CMS Guidance on Conducting Eligibility Redeterminations at the Individual Level
Patricia Boozang, Kinda Serafi, and Kaylee O’Connor, Manatt Health
On August 30, 2023, the Centers for Medicare & Medicaid Services (CMS) issued a State Medicaid Director Letter (SMDL) instructing states to assess whether they are in compliance with federal Medicaid regulations that require all renewal processes be conducted at the individual level. As part of its ongoing work with states to adopt and implement strategies to remediate areas of non-compliance with the federal renewal requirements and ensure that eligible individuals retain coverage during unwinding, CMS recently determined that some states may be conducting ex parte renewal processes at the household level, rather than at the individual level.[1] The SMDL lays out immediate actions that states must take to determine if they are out of compliance with the federal renewal requirements and mitigate compliance issues. Such actions include: pausing procedural terminations for affected individuals (i.e., “individuals for whom the ex parte renewal process is not currently compliant and whose Medicaid coverage may be terminated inappropriately due to improper implementation of renewal requirements”); reinstating coverage for affected individuals who have been disenrolled due to a failure to account for the individual’s eligibility status; fixing state systems and processes to come into compliance with federal rules; and implementing mitigation strategies to prevent continued inappropriate terminations. In addition to its SMDL, CMS released a Mitigation Plan Template that states may, but are not required to, use to communicate required information regarding their compliance assessments and proposed strategies for mitigation. States must submit the required information to CMS using the template or another format via email (CMSUnwindingSupport@cms.hhs.gov) no later than September 13, 2023.
Households are frequently comprised of multiple family members who are eligible for Medicaid or the Children’s Health Insurance Program (CHIP) based on different eligibility criteria and income thresholds (e.g., children are generally eligible for Medicaid and CHIP coverage based on higher income eligibility levels than their parents and are therefore more likely to be redetermined eligible for Medicaid or CHIP coverage).[2] Per federal renewal requirements at 42 CFR § 435.916(a)(2) and 457.343, states are required to make a redetermination of eligibility for an individual who is enrolled in Medicaid or CHIP, whether on the basis of Modified Adjusted Gross Income (MAGI) or non-MAGI, on an ex parte basis, “without requiring information from the individual if able to do so based on reliable information contained in the individual’s account or other more current information available to the agency.” In cases where one or more members of a household are unable to have their eligibility redetermined on an ex parte basis, states must still proceed with redetermining eligibility for members of the household for whom eligibility can be redetermined ex parte. States are out of compliance with this requirement if, when it is possible to redetermine eligibility for one or more members of a household using available ex parte data, they send renewal forms/requests for information to all household members, and condition renewal of Medicaid eligibility for any member who should have been determined eligible through the ex parte process on the return of the form/requested information.
Attachment B to the SMDL provides illustrative scenarios for conducting the ex parte renewal process at the individual level. CMS notes in its guidance that this issue most commonly affects, but is not limited to,[3] households with:
- Adult and child Medicaid/CHIP enrollees, when a state requires additional income information to verify eligibility for the adult(s) but not for the child(ren); and
- Multiple Medicaid/CHIP enrollee households, when the state requires additional eligibility information or documentation to verify eligibility for some, but not all, members of the household.
For illustrative scenarios, see pages 9–19 of CMS’ SMDL as well as a new diagnostic assessment tool published by State Health and Value Strategies. |
The SMDL describes in detail longstanding federal renewal requirements[4] and directs states that are not in compliance with these requirements, including pertaining to multi-member households, to take immediate action in order to avoid jeopardizing receipt of the enhanced Federal Medical Assistance Percentage or corrective action and related penalties imposed by CMS.[5] Notably, while the issue of not conducting ex parte renewals at the individual level likely impacts children most significantly, CMS directs states to take the actions described below with respect to all affected individuals.
Required State Action
CMS is requiring states to assess renewal processes to determine if systems, practices, and policies are compliant with the requirement to redetermine eligibility at the individual level. If areas of non-compliance are identified, states must:
- Pause procedural terminations for affected individuals until mitigation strategies or other processes are in place to ensure that individuals are not inappropriately disenrolled from Medicaid or CHIP. (While the SMDL indicates that states may pause procedural terminations, the Mitigation Plan Template seems to allow states to pause all terminations—see page four. This may be to provide flexibility to states that cannot identify “affected individuals.”)
- Reinstate coverage with retroactive eligibility back to the date of termination for affected individuals who have been procedurally terminated due to a state’s failure to account for the individual’s eligibility status independent of others in the household; and notify individuals of the coverage reinstatement and next steps. (States that cannot readily identify affected individuals must reinstate coverage for the entire household.)
- Implement one or more of the mitigation strategies (outlined in the table below) while the state works to bring systems and processes into compliance.
- Implement process/systems fixes to address the identified issue(s).
Communication with CMS: Mitigation Plan Template
As noted above, states must communicate to CMS required information regarding their compliance assessments and mitigations including: (1) identifying all impacted populations, and (2) describing the plan and timeline for rectifying the identified issues—including planned systems fixes. States are required to submit this information to CMSUnwindingSupport@cms.hhs.gov using the template or another format no later than September 13, 2023. CMS provides some flexibility on this reporting deadline, noting, “If your state’s assessment is not complete by September 13, 2023, please submit your preliminary findings along with a timeline for completing the analysis by the deadline.” CMS directs states that are not impacted by this issue to submit an attestation to CMS that they comply (by completing—or providing information consistent with—the attestation at section 1 of the template) on the same timeline.
Additional Considerations for States
As states evaluate whether and the extent to which their renewal policy, processes, and systems are out of compliance with federal requirements to redetermine eligibility on an individual enrollee basis, the mitigations they should deploy to address compliance issues, and their proposed communications with CMS regarding their Mitigation Plans, they may take into account the following considerations:
- Prioritizing strategies to rapidly identify and reinstate affected individuals or households that may have included individuals who were inappropriately disenrolled, especially children;
- Assessing the comparative resource intensity of implementing various mitigations;
- Determining whether mitigations will delay other essential planned systems/operational changes, including permanent systems fixes to come into compliance with federal requirements;
- Sizing the workforce impacts of different mitigations, especially manual workarounds;
- Potential impact of various mitigations on already strained call center capacity;
- Modeling the fiscal impact of proposed mitigation approaches;
- Identifying opportunities to leverage enhanced federal administrative match available to states at the 75% level for eligibility and enrollment-related staff support and operations and the 90% level for approved processes, systems, and activities necessary to ensure eligibility compliance;[6]
- Crafting messaging about mitigation approaches, and activating stakeholder support in enrollee communication; and
- Devising an effective process for designing and implementing long-term systems fixes, including collaboration across key agencies and vendors responsible for Medicaid eligibility functions.
Taking into account and balancing these considerations, some states may conclude that the best path forward is to adopt mitigations that pause terminations or suspend renewals altogether until automated temporary or permanent system solutions can be implemented.
Conclusion
With this SMDL, CMS seeks to mitigate coverage loss during unwinding and beyond for individuals who continue to be eligible for coverage but may be disenrolled due to state system errors—most critically (but not limited to) children. In light of the new, compulsory actions outlined in CMS guidance, states are tasked with analyzing whether their systems are programmed and operating consistent with federal renewal requirements and, if they are out of compliance, implementing immediate mitigations. This assessment and response must happen under a compressed timeframe, while states and their vendors simultaneously develop and implement new IT systems builds and processes to ensure permanent compliance with this and other federal renewal requirements. While this is not a new eligibility compliance issue, because it was newly uncovered during unwinding, it puts tremendous strain on already stretched state and CMS resources and capacity. The good news, while perhaps difficult to appreciate in this moment, is that the issue has been discovered, and permanent improvements to state eligibility systems will be made to fix it and ensure that eligible people remain covered.
[1] Social Security Act § 1903; 42 CFR Part 433, Subpart C; and 42 CFR Part 495. Also see this State Health and Value Strategies issue brief, Strategies for Supporting and Strengthening Medicaid Information Technology During the COVID-19 Crisis.
[1] Ex parte renewal means attempting to renew eligibility for all enrollees based on reliable information available to the state agency without requiring information from the individual.
[2] The Medicaid income eligibility limit for MAGI adults is commonly at or below 133% of the federal poverty level (FPL), while the median Medicaid/CHIP eligibility level for children is 255% of the FPL.
[3] While not included in the SMDL, another potential example is when a household is comprised of both MAGI and non-MAGI members and asset information is unable to be verified ex parte for one or more non-MAGI members of the household.
[4] States are required to conduct redeterminations of eligibility for all individuals enrolled in Medicaid and CHIP in compliance with federal regulatory requirements at 42 CFR §§ 435.916 and 457.343.
[5] Related penalties may include suspension of procedural terminations and/or civil monetary penalties of up to $100,000 per day if a state fails to submit or implement its corrective action plan.
[6] Social Security Act § 1903; 42 CFR Part 433, Subpart C; and 42 CFR Part 495. Also see this State Health and Value Strategies issue brief, Strategies for Supporting and Strengthening Medicaid Information Technology During the COVID-19 Crisis.