Medicaid Unwinding: Why Retroactive Coverage is not the Answer to Procedural Disenrollments as Some Claim

As readers of SayAhhh! know, we are closely monitoring the impact of Medicaid unwinding. We’ve been worried about inappropriate and large coverage losses for children and families for quite some time now – and as states get started and are reporting large numbers of procedural terminations our fears have not been allayed.

There are those already arguing that high rates of Medicaid terminations are nothing to worry about and want people to believe that these folks have “other sources of coverage”, “don’t want Medicaid”, “can easily get back on”, or are “simply irresponsible”. One of the misleading arguments that we’ve heard is that Medicaid’s 90-day retroactive eligibility period is another reason not to worry – those who lose coverage and wind up in the hospital will surely be reinstated without a problem.

Leaving aside the questionable premise that already overburdened states will just easily reinstate someone, the logic is troubling. Retroactive eligibility only protects people who were eligible when they were terminated. By definition someone is only eligible for retroactive eligibility if they were eligible during the 90 days prior. So, these are exactly the folks who should not be terminated for procedural reasons.  Terminate them and take more staff time to reinstate them? That is no way to run a railroad.

What is retroactive eligibility? Retroactive coverage is an important protection of Medicaid that ensures that someone who is eligible but unenrolled at the time of incurring a health care expense (such as a hospital bill) and is subsequently enrolled can have these expenses covered for 90 days prior to the official start of enrollment. This protection exists because it often takes time for states to enroll eligible people after they apply and it protect individuals and providers from incurring huge uncompensated care costs when patients wind up in hospitals or in nursing homes. People who have a stroke and wind up in the hospital need time to  gather the paperwork needed to apply for Medicaid. And, of course, Medicaid exists primarily to cover low-income people who can’t afford expensive medical costs.

I would certainly love to worry less about unwinding. And Medicaid’s retroactive eligibility provision does provide some small comfort. But it’s limited and here’s why.

Eleven states have received federal waivers and don’t offer retroactive coverage to all Medicaid beneficiaries. Ironically, Florida officials have recently been highlighting this protection in response to criticism about the large number of terminations occurring in that state, yet Florida requested and received a federal waiver of retroactive eligibility for all non-pregnant adults. So this protection only applies to children (and pregnant/postpartum women) in Florida but does not apply to other groups who are more likely to wind up in the hospital or nursing homes.  As a related aside, unfortunately we don’t know how many of those being terminated in Florida are children (and remain protected to some degree) since the state has not released any breakdowns of their data.

States that have received waivers of retroactive eligibility have done so for non-pregnant adults; generally parents and expansion adults if the state is an expansion state. The rules vary a bit by state but significant waivers of retroactive eligibility exist in AZ, DE, FL, IA, IN, MA, NH, OK, RI and TN. Arkansas has a shortened 60-day retroactive eligibility period in place.[1] My colleague, Leo Cuello, has explained why it’s a mistake to waive retroactive eligibility.

Families losing coverage are unlikely to be aware of retroactive coverage rules and will avoid needed care. I can’t imagine that most people are aware of Medicaid’s retroactive coverage rules and whether or not they live in a state that has received a waiver from CMS of this protection and for which population. In fact, Florida’s own Medicaid waiver evaluation implied as much. Moreover, I have seen no mention of retroactive coverage in any of the termination notices that I have seen.

When people are uninsured, they avoid necessary care. Low-income people are especially deterred from seeking needed care due to cost and for children especially, the need for routine preventive and primary care is high.  Some obvious examples are a child with asthma or an adult with hypertension or diabetes who needs regular medications to keep their conditions under control or they may wind up in the emergency room.  Gaps in coverage are disruptive for providers and families alike.

Primary and preventive care — the very care that is most cost-effective and preferable — is exactly the kind of care need that will likely be foregone when families experience gaps in coverage. Medicaid’s retroactive eligibility provisions, as important as they are, are no reason to stop worrying about high rates of procedural terminations that we are seeing in the Medicaid unwind.

[1] Georgia’s soon to be implemented Pathways program waives retroactive eligibility as well.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.