On October 28, the Trump Administration announced that it would weaken the current continuous coverage protection for Medicaid beneficiaries by permitting states to cut or scale back benefits and increase cost-sharing charges.
The Families First COVID-19 relief legislation provided a temporary 6.2 percentage point increase in the federal Medicaid matching rate (FMAP) through the end of the calendar year quarter in which the current public health emergency expires (PHE). Because the Secretary of Health and Human Services extended the PHE through at least January 20, 2021, this means the FMAP increase remains in effect through at least March 31, 2021.
Under a maintenance-of-effort (MOE) requirement, as a condition of receiving the increased Families First FMAP, state Medicaid programs must not implement eligibility standards, methodologies and procedures that are more restrictive or charge higher premiums than were in place on January 1, 2020. They must also cover COVID-19 testing and treatment without cost-sharing. They must also not disenroll any beneficiaries who were enrolled as of March 18, 2020 (or newly enrolled beneficiaries after such date) through the end of the month in which the PHE ends. That means that state Medicaid programs must maintain enrollment through at least January 31, 2021. This last “continuous coverage” requirement is critical to ensuring that low-income individuals and families have access to health coverage and to needed care during the pandemic.
Earlier this year, in guidance to states, the Centers for Medicare and Medicaid Services (CMS) interpreted the continuous coverage requirement as barring states from cutting benefits or increasing cost-sharing for Medicaid beneficiaries while they are enrolled. That was consistent with the plain reading of the Families First statutory language, which requires that a state would no longer be eligible for the FMAP increase if:
“the State fails to provide that an individual who is enrolled for benefits under such plan (or waiver) as of the date of enactment of this section or enrolls for benefits under such plan (or waiver) during the period beginning on such date of enactment and ending the last day of the month in which the emergency period described in subsection (a) ends shall be treated as eligible for such benefits through the end of the month in which such emergency period ends unless the individual requests a voluntary termination of eligibility or the individual ceases to be a resident of the State…” [italics added]
In other words, beneficiaries would no longer be eligible for the same benefits they were receiving if state Medicaid programs eliminate or scale back the benefits or increase their cost-sharing. That would constitute a violation of the continuous coverage requirement and make a state ineligible for the 6.2 percentage point FMAP increase.
CMS, however, is issuing a new interim final rule reversing its earlier sound reading of the continuous coverage requirement. Under the most harmful change, state Medicaid programs would now be permitted to eliminate optional benefits such as dental coverage and reduce the amount, duration and scope of covered benefits (like imposing lower visit limits or adding other utilization controls), compared to what was covered on March 18, 2020. They may also now increase co-payment and other cost-sharing levels (subject to federal limits) and require nursing home residents to contribute more to the monthly cost of their care (known as post-eligibility treatment of income), above what was required on March 18, 2020.
In addition, states would be permitted to transfer beneficiaries from one eligibility category to another if they are no longer eligible under their original category, even if it may reduce the benefits available to them. For example, if an expansion state has opted to cover 19 and 20 year-olds under their child eligibility category, the continuous enrollment protection would no longer require the state to maintain the young person in the child eligibility category when they turn age 21 and could instead transfer them to the adult expansion group. This, however, means the beneficiary would lose access to the comprehensive Early Periodic Screening Diagnostic and Treatment (EPSDT) benefit. Similarly, a near-elderly Medicaid beneficiary enrolled in the expansion who turns age 65 and becomes eligible for Medicare could be switched to the Medicare Savings Programs (which only covers Medicare premiums and cost-sharing, not other Medicaid benefits that may not be covered by Medicare).
CMS provides some limits to these transfers. If a beneficiary was originally entitled to coverage that constituted Minimum Essential Coverage (as defined by the Affordable Care Act), they cannot be moved to coverage that does not cover MEC, though they may be switched to coverage that is less generous. If a beneficiary was originally entitled to coverage that was not MEC but did cover COVID-19 testing and treatment, they cannot be moved to coverage that does not cover COVID-19 testing and treatment. If a beneficiary was originally entitled to coverage that was not MEC and did not cover COVID-19 testing and treatment, they would be required to be given the same level of that coverage. Beneficiaries can always be transferred to a more generous level of benefits. If an individual is not eligible for any other Medicaid eligibility category, states would be required to keep that beneficiary enrolled in the original eligibility category with the benefits that are otherwise available to that category.
Finally, CMS indicates that a state would not be out-of-compliance with the continuous coverage requirement if it disenrolls a beneficiary who was not validly enrolled in the first place (the eligibility determination was erroneous or the result of fraud and abuse). Beneficiaries found enrolled in two or more states who fail to respond to a request for information related to residency may also be disenrolled. In addition, states that have opted to cover full benefits for lawfully residing children and pregnant women in in the first 5 years after entry into the United States would be required to limit their coverage to emergency services if individuals are found to no longer meet the definition of such children and pregnant women.
These changes would be effective immediately (upon public display of the interim final rule). Notably, while CMS issued its original interpretation of the continuous coverage requirement as guidance, it is now reversing it through an interim final rule. That both makes these changes harder for a different Administration to modify procedurally but also essentially takes away meaningful public comment, as these changes will already be in effect well before any comments are submitted, let alone considered.