[Editor’s Note: The bipartisan spending plan was approved by Congress and signed into law by the President on December 29, 2022. Read CCF’s brief to learn more.]

The text of the omnibus spending plan released by Congress would allow states to resume Medicaid disenrollments after the end of the first quarter of 2023. If enacted by Congress and signed by the President, the proposed law effectively extends and phases out the enhanced federal funding states are receiving, as well as ending the Medicaid continuous coverage protection as of March 31, 2023. We were thrilled to see that Congress has recognized the importance of transparency and accountability by requiring public reporting of key unwinding monitoring data and penalizing states that do not comply. Moreover, the legislation would give more authority to CMS to halt procedural disenrollments and impose additional financial penalties on states that are not in compliance with all federal requirements applicable to the unwinding.

States may resume Medicaid disenrollments effective April 1, 2023.

When Congress first enacted the Families First Coronavirus Response Act in March 2020, the enhanced federal Medicaid funding and maintenance of effort (MOE) provisions, including the continuous coverage protection, were tied to the end of the COVID-19 public health emergency (PHE). The legislation would extend and phase down the enhanced federal Medicaid funding with new requirements during the unwinding.

States may take up to a full year to initiate renewals as outlined in CMS guidance.

The proposed law makes it clear that states can take up to a full year to initiate all renewals. CMS has previously issued guidance allowing states up to 14 months to resume routine eligibility and enrollment processes; 12 months to initiate renewals and an additional two months to complete the process.

Extended federal funding will help states avoid the fiscal cliff.

In the first quarter of 2023, states will continue to receive the 6.2 percentage point increase in the Federal Medical Assistance Percentage (FMAP). The increased FMAP is phased down for the remaining quarters in 2023 for states that meet requirements (as discussed below): 5 percentage points from April to June, 2023; 2.5 percentage points from July to September 2023; and 1.5 percentage points for October to December 2023. The prior law would have cut off the enhanced federal funding at the end of the quarter in which the PHE ended.

New maintenance of effort provisions required to qualify for ongoing FMAP bump.

States are required to conduct renewals in accordance with all federal requirements, including using the temporary Section 1902(e(14)(A) flexibilities to smooth out the unwinding and avoid procedural disenrollments or other processes and procedures approved by CMS. States must also meet specific data reporting requirements (noted below).

States must make a good faith effort to locate enrollees for whom mail has been returned.

States must attempt to ensure that it has up-to-date contact information using the National Change of Address Database Maintained by the United State Postal Service, other public program information, or other reliable sources of contact information. Additionally, the state may not disenroll anyone on the basis of returned mail until the state has made a good faith effort to contact the individual using more than one communication mode (e.g., mail, phone, text, email).

 Congress establishes state unwinding data reporting requirements and establishes penalties for non-compliance.

To ensure the availability of critical data needed to monitor the unwinding, the proposed law would require states to report key monitoring data and require CMS to publish state-specific data on a timely basis. This would include the following data for each month beginning April 2023 and continuing through June 2024

• Number of eligibility renewals initiated
• Number of enrollees renewed on a total and ex parte basis
• Number of individuals whose coverage for medical assistance, child health assistance, or pregnancy-related assistance was terminated, and the number of individuals terminated for procedural reasons
• Number of children enrolled in separate CHIP programs
• Total call center volume, average wait times, and average abandonment rate for each call center
• Such other information related to eligibility determinations and renewals as identified by the Secretary

States that use the federal Marketplace (FFM) or operate a state-based Marketplace (SBM) that does not determine eligibility for both Medicaid and Marketplace financial assistance must report the number of individuals whose accounts were received by the FFM or SBM. They must also report the number of individuals determined eligible for a qualified health plan (QHP) or Basic Health Program (BHP; applies to MN and NY only) and the number of people who selected a QHP or enrolled in BHP. SBM states with systems that have integrated Medicaid and CHIP eligibility in their Marketplace systems must report the number of individuals determined eligible for a QHP or BHP and the number of people who selected a QHP or enrolled in BHP.

Importantly, there’s a specific penalty for non-compliance of reporting requirements. Starting in July 2023 and continuing through June 2024, if a state does not report the required data, it will be penalized with a reduction in the state’s FMAP by .25 percentage points for each quarter in which the state fails to satisfy the reporting requirements up to a maximum of one percentage point.

CMS given additional authority to hold states accountable for compliance with all federal requirements applicable to the unwinding, including halting procedural disenrollments.

If the Secretary determines that a state is not in compliance with all federal requirements applicable to the unwinding, the Secretary may require the state to pause procedural disenrollments, as well as to submit a corrective action plan no later than 14 days after receiving notice from CMS. The agency then has 21 days to approve the plan, which must be implemented within 14 days after such approval. If the state fails to submit or implement an approved correction plan, the Secretary may impose a civil monetary penalty of up to $100,000 for each day the state is not in compliance. This penalty is in addition to the FMAP reduction for not meeting data reporting requirements.

The omnibus sets a date certain to begin the unwinding with more advance notice than the 60 days promised by the Biden Administration, although it is not the 120 days that the National Association of Medicaid Directors requested. However, states will receive enhanced federal funding for a longer period of time once the unwinding begins. Importantly, it prioritizes accountability and transparency and authorizes CMS to halt procedural disenrollments and imposes specific financial penalties for noncompliance with guidance and regulations. While we still expect the unwinding to be extremely challenging for enrollees and states, especially those that live in states that do not take care to do it right, the proposed changes will hopefully protect more children and families from a loss of coverage due to avoidable, inappropriate terminations of coverage.