Estimates show that Medicaid enrollment grew by more than 20 million (approximately 31%) during the public health emergency (PHE) and the top Medicaid managed care organizations (MCOs) experienced a 44.1% increase in managed care enrollment between March 2020 and March 2023. This increase has been largely attributed to the continuous enrollment condition, which conditioned certain federal funding on maintaining all Medicaid enrollments during the PHE. In spring of 2023, the continuous enrollment condition ended and states were given a year to redetermine the eligibility of 94 million Medicaid enrollees.
Today, more than halfway into the “unwinding,” millions of eligible individuals continue to face Medicaid disenrollment due to procedural deficiencies. States are struggling to keep up with the administrative burden of confirming eligibility for all enrollees, and many states have sought waivers from the Centers for Medicare & Medicaid Services (CMS) and assistance from Medicaid MCOs that have a financial interest in continued enrollment. CMS has declared an “all hands on deck” strategy but, as the 12-month deadline looms, we can expect millions more eligible individuals to lose Medicaid coverage.
Medicaid Continuous Enrollment Condition
As we previously discussed on Health Law Scan regarding changes to Medicaid and what to expect at the end of the PHE and beyond, the Families First Coronavirus Response Act (FFCRA), enacted on March 18, 2020, offered states enhanced federal funding (an additional 6.2% Federal Medical Assistance Percentage) in exchange for continuously enrolling Medicaid beneficiaries throughout the PHE.
In other words, to receive additional funding, states could not disenroll individuals for failure to meet Medicaid eligibility requirements during the PHE. Normally, states are required to conduct annual redeterminations to confirm enrollee eligibility. The continuous enrollment condition was implemented in order to prevent any interruption of coverage during the pandemic.
The Consolidated Appropriations Act of 2023 (CAA), enacted on December 29, 2022, delinked the Medicaid continuous enrollment condition from the PHE as of March 31, 2023. States were given a 12-month period, beginning on April 1, 2023 and referred to as the “unwinding,” to resume eligibility screenings and terminate enrollment for ineligible individuals. States are also required to submit monthly renewal/disenrollment data to CMS for public reporting.
Anticipating the impact of the unwinding, the US Department of Health and Human Services (HHS) estimated that 15 million people would lose Medicaid coverage—6.8 million of whom may remain eligible for Medicaid benefits.
To continue receiving enhanced federal funding during the unwinding period, states were required to develop operational plans and work with CMS to prioritize renewals and meet other requirements. However, the unwinding has presented problems for state Medicaid agencies, which are struggling with staffing shortages and lack of accurate/updated contact information for enrollees.
Unwinding Unease
Independent research firm KFF estimates that, since the unwinding began, at least 11 million people have been disenrolled from Medicaid. However, delays in state reporting suggest higher numbers. CMS reported in a November 2023 update that 7.5 million enrollees have been disenrolled, but its figure is based on data current through August 2023.
Disenrollments vary widely state to state and have changed dramatically over time. Presently, Texas and Idaho have the highest disenrollment rate (64%) while Maine and Illinois have the lowest (10%). Initially, Florida’s disenrollment rate was 54%, but recently has been reduced to 32%, although Florida still has the third highest number (over 822,000) of individuals disenrolled.
It is estimated that 71% of all people disenrolled lost coverage due to administrative or procedural reasons. Such procedural disenrollments can occur because of outdated contact information or the inability of enrollees to understand the renewal forms and/or process. Many of these disenrolled persons may still be eligible for Medicaid coverage.
Significant coverage losses that occurred during the first two months of the unwinding prompted the Secretary of HHS to issue a letter to US governors in June 2023 imploring them to ensure that individuals do not lose coverage due solely to administrative processes. CMS also launched outreach and educational resources to support an “all hands on deck” strategy to reach enrollees and prevent inappropriate coverage losses.
CMS encouraged strategies to reenroll eligible individuals who lost Medicaid coverage and help disenrolled individuals to obtain insurance coverage on the state Marketplace or through other insurance options. CMS also elicited aid from schools, libraries, local public transportation agencies, and others to raise awareness about the need for individuals to complete Medicaid renewals. Plans and providers were asked to engage with patients during visits and assist with questions about eligibility renewals. Private sector businesses and community organizations were also asked to partner with states to spread the word.
CMS received authority, beginning on July 1, 2023, to withhold federal Medicaid funding (not to exceed 1% Federal Medical Assistance Percentage) from states that do not report unwinding data required by the CAA. Reports from CMS in the same month showed that most states were out of compliance with basic renewal functionalities, including providing ex parte renewals for all enrollees, allowing renewal through all required modalities (e.g., online and phone), and supporting transitions to Marketplace coverage.
During the unwinding, states have engaged in various mitigation tactics:
- All states have received approval for Social Security Act waivers (referred to as e-14 waivers) to address operational issues with income and eligibility determination systems.
- 22 states have adopted strategies to renew eligibility based on information from other programs such as the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families.
- More than 40 states are using updated contact information from MCOs or other databases to ensure receipt of renewal letters.
- More than two-thirds of states have adopted other strategies to renew Medicaid for eligible families without requesting additional paperwork.
- 15 states have delayed procedural disenrollments for beneficiaries for one or more months while the state conducts targeted renewal outreach.
- Massachusetts provides grants to community-based organizations to door-knock in certain communities with the greatest risk of coverage loses.
However, some states have faced significant public criticism for their handling of the unwinding. For example, Florida initially received public scrutiny when more than half of enrollees seeking renewals, a significant number of which were children, were terminated from Medicaid during the first few months of the unwinding. On December 5, 2023, Florida launched a new online portal that will require all Medicaid beneficiaries to create a new online account, which may have been intended to mitigate staffing shortages but could pose a challenge for those with access and computer literacy issues.
Conclusion
At present, more than 70% of disenrollments are procedural, meaning many of these individuals may still be eligible for coverage. These disenrollments will have a significant impact on continuity of care for patients and revenue for MCOs and providers. Furthermore, uninsured rates correlate with increased costs, such as uncompensated care provided by hospitals, which strain both providers and state budgets, considering states typically cover a portion of these costs.
For these and other reasons, stakeholders have an interest in mitigating procedural disenrollments and avoiding increased uninsured rates. However, despite what appears to be well-intentioned efforts, there does not seem to be an easy solution to this vexing issue and it is likely that the percentages of procedural disenrollments will continue to grow in the next several months.