Va. reinstates almost 45,000 people to Medicaid programs to fix eligibility glitch

Virginia has reinstated almost 45,000 people — about half of them children — to the state's Medicaid and child health insurance programs after they lost coverage in part because of a faulty review of their eligibility to remain on the rolls, and in part because the families didn't respond to subsequent requests for information.

The Department of Medical Assistance Services told federal regulators that Virginia had reinstated 44,622 people who had been dropped from the programs after an automated review failed to ensure that each person was evaluated at the individual rather than household level for eligibility to remain in the program.

Those people will be evaluated again by Sept. 30 after the state completes an upgrade of its automated system on Friday. The upgrade is Virginia's response to a sweeping federal directive at the end of August aimed at correcting a potential error in states' automated systems for updating eligibility of millions of Americans for coverage after the end of the COVID-19 pandemic.

If they meet eligibility requirements, the state will extend their coverage for a year. If they don't, they will receive a required 10-day notice to apply personally for renewal or their coverage would end on Oct. 31.

The Centers for Medicare and Medicaid Services, known as CMS, required states to determine if they were basing their "ex parte" or automated eligibility evaluations on households instead of the individuals in them, including children who would be subject to higher income thresholds to remain covered under the Children's Health Insurance Program, or CHIP. Automated reviews are designed to use readily available information to screen participants for continued eligibility without requiring them to submit additional proof.

"As the state's ex parte process did not perform redeterminations on an individual basis, Virginia immediately reviewed all closures to identify any that occurred where an individual review could not be validated," Virginia Medicaid Director Cheryl Roberts told the federal agency in the state's response on Sept. 13.

'There's just a lot of barriers'

That review identified 44,622 people who had lost coverage after the automated process did not ensure their evaluation on an individual basis. Of those, 18,109 were children in the Medicaid program and 3,726 were children in CHIP, or about 49% of those affected. The rest are adults, including those covered under Virginia's expansion of Medicaid eligibility in 2019 under the Affordable Care Act.

The state said it reinstated their coverage on Sept. 9 and advised participants on how to seek help with any medical expenses they incurred after losing coverage.

However, state officials emphasized that Virginia does not drop anyone from Medicaid or CHIP solely because of an automated review. Instead, they would lose coverage only after also failing to return renewal forms sent to them to be evaluated manually, a burden of proof that the automated review is intended to avoid.

Advocates say it's also hard to say whether people had a fair chance to respond to the renewal packets they were supposed to receive after being screened out by the automated process.

"I've seen people receive the communication days before it was due," said Cassie Edner, an attorney at the Virginia Poverty Law Center in Richmond.

"There's just a lot of barriers to put the onus on individuals to fill out the renewals, who otherwise would be eligible," Edner said.

Deborah Oswalt, executive director of the Virginia Health Care Foundation, agrees that people miss the paperwork deadline for different reasons.

"Is it because it's lying on the kitchen table with a bunch of mail? Is it because they don't live there anymore?" she asked. "Is it because the Postal Service didn't deliver it.?

But Oswalt gives high marks to the Department of Medical Assistance Services for responding quickly to the problem after federal Medicaid officials sounded the alarm and for doing everything possible to keep people in the program if they are eligible.

"It really heartens me that the minute they realized this, they got right on it and took all of the appropriate steps," she said.

'Unwinding process'

The reviews are part of a massive undertaking by Virginia's Medicaid program and Department of Social Services to re-evaluate the eligibility of 2.2 million people enrolled in Medicaid and CHIP as part of a yearlong "unwinding process" that is occurring across the United States with the end of the public health emergency. The state has received hundreds of millions of dollars in additional federal support for Medicaid during the pandemic, but in return could not drop participants from the program until the end of the federal emergency.

It's a national challenge, with about 72% disenrolled from Medicaid coverage for procedural reasons, such as not responding promptly to mailed renewal applications, according to the Kaiser Family Foundation.

Virginia is doing a better job on that front, with procedural reasons accounting for 34% of the 144,645 people who have lost their coverage. The rest were due to "non-procedural" reasons, ranging from no longer complying with income or non-financial program requirements to moving out of Virginia or dying.

State Medicaid officials say Virginia always has required evaluation of eligibility on an individual basis, not just as a household, but the federal government requires states to use the automated process to initially determine whether people still qualify for benefits without requiring them to submit renewal applications to justify continue coverage. They also say the state has been following the same process it has used for a decade.

So they were surprised whether they first heard of the potential glitch during conversations with CMS in early August.

"Like other states, we were caught off guard," said Sarah Hatton, deputy for administration in the state Medicaid office.

Virginia revised its automated system on Aug. 25 — five days before receiving the official notice from CMS — to allow the state to track any manual renewals based on individual case reviews. The state expects to complete the upgrade on Friday to ensure that program participants are evaluated on an individual basis, although a permanent fix won't be in place for everyone until next June, with manual reviews conducted for those not covered by the automated system.

"That's why I think we're going to end up in such a good position," Hatton said. "Because we already have such a strong ex parte system and this is only going to make it stronger."