Biden HHS Steps In Amid Wave of Medicaid Coverage Cancellations

Biden administration officials are increasing their monitoring of states’ Medicaid renewal processes to ensure Americans don’t lose health coverage inappropriately.

The Centers for Medicare & Medicaid Services has intervened with about a half-dozen states since eligibility checks halted during the pandemic were allowed to resume in April, requiring them to pause procedural terminations and reinstate individuals, CMS Deputy Administrator and Director of Center for Medicaid and CHIP Services Dan Tsai said on a call with reporters Wednesday.

The effort comes as nearly 2.9 million Medicaid beneficiaries nationwide have been disenrolled from their policies as of July 18. KFF estimates that 74% of Medicaid beneficiaries who lost coverage were disenrolled due to procedural reasons like missing renewal forms, failure to locate a beneficiary’s current address, and glitches from state automatic enrollment systems.

Medicaid eligibility checks were halted in 2020, when federal funding for state Medicaid programs temporarily increased under the condition that states continuously cover beneficiaries until the end of the Covid-19 public health emergency. The number of Medicaid beneficiaries increased by almost 20 million during this time. However, the Consolidated Appropriations Act of 2023 removed the federal continuous coverage requirement starting April 1, allowing states to begin eligibility redeterminations for all 83.5 million Medicaid beneficiaries.

The CMS will be closely tracking state data and fielding complaints to identify problems early with renewals, according to a fact sheet released this week by the agency. When issues arise, the agency will issue corrective action, which can include pausing terminations, reinstating coverage, addressing systems glitches, and other measures to bring states into compliance.

Tsai warned states that continue to kick Medicaid-eligible beneficiaries off the rolls unnecessarily that the agency is willing to take punitive measures to ensure that redeterminations are conducted ethically.

Financial Penalties on the Table

Congress gave the CMS discretion to impose financial penalties and withhold extra federal funding from states that don’t comply with renewal rules. So far the agency hasn’t needed to take that step, according to the fact sheet.

“In the instances where we have been holding states accountable, identified violations, required states to pause procedural terminations, etc., what those states understand is if they do not do that, their entire enhanced federal match for the quarter that’s been outlined by statute is at risk, and that it’s a significant amount of funding,” Tsai said on the press call.

The increased oversight comes as at least 35 states have voluntarily adopted mitigation strategies to avoid improper churn in Medicaid coverage. The agency has worked discreetly with multiple states in recent months to promptly resolve policy and operational problems related to renewals.

“We’ve had about a half-dozen states where we have affirmatively identified an issue and required them to pause procedural terminations and reinstate individuals,” Tsai said.

In one case, the CMS directed a state to stop improper terminations and reenroll people after finding the state wasn’t providing renewal forms to some recipients as required. In another, the agency had a state pause terminations and reinstate coverage after reviewing data that showed the state failed to implement required auto-renewal mitigation strategies.

In addition, “We are in discussions with probably a dozen other states exploring a range of things and assessing what’s happening to help identify if there are other violations of a federal requirement,” Tsai said.

The CMS will be providing extensive technical assistance to states and urging them to take a measured approach by spreading renewals over 12 months, according to the fact sheet. The agency will also continue to push states to increase auto-renewals based on available data to minimize unnecessary paperwork.