HHS has limited options as millions lose Medicaid

WASHINGTON -- States are disenrolling residents from Medicaid at a breakneck pace, even though a large percentage of those losing coverage are still eligible for the program.

But the unique structure of the jointly run federal and state program means there's little the Biden administration can do to prevent poor people from losing health care.

As of June 22, more than 1.5 million people in 25 states and the District of Columbia have been disenrolled from Medicaid through the unwinding of the pandemic continuous coverage provision, according to data from KFF, the group formerly known as the Kaiser Family Foundation. And as many as 17 million could lose coverage soon by the time the process concludes.

Across all states, 73 percent of those disenrollments are procedural terminations, meaning patients in question still qualify for Medicaid based on their income or disability status, but they may have missed a phone call from a state health official, could not verify income with a previous employer or dealt with some other procedural misstep that thwarted the process of reenrolling.

The disenrollments are happening in the context of the end of a continuous coverage requirement brought on by the COVID-19 public health emergency. That requirement barred states from removing anyone from their Medicaid rosters during the emergency. The end of the requirement in March means that Medicaid recipients must verify their eligibility or risk being cut from the program, and many red states see this as an opportunity to quickly cut costs and trim their Medicaid rolls.

The White House gave states a few months to prepare for the end of the public health emergency and the resumption of Medicaid renewals, but some policy experts say it was difficult for states to realize the downstream impact.

"It is hard to underestimate or underscore enough the historical, traumatic events that we are experiencing in the Medicaid base right now," said Karen Shields, a former deputy director of the Centers for Medicare & Medicaid Services' Center for Medicaid and CHIP Services under the Obama administration and now client engagement officer at Gainwell Technologies, a company that provides digital solutions to administer health and human services programs.

"The [coverage] grounds that we have made since the passage of the [2010 health care law] are quite frankly about to erode because we are not taking this problem seriously enough," she said.

In Arkansas, for example, the state reported 72,802 beneficiaries had lost Medicaid coverage during the first month of redeterminations — 40 percent of whom were children and 72 percent of whom lost their coverage for procedural reasons.

But the Arkansas Department of Health defended these high numbers of procedural terminations by arguing that many residents simply chose not to turn in their Medicaid paperwork because they knew they no longer qualified. While these people may count as procedural coverage losses, they were aware of the process, argued Arkansas Department of Health communications chief Gavin Lesnick.

In Kansas, 89 percent of Medicaid enrollees who lost health insurance lost coverage for procedural reasons. Many were children who rely on parents or other caregivers to update their contact information with the state. More than 62 percent of KanCare enrollees are kids, and roughly 64 percent of KanCare sign-ups during the pandemic were children, according to data from the Georgetown Center for Children and Families.

Power of the purse

Biden administration officials and Capitol Hill lawmakers are quickly trying to figure out how many of these procedural terminations could have been avoided and what to do about it.

HHS offered states some new flexibilities earlier this month in an effort to stem the disenrollments.

This includes allowing managed care firms to complete Medicaid renewal forms on an enrollee's behalf, allowing states to delay administrative termination for one month while the state conducts additional targeted outreach, and allowing pharmacies and community-based organizations to facilitate reinstatement of coverage for those who were disenrolled.

But the new flexibilities stop short of the agency's ultimate power move: cutting off funding to individual state Medicaid programs. While CMS controls the power of the purse, it rarely uses it.

During a call with reporters on June 13, CMS officials urged states not to rush the process and warned it would crack down on states that seem to be needlessly discarding people from their Medicaid rosters.

"If we find any violation of federal rules, we will use every lever Congress gives us," said Rachel Pryor, the counselor to HHS Secretary Xavier Becerra. She said a pause on procedural terminations is a probable option.

But Washington, D.C., doesn't have a lot of control over state Medicaid programs.

While the federal government oversees and funds Medicaid, each state designs and operates its own Medicaid program within federal guidelines.

When federal bureaucrats see something amiss in state programs, its first course of action is typically a corrective action plan, and the last resort is withholding federal funds. But such drastic steps rarely occur, and corrective action plans take a long time to produce results, explained Robin Rudowitz, vice president at KFF and director for the Program on Medicaid and the Uninsured.

Congress gave CMS some additional enforcement tools to ensure states aren't needlessly disenrolling Medicaid recipients as part of recent omnibus legislation, including financial penalties and requiring states to pause disenrollments.

A sense of urgency

The agency has yet to take these steps, though, and Congress wants it to move faster.

Top Democrats on Capitol Hill are urging the Biden administration to take a greater role in overseeing state reassessments of Medicaid beneficiary eligibility.

Senate Finance Chair Ron Wyden, D-Ore., and House Energy and Commerce ranking member Frank Pallone Jr., D-N.J., sent a letter to CMS on June 8 urging the agency to take a greater role in overseeing state reassessments of Medicaid beneficiary eligibility. The Democrats asked CMS to threaten to defund state Medicaid programs if they don't undertake good-faith efforts to prevent procedural terminations.

"We urge you to move swiftly to use these tools to prevent more coverage losses among eligible children and adults in Florida, Arkansas, and other states," Wyden and Pallone wrote.

Pallone on Friday said that Republican states aren't doing enough to ensure their citizens don't lose coverage. He called on CMS to "be more assertive in laying out their plans for enforcement action."

But taking a heavy hand with state Medicaid programs is not usually the agency's style, Shields said. Since Medicaid is a state-federal program, it has to walk a careful line.

Once kicked off Medicaid, an individual has 30 or 90 days, depending on their coverage, to appeal the decision and provide the necessary information to have their coverage reinstated without any gap. But many are not aware of that option. And that's where local health groups and outreach programs come in, Shields said.

"We can sit and yell at the front building of CMS forever, but the truth is, all of us need to mobilize. … This is not just a federal or state problem. It is a community issue," Shields said.