On the Brink of Disaster: Medicaid Redetermination after the COVID-19 Public Health Emergency
By: Eli Boone
States are in suspense after Xavier Becerra, Secretary of the U.S. Department of Health and Human Services, renewed the federal COVID-19 public health emergency (PHE) declaration on October 13, 2022. States have agreed not to disenroll any Medicaid beneficiaries while the PHE is in effect in exchange for increased federal payments. Expiration of the PHE means states will be required to process tens of millions of eligibility applications—a colossal administrative task—and put millions of beneficiaries at risk of losing coverage. With the PHE expected to end early next year, states are scrambling to prepare for Medicaid redetermination where they will be forced to decide who can keep their coverage.
Nationwide Medicaid enrollment has continuously increased during the PHE as states have maintained the federal continuous coverage requirement. As part of the Families First Coronavirus Response Act, passed by Congress in March 2020, the federal government increased its share of Medicaid payments to states by 6.2 percentage points if they agreed to provide continuous Medicaid coverage until the PHE expired. All 50 states and Washington, D.C. opted for these increased payments. Economic instability as a result of the pandemic has left more people eligible and enrolling in state Medicaid programs over time. Maintaining coverage for anyone eligible for Medicaid, even if they would no longer be eligible under normal rules, has led to increased enrollment. According to analysis by the Kaiser Family Foundation (KFF), Medicaid and Children’s Health Insurance Program (CHIP) enrollment has increased by 18.2 million people since February 2020. (See Figure 1)
Figure 1. Increased Medicaid/CHIP Enrollment Since the PHE Began
The overarching goal of Medicaid redetermination is to transition Medicaid programs to pre-public health emergency eligibility and enrollment levels. In the 39 states (including D.C.) that have expanded Medicaid, adults with incomes up to 138% of the Federal Poverty Level ($20,385 for an individual in 2022) qualify for Medicaid. States that have not expanded Medicaid will primarily return to covering lower-income women who are pregnant and children. The Centers for Medicare & Medicaid Services (CMS) hopes to move Medicaid beneficiaries who lose eligibility to Marketplace plans through redetermination to mitigate the number of people who will be left uninsured.
Processing a historic number of applications poses a severe threat to state Medicaid agencies. According to estimates from the Urban Institute, states will process 61.6 million Medicaid eligibility applications if the PHE were to expire in the fourth quarter of 2022. Processing that many applications would be challenging under normal circumstances, but leaders from state Medicaid departments recently shared that existing system limitations, short staffing, and financial constraints make planning and completing this task even more challenging.
A significant number of Medicaid beneficiaries stand to lose coverage, with some at increased risk compared to others. The Urban Institute estimates that 15 million beneficiaries could lose coverage if all states process redeterminations within six months of the PHE expiration, though they have up to 14 months to do so. Current Medicaid beneficiaries with lower incomes are at increased risk of losing coverage. Families USA found that 1.5 million low-income people lost Medicaid coverage in 2018 due to faulty redetermination processes such as prohibiting online applications or requiring mail-in paperwork. The Commonwealth Fund predicts similar issues following the COVID-19 PHE as systemic shortcomings remain and many Medicaid beneficiaries experiences changes in income or address during the pandemic. Communities of color have experienced disproportionate housing instability during the pandemic, increasing their risk of losing Medicaid coverage.
Planning for Redetermination
State redetermination efforts and continued coverage for Medicaid beneficiaries hinge on the unknown end of the PHE. Becerra renewed the PHE determination on October 13, 2022, extending it another 90 days. Unless renewed again, the PHE—and the flow of increased federal funds—would end on January 11, 2023, granting short notice and less money for the redetermination process to begin. The Biden Administration has said it would give states and providers a 60-day notice before ending the PHE. This could mean the end of the PHE will be announced by November 12, 2022.
In guidance provided by the CMS, states have up to 12 months from the end of the PHE to begin redeterminations and 14 months to process all applications. CMS has offered three optional timelines for states to follow and recommends states process 1/9th of their total caseload each month to maximize the likelihood of completing redetermination within 14 months. (See Figure 2). A March 2022 survey by KFF and the Georgetown University Center for Children and Families found that 41 states plan to take up to the entire time allowed to process redeterminations.
Figure 2. CMS-Issued Unwinding Timeline Options for States to Follow
States are taking varied approaches in preparing for redetermination and their processes for accomplishing the task. The same KFF and Georgetown survey found that 27 states have developed CMS-required plans for prioritizing eligibility and renewal efforts following the PHE. More than four in five states (41) plan to reach out to beneficiaries after the continuous enrollment requirement ends to prevent loss of coverage due to missing information. Similarly, nearly all states (46) plan to proactively update mailing addresses before the PHE ends through USPS databases and working with Managed Care Organizations (MCOs).
Federal & State Policy Solutions Moving Forward
While states will be responsible for processing their own Medicaid redeterminations, options exist for the federal government to support the historic effort. Advanced notice of the PHE expiration will further help states plan and prepare for redetermination. A group of providers and health plan advocacy groups, including the National Association of Medicaid Directors, joined together to ask Congress to provide at least 120 days’ notice to help states prepare.
With the federal government’s support, moving current Medicaid beneficiaries to other sources of health insurance coverage can mitigate the number of people that lose coverage. Letting the PHE expire during the Open Enrollment Period for Marketplace plans, typically November 1 through January 15 of each year, will allow people ineligible for Medicaid coverage to find coverage through private plans. Of those who will lose Medicaid coverage, the Urban Institutes estimates that about one in four (27.5 percent) would be eligible for Marketplace subsidies.
Communicating alternative coverage options for the disenrolled and protecting them from dangerous substitutes will also be essential. Research from Georgetown’s Center on Health Insurance Reforms found that online consumers were far more likely to be referred to brokers or plans that cost more and cover less than plans on the Marketplace. The Alliance of Community Health Plans recommends increased federal oversight to protect consumers from financially-motivated brokers and products.
States themselves can take steps to best prepare for Medicaid redetermination by working with the federal government. In guidance issued to states, CMS recommends they apply for different types of waivers that will allow them to change requirements and services offered under Medicaid programs. One option is for states to submit an 1115 waiver to implement 12-month continuous edibility for adult Medicaid beneficiaries to expand coverage and ease the administrative burden. A RAND study found that year-long continued eligibility stabilized coverage with modest cost increases. Waivers from section 1902(e)(14)(A) of the Affordable Care Act can allow states to use an applicant’s eligibility for the Supplemental Nutrition Assistance Program (SNAP) to renew Medicaid eligibility. States can apply for 1135 waivers to allow Medicaid applicants more than 90 days to request a fair hearing if they are disenrolled, a significant extension from the current 60-day maximum.
States should leverage partnerships with community-based organizations with robust ties to underserved, vulnerable, and diverse populations to provide culturally-appropriate resources before, during, and following redetermination. Colorado, Massachusetts, and Utah shared how they plan to engage with a range of partners in a recent convening with the National Academy for State Health Policy. States with existing budget surpluses from federal COVID-19 aid could use funds to partner with organizations to help residents maintain Medicaid coverage or find appropriate alternatives. In 2021, the Massachusetts state legislature allocated $5 million from the American Rescue Plan Act to a non-profit to conduct public awareness and outreach campaigns for Medicaid beneficiaries, focusing on marginalized communities.
The closer we get to the expiration of the PHE, the closer we get to the start of Medicaid redetermination. Continuous coverage provided shelter during the pandemic, but now states—and the Medicaid beneficiaries they oversee—must enter into a new and historic trial. Health insurance coverage for an estimated 15 million beneficiaries will soon end, and states must prepare to process over 60 million applications. State governments are preparing for redetermination as best as possible; time will tell how well they dodge, delay, or deal with disaster.
