Unwinding of Medicaid Continuous Enrollment Messy Process for States

In the early days of the COVID-19 pandemic, Congress enacted the Families First Coronavirus Response Act, which among other things required state Medicaid programs to keep people continuously enrolled through the end of the public health emergency.

That single requirement has done wonders for America’s uninsured rate. Enrollment in Medicaid and the Children’s Health Insurance program rose to 91 million in September 2022, an increase of 27.9 percent from February 2020, just before the pandemic.

Continuous enrollment also stopped “churn” among Medicaid enrollees—that is, when Medicaid clients disenroll, then re-enroll within a short period of time, often due to temporary changes in income or eligibility. Churn can block patients from receiving care and cause administrative costs to rise.

Continuous enrollment ended all of that.

But, as they say, all good things must come to an end.

In late December 2022, President Biden signed the Consolidated Appropriations Act, which ended the continuous enrollment requirement on March 31, 2023.

States are now in the process of “unwinding” the continuous enrollment provision, which could ultimately lead to an estimated 7.8 million to 24.4 million people losing Medicaid coverage.

As Yale University’s School of Public Health reported, the unwinding process “is expected to be the single largest health coverage transition event since the Affordable Care Act took effect in 2013.”

State Approaches to Unwinding Vary

Each state has the option of approaching unwinding in its own way. The Centers for Medicare and Medicaid Services (CMS) requires states to submit plans describing how they’ll prioritize renewals and how they’ll reduce coverage loss during the unwinding process.

As of early May, 30 states had posted their renewal distribution plans. According to CMS guidance, states had the choice of beginning the unwinding process in February, March or April. Eight states started in February, 15 in March, 28 in April. Most states – 43 – have said they plan to take 12 to 14 months to complete renewals.

Under the Affordable Care Act, states are required to complete administrative or “ex parte” Medicaid renewals by verifying an enrollee’s ongoing eligibility through existing sources, like state wage databases. It's only after states can’t confirm eligibility through such data sources that states are permitted to send a renewal form to an enrollee or request more documentation.

Some states stopped the entire renewal process when they implemented continuous enrollment. But with continuous enrollment's unwinding, renewals will begin again, which could lead to some challenges, as some states lack the staff or systems to handle this change.

To make things easier for the states, CMS announced that certain temporary waivers would be available on a limited basis to streamline the renewal process for some enrollees and cut down on patients losing coverage.

By late February, CMS had approved 188 waivers for 47 states. These waivers allow for such things as states renewing an enrollee’s coverage based on Supplemental Nutrition Assistance Program (SNAP) and/or Temporary Assistance for Needy Families (TANF) eligibility.

CMS has issued guidance allowing states to work with health plans, managed care organizations and community organizations to update enrollees’ information so they can stay enrolled.

Still, there’s concern that the unwinding will be a chaotic affair, resulting in certain marginalized groups in particular losing coverage—people with limited English proficiency or disabilities, immigrants and the elderly.

“I am very concerned that millions of eligible individuals will endure at least temporary disruptions in coverage and access to care, which is bad for their health and inefficient for the system,” said Dr. Chima D. Ndumele, an associate professor of health policy at the Yale School of Public Health and an associate professor at the Yale Institute for Social and Policy Studies.

“We know that some of these individuals won’t re-enroll in the program until they encounter a preventable hospitalization, and some may forego acquiring coverage at all. Many of these families, who received Medicaid benefits for the first time during the COVID-19 period, have never gone through the recertification process. In addition to the practical benefits of Medicaid coverage, which include free preventative services, access to free or low-cost medications, and reductions in excess morbidity and mortality, having insurance coverage just gives people peace of mind.”

Millions of Medicaid-Eligible Americans Likely to Be Disenrolled

Of course, some people are expected to lose Medicaid coverage because they’re genuinely ineligible. But as many as 7 million Americans are expected to lose their coverage due to simple procedural snafus, such as an enrollee failing to submit their renewal form on time.

These 7 million souls will still be eligible for Medicaid and will have the ability to re-enroll, reinstituting the problem of churn.

A single person disenrolling from Medicaid and then re-enrolling just one time is estimated to cost between $400 and $600, to say nothing of the disruption to their coverage, which can cause them to postpone needed care or fail to refill their prescriptions.

KFF, formerly known as The Kaiser Family Foundation, surveyed health insurance consumers in February and March and found that most were unaware of the end of continuous enrollment, furthering worries that this major transition could come as a major surprise to many Americans.

Most State Action on Issue Coming in Form of Agency Documents

Despite all of the concern about the unwinding process, there’s been relatively little action on the issue in state legislatures, with only a handful of bills referring specifically to Medicaid unwinding having been introduced—one of which was a budget bill enacted in New Hampshire (HB 2—according to the LexisNexis® State Net® legislative tracking system.

There’s been more activity at state agencies, but primarily in the form of non-rulemaking agency documents, the use of which have become increasingly common over the past decade, according to analysis by State Net®. The two dozen such documents referring to Medicaid unwinding in the State Net database include guidance from Virginia’s Corporation Commission/Bureau of Insurance regarding Medicare supplement guaranteed issue eligibility (Virginia Agency Advisory Letter 11786) and a notification from New Jersey’s Department of Banking and Insurance about a special enrollment period for Medicaid unwinding (New Jersey Agency Bulletin 74037). 

More Medicaid Unwinding-Related Agency Docs Than Bills, Regs

Only three states have considered bills and two have proposed regulations mentioning Medicaid unwinding this year, according to the LexisNexis State Net legislative and regulatory databases. But 11 states and the District of Columbia have issued non-rulemaking agency documents referring to Medicaid unwinding.

Healthcare Providers Face Big Revenue Drop

Attorney Rodney Miller of the Practical Guidance Team at LexisNexis said a drop in Medicaid enrollees could end up hitting the pocketbooks of providers, who have grown accustomed to having so many Americans covered.

With fewer people insured, there will be less money to pay providers for their services.

“I think they’re going to have to pivot somewhat and adjust their anticipated revenue,” Miller said. “Providers do have that shortfall they can see coming.”

—By SNCJ Correspondent BRIAN JOSEPH