As anticipated, the start of the Medicaid unwinding process has taken a toll on coverage

Fears among healthcare policymakers that the end of the COVID-19 public health emergency would sow chaos in Medicaid have been realized, leading the Biden administration to intensify its mitigation efforts.

The end of Medicaid continuous-enrollment provisions is affecting the program in many states. In 21 states that had begun the “unwinding” process since April 1, more than 1.2 million beneficiaries had been disenrolled as of June 15, according to the Kaiser Family Foundation’s dashboard. Nearly 250,000 people had been disenrolled in Florida (100,000 more than in any other state), while a recent Politico article put a spotlight on the uncertainty in Arkansas, where 110,000 have fallen off the rolls.

The national figures represent an undercount, according to KFF, because of a lack of publicly available data in some states. And the numbers are set to increase significantly as the 21 states continue with disenrollment and additional states launch the process in June and July.

Last August, the U.S. Department of Health and Human Services (HHS) projected that 9.5% of Medicaid and CHIP beneficiaries (or 8.2 million people based on enrollment figures at the time) would need to transition to other insurance due to a loss of eligibility, while 7.9% (6.8 million) would become uninsured at least temporarily due to administrative “churn.” An analysis commissioned by AHIP put the net number of new uninsured after the unwinding at 3.8 million.

An obvious concern for providers is adverse changes in payer mix, including an increase in bad-debt levels. In an April memo, for example, Fitch Ratings said the unwinding will “add to operating pressures” at not-for-profit hospitals. “Revenue erosion could be particularly acute for hospitals with higher Medicaid patient levels and could affect credit quality over time.” Hospitals also face a greater administrative burden in having to track insurance status.

CMS sounds the alarm

The final disenrollment figures will exaggerate the number of newly uninsured, given that some former enrollees will find — or have found — insurance through an employer or other option without notifying Medicaid. Regardless, the statistics are a concern at CMS.

“We are worried because we’re seeing high rates of terminations,” Daniel Tsai, deputy administrator and director of the Center for Medicaid and CHIP Services at CMS, said during a June 14 stakeholder call. “The most concerning part is the vast majority are not losing coverage because a state has been able to confirm that the individual is, say, over [the] income [limit].”

Instead, churn-related issues are the primary obstacle.

Among the 1.2 million who have been disenrolled, KFF found that 76% of cases happened due to procedural reasons such as a change of address or an enrollee’s lack of awareness that they need to watch for a renewal form. The share of such terminations ranged from 33% in Colorado to more than 80% in Arizona, Connecticut, Florida, Indiana, Kansas and West Virginia.

“It’s clear that many people do not know that the Medicaid renewal process has started,” Tsai said. “For the past three years, many of our enrollees have been told by a range of folks, ‘Hey, your coverage is protected. Don’t worry about the renewal form.’”

He added, “It’s not an exaggeration to say that for millions of Americans, their healthcare coverage is at risk.”

In a June 12 letter to state governors, HHS Secretary Xavier Becerra wrote, “Any avoidable loss in coverage is concerning, but I am particularly concerned that children may lose coverage because their parents do not understand that even if they experience a transition in coverage, their children are very likely still eligible for coverage through Medicaid or CHIP.”

Putting the impetus on states

State Medicaid agencies are central to the effort to avoid a widespread loss of coverage. Becerra’s letter urged governors to take steps such as ensuring the unwinding is spread over the allotted 12 months to avoid operational backlogs.

However, states may have an incentive to wrap up the process by year’s end because that’s when the enhanced federal matching rate for state programs will expire. For that matter, the decrease in the matching rate from 5 percentage points in April-June to 2.5 starting in July could lead to an acceleration in eligibility reviews.

If CMS finds that a state is modifying eligibility standards for enrollees during the remainder of 2023, the state can immediately lose the additional funding. Other conditions of the enhanced funding include:

• Attempting to ensure a beneficiary’s contact information is up to date before triggering a redetermination
• Undertaking good-faith efforts to contact a beneficiary using multiple modalities before terminating enrollment based on returned correspondence

CMS also recommends that states consider applying federal waivers, such as allowing for automatic enrollment or renewal based on enrollment in other public aid programs (e.g., SNAP, TANF).

States also should be contacting Medicaid managed care plans and providers with lists of individuals who are up for renewal but have not responded, per CMS’s recommendations. They also can grant certain organizations, including providers, authority to make presumptive-eligibility determinations based on income for individuals who lost coverage because of procedural reasons over the previous 90 days.

Providers can play a role

CMS likewise is encouraging providers to do what they can to keep patients enrolled.

For example, the administration urges providers to communicate with their patients about Medicaid renewals and be available to help patients with the process. If a provider does not have the resources to assist with reenrollment, they can connect patients with other entities (e.g., health plans, navigators, state agencies).

Providers such as community health centers and safety net hospitals especially should advertise themselves as a resource for reenrollment and should proactively assist any Medicaid beneficiary that comes to them for healthcare services.

“Each of you [stakeholders] has a really important role in helping to make sure that individuals and families [who are] enrolled in the program know what’s happening from a trusted resource,” Tsai said.