At the onset of the COVID pandemic in March of 2020, Congress made an important policy decision: continued access to health coverage was crucial, especially because, at the time, it was uncertain how the economy would respond to the shutdowns that public health officials felt were necessitated by the pandemic. Because Medicaid is an important public health insurance program, Congress shored it up in two ways: first, they provided an increase in the federal share of Medicaid funding; second, they coupled the increased funding with a requirement that states maintain the then-existing eligibility standards. As a result, states generally refrained from terminating Medicaid eligibility for most of their residents during the COVID-19 Public Health Emergency (PHE) declaration that accompanied the onset of the pandemic.
Since this COVID-era Medicaid continuous enrollment requirement officially ended on April 1, 2023, state Medicaid programs have been processing redeterminations for the millions of Medicaid beneficiaries who maintained coverage throughout the pandemic. The Kaiser Family Foundation estimates that, as of September 12, approximately 6.4 million Medicaid beneficiaries have been disenrolled by their respective state Medicaid programs. The sheer magnitude of Medicaid redeterminations and disenrollment occurring over the last several months has led to serious concerns regarding state processes for handling redeterminations. Stakeholders allege that certain Medicaid programs contain inadequate safeguards to ensure that individuals who otherwise meet Medicaid eligibility criteria are not disenrolled due to procedural or technical hurdles. Some developments on the ground have led to increasingly sharp responses by the Centers for Medicare & Medicaid Services (CMS), as well as at least one lawsuit from the beneficiary community. This post aims to provide a brief background on where things currently stand on this important issue.
Continuous Medicaid Enrollment During the PHE
As we’ve discussed in previous posts, on March 18, 2020, Congress enacted the Families First Coronavirus Response Act (FFCRA). As we describe above, among other COVID relief provisions, the law provided states with enhanced federal Medicaid funding to help states respond to the pandemic. In exchange for this enhanced federal funding, however, states had to agree to pause all Medicaid redeterminations for the entirety of the PHE. In practice, this meant that any individual who had Medicaid coverage going into the COVID-19 PHE, or who gained Medicaid coverage at any point during the COVID-19 PHE, was continuously enrolled in the program throughout the pandemic. The Kaiser Family Foundation estimates that as a result of this “continuous enrollment” provision, Medicaid enrollment grew by approximately 20 million individuals.
As discussed above, the Medicaid continuous enrollment requirement was initially tied to the end of the COVID-19 PHE. However, during the pandemic, when the PHE’s “end date” remained unclear, states began voicing concerns to CMS and Congress that the uncertainty brought by linking the requirement to the PHE was raising administrative and financial difficulties. As a result, in the Consolidated Appropriations Act (CAA), 2023, Congress included a provision delinking the FFCRA’s continuous enrollment provision from the COVID-19 PHE, and instead provided that states could begin Medicaid redeterminations starting April 1, 2023. The CAA, 2023 also specified how the enhanced Federal funding that had been in place since March 2020 would progressively wind down throughout 2023, decreasing every quarter until finally coming to an end at the conclusion of the year. However, the CAA, 2023 specified that to continue receiving this “wind-down” federal funding, states would be required to comply with certain requirements, including:
- Conducting Medicaid eligibility determinations in accordance with all Federal requirements applicable to renewals and redeterminations;
- Maintaining up-to-date contact information for all individuals undergoing an eligibility redetermination; and
- Undertaking a good faith effort to contact beneficiaries prior to disenrollment.
Leading up to April 1, 2023, CMS issued guidance to states to “mitigate churn for eligible beneficiaries and smoothly transition individuals between coverage programs.” In a separate letter, the Department of Health & Human Services (HHS) Secretary Xavier Becerra urged state Medicaid agencies to (1) spread renewals for all populations across 12 months; (2) increase the use of data sources to decrease the need for certain individuals to complete and return a Medicaid renewal form; and (3) partner with managed care plans and use data obtained from the United States Postal Service so that renewal forms are sent to the correct addresses of existing beneficiaries.
Even with these safeguards prior to the unwinding, HHS estimated that 15 million Medicaid and Children’s Health Insurance Program beneficiaries would be disenrolled during this “unwinding” period, including approximately 5 million children.
States Begin Redeterminations and CMS’s Response
Pursuant to the CAA, 2023, states began redetermination on April 1, 2023. States have taken varying approaches to the unwinding, with some states declining to spread renewals over the course of the year and instead choosing to work expeditiously to process all pending redeterminations over the last several months. As expected, this has led to considerable Medicaid disenrollment.
Given the pace at which states have undertaken this process, as well as the sheer number of redeterminations in need of processing, many stakeholders have become concerned that a substantial number of individuals have been disenrolled not because of ineligibility for the program but because of procedural or administrative hurdles. CMS has been monitoring these issues over the summer, at first showing reluctance to publicly reprimand states. However, over the last few months, the agency has grown increasingly distressed and vocal with particular states experiencing operational issues, which has led to significant Medicaid coverage losses.
For example, after receiving reports that children were being wrongly disenrolled because of a “glitch” in the automated systems being used by state Medicaid agencies, CMS sent a letter to all states, directing them to evaluate their systems and determine if they indeed have issues leading to wrongful disenrollment. CMS also directed states to reinstate coverage to impacted individuals and promptly take additional remedial steps. It remains to be seen how CMS will approach states that it believes remain noncompliant with federal renewal requirements, including whether CMS will proceed with imposing penalties on such states by, for example, disqualifying them from receiving increased federal funding provided by recent legislation.
Legal Challenges to State Redetermination Processes
In a seminal 1970 decision, Goldberg v. Kelly, the Supreme Court of the United States held that the Due Process Clause of the Fourteenth Amendment to the United States Constitution required the government to provide a full hearing to a public benefits recipient before terminating their benefits. The Court concluded that the beneficiary’s interest in receiving these benefits strongly outweighed the government’s interest in terminating them, even for individuals whose eligibility has ended. Goldberg v. Kelly, 397 U.S. 254 (1970). Even though the Goldberg decision was decided only five years after the enactment of Medicaid and did not involve Medicaid benefits, there seems to be no question that the Court’s reasoning would apply to the potential termination of Medicaid benefits, especially because the receipt of health benefits through the Medicaid program constitutes a “brutal need,” in the words of the Court.
Patient advocacy groups have also responded to what they believe to be inadequacies and failures in state redetermination processes. For example, on August 22nd, Medicaid beneficiaries in Florida, represented by the Florida Health Justice Project and the National Health Law Program, filed suit against the state alleging that its Medicaid program was terminating tens of thousands of Floridians from coverage without providing sufficient individualized written notice of the reason for the termination and an opportunity for a pre-determination hearing. The lawsuit –Chianne D. et al. v. Jason Weida et al.–is the first of what could be many cases brought by patient groups challenging state redetermination processes.
Next Steps
As discussed above, approximately 6.4 million individuals have lost Medicaid coverage since the start of the “unwinding” and many millions more are expected to lose coverage in 2023 and beyond. As news of the rising number of disenrollment continues to roll in, concerns regarding the processes used by states to conduct redeterminations are also likely to heighten, especially with respect to procedural deficiencies that lead to otherwise eligible individuals losing coverage.
Where CMS goes from here remains unclear. Given its recent shift in tone and rhetoric regarding the specific issue of state automatic renewal processes, it is possible the agency will find it necessary to penalize noncompliant states. Furthermore, patient groups have already filed suit challenging one state’s redetermination process. If concerns regarding improper disenrollment continue to grow, it is likely more lawsuits will be coming down the pipeline.
As always, we will be actively tracking this important issue and will check back in with updates as things develop over the next few months.
