States wasting money by slow-rolling Medicaid reviews, by Sally Pipes

During the COVID-19 public health emergency, Congress forbade states from disenrolling people from Medicaid. The idea was to prevent people from losing coverage during the pandemic.

But the emergency is over. On April 1, state Medicaid programs regained the ability to drop people no longer eligible.

Some states have moved to re-evaluate Medicaid enrollees' eligibility. But other states are deliberately dragging their feet at the behest of the Biden administration — thus costing taxpayers billions of dollars. These delays in the "redetermination" process are deeply irresponsible. People who are eligible by law for Medicaid should continue in the program — and those who are ineligible should not.

The 2020 Families First Coronavirus Response Act offered states additional federal funding for their Medicaid programs — but only if they agreed to not drop anyone from their Medicaid rolls for the duration of the public health emergency.

By March of this year, enrollment in Medicaid and the state Children's Health Insurance Program had swelled to 93 million people. That's about one in three Americans under the age of 65. That far exceeds the scope of a program initially designed as a safety net for pregnant women, the blind and low-income elderly individuals who couldn't support themselves.

Unfortunately, Congress effectively gave states maximum flexibility to determine eligibility at their own pace. States have until the end of May 2024 to complete the process, and the enhanced federal payments for Medicaid will slowly ratchet down until returning to pre-pandemic norms at the end of this year. Preliminary figures from the federal Centers for Medicare & Medicaid Services indicate that about a third of redeterminations result in disenrollment.

This slow process is costing taxpayers billions. According to a new study from the Paragon Institute, states could save themselves nearly $12 billion over the next year if they started their redeterminations in April and finished within six months rather than starting in July and taking 12 months. If all states followed this faster timeline, total savings for state and federal taxpayers could exceed $40 billion.

Deep-blue states like California and New York, which are heeding the administration's call to audit their Medicaid rolls slowly, will spend an additional $1.3 billion and $900 million, respectively, on coverage for people who are ineligible but nevertheless remain enrolled in Medicaid, according to Paragon's estimates.

Other states are proceeding expeditiously. Arkansas, for example, began auditing its Medicaid rolls in April and may finish its work soon. If it finishes within six months, as opposed to 12, it will save state taxpayers $122 million, according to Paragon's research.

In some circumstances, a state can determine eligibility through its own resources — say, by automated income checking and other verification methods.

In other cases, beneficiaries receive notification — perhaps by mail, email, phone, or text message — that they must provide documentation to retain their Medicaid coverage. Some may have ignored such requests during the pandemic but could face disenrollment if they continue to do so now.

Federal officials are up in arms over these "procedural disenrollments," whereby people lose Medicaid coverage for failing to verify eligibility. Since April, the Centers for Medicare & Medicaid Services has paused redetermination proceedings in a dozen states over alleged failure to comply with federal standards.

The pause is costing taxpayers additional millions daily. And it's unjustified, given that the fears of genuinely eligible enrollees losing coverage over paperwork mishaps are overblown. The Florida Department of Children and Families found that over half of unresponsive enrollees — whom the state had tried to contact as many as 13 times — hadn't used Medicaid in the past year or had obtained other insurance coverage.

If people who are eligible for Medicaid lose coverage because of a bureaucratic error, they can easily re-enroll the next time they need health care. And Medicaid coverage is retroactive — it can cover healthcare expenses for the three months before re-enrollment.

It's the height of waste to continue providing expensive government benefits to people who, by law, aren't eligible. State leaders should move quickly to audit their Medicaid programs to ensure taxpayers don't have to underwrite such waste.

Sally C. Pipes is president, CEO and a fellow in healthcare policy at the Pacific Research Institute.