Enforcing State Redeterminations of Medicaid Eligibility - McDermott+Consulting

Enforcing State Redeterminations of Medicaid Eligibility

Enforcing State Redeterminations of Medicaid Eligibility

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December 14, 2023 – As we continue to “unwind” from the COVID-19 public health emergency (PHE), we are still very much in a transition period. Many of the policies that beneficiaries, providers, plans and states came to rely on during the pandemic are either being phased out slowly or are being extended for a little longer since they have proven to be successful or simply too hard to give up (such as some of the telehealth flexibilities). But of all the policies enacted during the PHE, none was more meaningful to individuals than the continuous Medicaid coverage provisions. To help me describe the issues around Medicaid and the PHE, I’m bringing in my colleague Katie Waldo.

The Families First Coronavirus Response Act provided Medicaid programs a 6.2 percentage point increase in the Federal Medical Assistance Percentage (FMAP) if states met certain maintenance of eligibility requirements that ensured continuous coverage for current enrollees. As a result, all Medicaid beneficiaries were continuously enrolled in Medicaid, regardless of current eligibility status, throughout the COVID-19 PHE. In December 2022, Congress acted through the Consolidated Appropriations Act (CAA) of 2023 to allow states to begin Medicaid eligibility redeterminations and renewals as of April 1, 2023 (prior to the formal end of the PHE). The CAA also phased down the increased FMAP states received throughout 2023.

The Kaiser Family Foundation reports that almost 12 million Medicaid beneficiaries have been disenrolled through the unwinding process thus far. Although states were allowed under the CAA 2023 to begin the redetermination process as soon as April 2023, the CAA 2023 established guardrails to try to create a smooth process. States were required to use the most reliable sources of Medicaid beneficiary contact information and make good faith efforts to contact beneficiaries prior to disenrollment. The CAA 2023 added new reporting requirements for states related to their redetermination processes, as well as enforcement authorities for the Centers for Medicare & Medicaid Services (CMS) to ensure that states complied with CMS requirements and procedures related to redeterminations and disenrollments.

With respect to the reporting requirements, the CAA 2023 requires states to submit to CMS monthly data about activities related to eligibility determinations and redeterminations conducted during that same period. States must submit these reports each month from April 1, 2023, until June 30, 2024, and CMS must make them publicly available. The CAA 2023 also requires CMS to reduce the FMAP for states that do not abide by the reporting requirements by 0.25% for each fiscal quarter in which a state does not meet the requirements (not to exceed a 1% reduction). Further, if a state does not meet the reporting requirements or does not abide by the eligibility redetermination requirements between April 1, 2023, and June 30, 2024, CMS can require the state to submit and implement a corrective action plan (CAP). States must submit the plan within 14 days of receiving the CAP from CMS. Then CMS must approve the plan within 21 days. The state must initiate implementation of the plan no later than 14 days after CMS approves it. If a state fails to submit or implement an approved CAP, CMS may require the state to suspend some or all terminations of Medicaid eligibility for procedural reasons until the state takes appropriate corrective action (as determined by CMS), and/or may impose on that state a civil monetary penalty of up to $100,000 for each day that the state is not in compliance.

States have taken varying approaches and timelines to complete the disenrollment process. And CMS has issued various guidance documents, State Health Official letters (SHOs), and enforcement actions relating to unwinding. In January 2023, CMS released a SHO detailing the reporting requirements and enforcement provisions established through the CAA 2023. The SHO specified monthly reporting requirements, as well as the implementation of CAPs and CMPs.

Although the requirements and enforcement authorities are clearly laid out in statute, and CMS notified states about these requirements in January 2023, CMS just released an interim final regulation codifying these requirements and seeking comment on them. While the requirements are already in effect, CMS released the reg to remind states about CMS enforcement authorities and provide a little more information about how and when CMS may choose to utilize them. CMS created exceptions in the reg for “unusual circumstances” where states may be unable to meet certain requirements because of a natural disaster or other unavoidable circumstance. In these cases, CMS would not utilize its authority to issue a CAP or CMP. CMS also provided a process for states to appeal the imposition of a CAP or CMS’s call for a state to suspend some or all terminations of Medicaid eligibility. Thus, the interim final reg fleshes out these disenrollment requirements a bit more, creates some exceptions and allows different stakeholders to weigh in on CMS’s enforcement approach.

It is noteworthy that CMS already has taken enforcement actions and paused disenrollments after identifying issues with many states’ ex parte review processes, such as inappropriate disenrollment of children and other enrollees despite information indicating they remained eligible. According to CMS, 29 states plus Washington, DC, have self-identified as erroneously making ex parte renewal decisions on a household level rather than an individual level as federal regulations require. CMS required these states and Washington, DC, to pause procedural terminations, reinstate coverage, implement mitigation strategies, and fix their systems and processes. All in all, CMS continues to closely examine the unwinding process to ensure eligible Medicaid beneficiaries are not removed from the Medicaid program.

Comments on the interim final reg are due February 2, 2024. Although the reg’s requirements are already in effect, stakeholders could comment on various issues related to the redetermination process as well as CMS’s interpretation of its enforcement authorities.

Until next week, this is Jeffrey (and Katie) saying, enjoy reading regs with your eggs.

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