Today, CMS released troubling information. Based on the agency’s monitoring of the unwinding of the COVID-related Medicaid continuous enrollment requirement, CMS found that many states are conducting ex parte renewals incorrectly. As a result, many children and other enrollees are or could soon be losing their Medicaid coverage when the state had information that they remain eligible for Medicaid. Children are not the only ones impacted but they are likely the vast majority of those impacted. We are heartened to see that CMS is quite serious about holding states accountable for getting it right.

When we talk about historic churn, you can bet that what CMS has uncovered has also been a key driver in inappropriate terminations of coverage for a decade; the scope and pace of the unwinding, however, has accelerated the negative consequences of this serious deficiency in the renewal process.

What is the problem? As best we can tell, when states are conducting renewals on a household basis, if one person appears to be ineligible, they are sending the renewal form to the entire household. If no response is received, all members lose coverage for procedural reasons. But here’s what should happen. If ex parte data indicates that any members of the household are eligible, coverage for those individuals must be renewed and the renewal form or request for information is only sent to household members whose eligibility could not be confirmed via ex parte.

Who does this impact? Unfortunately, this problem impacts children more frequently because their income eligibility levels are much higher than adults in all states but especially in non-expansion states, and therefore ex parte data should more frequently confirm their ongoing eligibility. However, if either the ex parte rate or procedural disenrollment rate for children is the same as adults, it suggests the state is getting it wrong! Another indication of the problem may be if the child share of total disenrollment is close to the child share of total enrollment. Since children are more likely to remain eligible, a smaller share should be disenrolled. ASPE analysis of enrollment data projected that 74% of children who are disenrolled actually remain eligible; these kinds of administrative failures are a key reason why.

What do the federal renewal requirements say about individual versus household-based eligibility? There is no regulatory basis for conducting a renewal on a household basis, although states may align renewal dates for all members of the household which many are doing during the unwinding. The regulation clearly denotes that if ex parte data indicates that an individual is eligible, the agency must notify the individual of their ongoing eligibility.

435.916 Periodic renewal of Medicaid eligibility.

(a) Renewal of individuals whose Medicaid eligibility is based on modified adjusted gross income methods (MAGI).

(2) Renewal on basis of information available to agency. The agency must make a redetermination of eligibility without requiring information from the individual if able to do so based on reliable information contained in the individual’s account or other more current information available to the agency, including but not limited to information accessed through any data bases accessed by the agency under §§435.948,

435.949 and 435.956 of this part. If the agency is able to renew eligibility based on such information, the agency must, consistent with the requirements of this subpart and subpart E of part 431 of this chapter, notify the individual—

(i) Of the eligibility determination, and basis; and

(ii) That the individual must inform the agency, through any of the modes permitted for submission of applications under § 435.907(a) of this subpart, if any of the information contained in such notice is inaccurate, but that the individual is not required to sign and return such notice if all information provided on such notice is accurate.

What happens next? Although CMS already knows the problem exists in some states, all states have 14 days to conduct an internal assessment. To assist states with this, the State Health Values Strategy (SHVS) group has released a diagnostic tool for states to use in reviewing their procedures and processes.

What will states have to do if they are getting it wrong? The CMS letter to states indicates they will be required to correct the problem and reinstate coverage. According to the CMS press release, if a state’s eligibility system has this issue, states must immediately take the following steps to avoid additional federal enforcement actions, such as CMS withholding a state’s enhanced federal funding or requiring states to implement a corrective action plan or be subject to civil monetary penalties:

• Pause procedural disenrollments for those individuals impacted.
• Reinstate coverage for all affected individuals and provide notice to them.
• Implement one or more of the CMS-approved mitigation strategies to prevent continued inappropriate disenrollments, and
• Fix state systems and processes to ensure renewals are conducted appropriately and in accordance with federal Medicaid requirements.

The CMS letter to states details mitigation strategies that states will be required to implement until the state has fixed all systems and processes to be compliant with federal renewal requirements. These actions may cause a state’s unwinding process to take longer. These strategies include:

• Identifying and renewing eligibility for affected individuals prior to disenrollment for a procedural reason.
• Suspending renewals while the state implements needed systems and operational fixes.
• Waiving the requirement to redetermine eligibility and extend Medicaid or CHIP eligibility for affected members for up to 12 months from the enrollee’s scheduled renewal date.
• Implementing other state-identified strategies approved by CMS.

Now is a good time to require state reporting of child-related unwinding data. Given the impact on children, this seems like the right time to require states to report unwinding data disaggregated by eligibility group or at least children and adults, since the problem is concentrated among children. Continued transparency will be key to ensure that families who have been affected are informed of the possibility of regaining coverage retroactively.

We applaud CMS’ strong stance on this disturbing news and their commitment to holding states accountable for fixing the problem once and for all.

[Editor’s Note – Interested in learning more about state challenges and lessons learned regarding ex parte renewals? Check out this brief.]