of about 3.3 million disenrollments.

The importance of using ex parte renewal procedures can be seen in the share of reenrolled beneficiaries — 54%, according to KFF — whose reenrollment happened through such procedures, which draw on wage information and other available data to renew enrollees without requiring them to take any action.