500K have Medicaid coverage restored after computer problem fixed

About a half-million people who had their Medicaid and Children’s Health Insurance Program coverage terminated were reinstated into coverage after computer errors in many states were corrected, the Centers for Medicare and Medicaid Services announced.

On Aug. 30, CMS issued a call to action to states about a potential state systems issue where systems were inappropriately disenrolling children and other enrollees, even when the state had information indicating the person remained eligible. Some state computer systems were flagging entire households for further information — and dropping all family members when no one responded — instead of reviewing each individual separately and automatically renewing children who remain eligible.

The computer issues affected people in 29 states and the District of Columbia.

All states are reviewing their Medicaid rolls after a three-year, pandemic-era prohibition on ending coverage expired this spring. While the freeze was in effect, Medicaid enrollment swelled by nearly one-third, from 71 million people in February 2020 to 94 million in April 2023.

States that received extra Medicaid funding under a 2020 COVID-19 relief bill had to agree to pause beneficiaries’ eligibility verifications.

Under the $1.65 trillion federal spending bill approved by Congress in December, states were permitted to begin disenrolling people from Medicaid in April.

CMS sent a letter on Aug. 30 to all states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands requiring them to determine and report whether they have a systems issue that inappropriately disenrolls children and families, even when the state had information indicating that they remained eligible for Medicaid and CHIP coverage. CMS said that so far, 29 states and the District of Columbia reported having these system issues. As a result, to avoid CMS taking further action, all affected states were required to pause procedural disenrollments for impacted people unless they could ensure all eligible people are not improperly disenrolled due to this issue.

The re-enrollment problem stemmed from a potential eligibility systems issue related to automatic renewals for Medicaid and CHIP coverage. Auto-renewals (also known as “ex parte” renewals) are one of the strongest tools that states have to keep eligible people enrolled in Medicaid or CHIP coverage during the renewals process. Federal rules require states to use information already available to them through existing reliable data sources (e.g., state wage data) to determine whether people are still eligible for Medicaid or CHIP. Auto-renewals make it easier for people to renew their Medicaid and CHIP coverage, helping to make sure eligible individuals are not disenrolled due to red tape. CMS said it continues to provide technical assistance to states as they address these system issues.