A national Medicaid eligibility redetermination process is underway in each state following the end of the public health emergency (PHE).

The process is a massive undertaking for state health departments and will have significant implications for individuals eligible for Medicaid, as well as hospitals and other components of the health care delivery system. Of particular concern are high termination rates of coverage due to administration reasons, which can be devastating to patients.

Navigate changes with insights below so you can take a proactive approach to helping patients obtain or retain eligible coverage while also supporting your organization.

Background

Legislation enacted early in the PHE included a maintenance of eligibility requirement for Medicaid enrollees. To help ensure needed coverage, the law required that states keep enrollees continuously on Medicaid, which was a deviation from the redetermination process that takes place in the regular course of business. In return, states received enhanced federal matching funds (FMAP) in the form of an additional 6.2% to the current FMAP.

To receive the enhanced FMAP, states couldn’t terminate an enrollee unless the enrollee requested termination, or the enrollee moved out of state or died. This provision was critical in preserving health coverage for not only the newly qualified, but to maintain coverage for current enrollees who may have lost coverage through the typical administrative churn process.

The add-on funding totaled an estimated $40 billion per year nationally. The additional cost of enrollment reached an estimated $47.2 billion for the period 2020 through 2022, while the additional funding totaled an estimated $100 billion.

In terms of the enrollment numbers, 94 million were enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) in March 2023, an increase of 22 million from February 2020.

Unwinding Processes

Unwinding processes are planned for both the enhanced payments and enrollees.

For the enhanced payments, the add-on percentage began gradually declining on April 1, 2023, and will reach zero on January 1, 2024. For enrollees, the redetermination process should be completed within a year of beginning, but no enrollees were to be removed before April 1, 2023.

According to an updated analysis, the process began in virtually all states. However, the process may be delayed or halted in a few states as they work through mitigation procedures approved by the Centers for Medicare & Medicaid Services (CMS) regarding the process.

Several federal regulations were enacted to assist with the process and help mitigate inappropriate terminations.

Other ways to mitigate terminations include:

• Using information available to the agency
• Enabling communication through multiple modalities
• Checking other potential coverage options before terminating
• Providing sufficient time for beneficiary response
• Providing advance notice of adverse action
• Simplifying re-enrollment
• Ensuring accessibility for all beneficiaries
• Collaborating with community organizations for beneficiary outreach

Expected Outcomes

Based on various analyses prepared by The Department of Health and Human Services (HHS), Kaiser Family Foundation (KFF) and the Urban Institute, estimates of disenrollment ranged from 5 million to 15 million enrollees.

HHS estimated 15 million disenrollments, with 6.8 million likely still qualifying. This reflects the expectation that many disenrollments would be for procedural reasons, such as failure to respond to requests for updated eligibility information. Some of those disenrolled for procedural reasons may no longer qualify; for example, they may have not responded because they now have coverage through an employer.

In terms of geographic distribution, The Urban Institute also estimates almost 15 million disenrollments with the biggest losses projected, in order, to be:

• California
• Texas
• Florida
• New York

Higher Rates of Disenrollment for Procedural Reasons

According to a Kaiser Family Foundation report titled Medicaid Enrollment and Unwinding Tracker, roughly 10.1 million Medicaid enrollees disenrolled to date as of the report’s publishing date November 8, 2023. This is based on data from 50 states and Washington, DC. Of those completing renewal, 35% disenrolled and 65% had their coverage renewed.

Disenrollment rates vary widely, from 10% to 65%. This is likely due to renewal policies and system capacity.

From states with available data, 71% of disenrolled people had coverage terminated for procedural reasons, much higher than the expected 45%. There’s wide variation here as well with a high of 96% in New Mexico, but 7% in Oregon.

High disenrollment rates based on procedural reasons are concerning because those people may avoid seeking necessary medical care, and those who do receive care will likely do so without insurance coverage, which may result in medical debt for these patients.

A class action lawsuit filed in Florida on behalf of two families in August 2023 alleges the families received neither proper notice nor a chance to contest the decision.

There’s potential for CMS to halt the process in a dozen states while results and procedures are being reviewed and potentially modified.

Implications for Medicaid Beneficiaries

A person who has lost Medicaid coverage is likely to experience negative impacts. Studies show that Medicaid coverage is associated with financial security and educational attainment.

Additionally, losing Medicaid makes people more likely to forego medical services, potentially impacting their physical and mental health.

Implications for Providers and Reimbursement

There are three key implications for providers and reimbursement:

• DSH and uncompensated care
• Revenue cycle
• 340B

DSH and Uncompensated Care

Providers may see a significant reduction in their allowable Medicaid days for Medicare DSH purposes as patients may now be uninsured or enrolled in other health plans.

This impact, along with recent changes in the allowability of certain Section 1115 waiver days, will see many providers with substantial cuts to their Medicare DSH payments, and some may no longer even meet the qualification requirements for a DSH and uncompensated care payment.

Providers may also see an uptick in their uninsured patients. It’s incumbent on providers to ensure their financial assistance policies and procedures are updated to accurately report this information on Worksheet S-10 on future cost report filings.

Revenue Cycle

Provider revenue cycle teams may be impacted by increasing financial counseling volume as newly uninsured patients seek care, exceeding provider capacity. This could create a patient access bottleneck and increases the risk that patients eligible for Medicaid might not obtain coverage. Prior to seeking care, many patients may not be aware they have lost Medicaid coverage and may need assistance identifying any coverage they’re eligible for. Many of those who lose coverage will likely become uninsured.

340B

The reduction in Medicaid days may also put in jeopardy 340b qualification, as the threshold for qualification is tied to the DSH adjustment percentage. Many hospitals that traditionally have qualified for the 340b program may now be at risk of losing this discount on covered outpatient drugs, which are substantial cost savings for providers.

How Stakeholders Can Impact the Process

The redetermination process is an unprecedented event, much like the continuous enrollment mandate itself. There are many variables and moving parts rendering the process extremely complex. Parties to the process should exercise maximum cooperation and vigilance to help ensure all individuals that qualify for coverage are appropriately identified.

Fortunately, there are steps stakeholders can take to support these efforts.

Partner with State Officials and Understand the Process

In an environment with different approaches by state, it’s incumbent on stakeholders to be intimately aware of the regulations, procedures, and processes available and to help ensure they’re followed and know what to expect.

The federal regulations in Title 42 of the Code of Federal Regulations (CFR) Section 435.916 require states to comply with provisions covering:

• Fully utilizing information already available to the state through any other state agency
• Only request information not otherwise already available electronically
• Accepting information online, via phone, via mail, and in person
• All bases of eligibility must be exhausted prior to termination
• Adequate time for beneficiary response
• Advance notice of termination and the rights to file appeals
• Process simplification
• Use of ex parte information

Hospitals, hospital associations, and other stakeholders should have ongoing dialogue with state officials about their process and challenges in implementing their processes to reduce the negative impacts on beneficiaries.

What Providers Can Do to Protect Their Reimbursement and Help Patients

Hospitals and other providers have a wealth of historical information about patients and their Medicaid eligibility history as many of the same patients are seen multiple times over the years. Additionally, providers are generally considered trusted sources of information by their patients.

Collaborate with Other Organizations

Work with your State Medicaid agency and Medicaid Managed Care Organizations, along with other organizations such as schools and faith groups, to coordinate messaging about redeterminations, including what enrollees should expect and consequences if they don’t respond.

This communication should be executed in all languages applicable to the populations served. In some cases, enrollees may respond more favorably to communication from their provider than from a state agency or managed care organization. Some states have established formal programs for ambassadors that can be used for this purpose.

Provide Communications

Provide information at registration to all current Medicaid eligible patients and obtain up-to-date contact information. Update revenue cycle scripts to inquire about any Medicaid redetermination communication the patient has received.

Identify and Support Disenrolled Patients

In addition to communicating these changes to your community, be proactive about identifying your patients who have been disenrolled. This will remove a barrier to them seeking care when it becomes necessary, reduce the workload on financial counseling teams, and create patient goodwill toward providers.

Work with your state Medicaid agency to analyze your patient population that has been disenrolled from Medicaid for administrative reasons, comparing these enrollees to your patient population. Many states are processing disenrollments in batches. Knowledge of this cadence can help providers validate eligibility for upcoming services after the state has completed a disenrollment batch.

This approach is only viable with a Medicaid agency willing to collaborate. Additionally, some patients who are disenrolled may be already enrolled in other coverage, so there should be an additional step to identify these patients.

Work with a coverage discovery vendor to evaluate the current insurance coverage of your Medicaid patient population. This allows you to identify non-Medicaid coverage for patients upfront.

Even with these proactive approaches, providers should prepare for the significant administrative burden on health care systems seeking to collect reimbursement. The effects of these redeterminations will undoubtably be an increased burden on all facets of the revenue cycle.

Providers should re-evaluate their capacity to assist patients in the enrollment process and determine if any outside assistance is needed, as the impact on these redeterminations will be felt for years to come.

The increase in the uninsured population may also require a reassessment of charity policies and financing options along with re-evaluating collection strategies.

Whatever the approach, this will require effort but is likely to produce a sound financial return while serving the community.

We’re Here to Help

For more information to help your organization navigate the Medicaid redetermination process, contact your Moss Adams professional.

Additional Resources

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