Sep, 16, 2022

CMS Proposed Rule on Medicaid and CHIP Eligibility, Enrollment, and Renewal

Kinda Serafi and Melinda Dutton, Manatt Health


On August 31, the Centers for Medicare & Medicaid Services (CMS) released a new proposed rule, “Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes.” The expansive proposed rule was developed in response to CMS’ Access to Coverage and Care Request for Information[1] issued in February 2022 and is the first large-scale eligibility and enrollment rule released since the two Affordable Care Act implementing regulations were finalized in March 2012 and July 2013.[2] The proposed rule seeks to strengthen existing eligibility, enrollment, and renewal operational processes in an effort to close gaps and extend best practices that were identified by CMS and states in the course of preparing for the end of the Medicaid continuous coverage requirement under the federal public health emergency (PHE).[3]

Overview of the Proposed Rule

The proposed rule:

Streamlines verification requirements for all Medicaid and Children’s Health Insurance Program (CHIP) enrollees.[4] The proposed rule seeks to further simplify verification processes by: expanding the forms of standalone verification of citizenship to include verification of birth with a state vital statistics agency and/or verification of citizenship with the federal Systemic Alien Verification for Entitlements Program; removing the state option to limit the number of reasonable opportunity periods to establish citizenship or immigration status; limiting the requirement for individuals to apply for other benefits as a condition of eligibility; clarifying that current requirements to verify financial eligibility using available data sources apply to both income and resources and that states are not permitted to request additional information from an individual if the resource information is reasonably compatible with the information received from an electronic data source; and giving states the option to allow individuals to deduct predictable non-institutional anticipated medical and remedial care expenses from their income in order to become eligible under the optional Medically Needy eligibility group, eliminating institutional bias and reducing administrative processes inherent with the Medically Needy spenddown program.

Establishes new timeliness and process requirements at application, at renewal, and upon changes in circumstances for Medicaid and CHIP enrollees.[5] Current processing timeframe regulations require that states determine applications based on disability within a maximum period of 90 calendar days and within 45 days for individuals applying on all other bases. The proposed rule expands on the current requirements by creating a new reconsideration period—30 days at application and 90 days upon changes in circumstances—similar to the reconsideration process that currently exists at renewal. The proposed rule also establishes time period definitions and new processing timeframes for renewals, changes in circumstances, and anticipated changes in circumstances (e.g., when a child turns 19).  Recognizing that returned mail results in a significant number of enrollees who continue to meet all eligibility requirements being terminated from coverage, the proposed rule lays out expectations for responding to returned mail.

Extends for the first time modernized processes currently used to determine eligibility for Modified Adjusted Gross Income (MAGI) populations (including children, parents, pregnant individuals, and expansion adults) to non-MAGI populations (e.g., aged, blind, and disabled).[6] Current regulations afford MAGI populations a number of enrollment and renewal simplifications that make it easier for individuals to get and keep coverage. The proposed rule seeks to extend many of these simplifications to non-MAGI populations, who are more likely to live on fixed-incomes and thus remain financially eligible for coverage, and who are more susceptible to administrative barriers due to age or disability. For example, the proposed rule: eliminates the state option to require an in-person interview as part of the application and renewal processes and establishes that renewals may not be more frequent than every 12 months, requires that a prepopulated form be sent to non-MAGI populations whose eligibility can not be verified ex-parte, establishes a 30-day time period to return renewal forms, and creates a new 90-day reconsideration period.

Eliminates access barriers for children enrolled in CHIP.[7] CMS proposes a number of sweeping CHIP enrollee protections—prohibiting premium lock-out periods, waiting periods, and annual and lifetime benefits (e.g., on dental and orthodontia coverage)—that will have a considerable impact on ensuring continuity of coverage for CHIP-enrolled children.

Secures transitions of enrollee accounts between Medicaid, CHIP, and the Basic Health Program (BHP).[8] Under current regulations, when an individual is found ineligible for Medicaid, the state must determine potential eligibility for other insurance affordability programs and transfer the individual’s information to the appropriate program. State agencies are not, however, required to transfer an individual’s account when an enrollee does not respond to a renewal form or other requests for information. As a result, individuals are sometimes terminated from coverage for procedural reasons without having their eligibility determined and seamlessly transitioned to the appropriate eligibility program. The proposed rule seeks to address this gap by improving transitions for children between Medicaid and states with a separate CHIP agency. Per the preamble, 40 states have a separate CHIP; this includes two states with only a separate CHIP and 38 states with both a Medicaid expansion and a separate CHIP.

Strengthens current Medicaid and CHIP record-keeping requirements.[9] State Medicaid and CHIP agencies are required to maintain records for all Medicaid and CHIP applicants and current enrollees to support eligibility decisions, address challenges through fair hearing requests, and enable oversight and monitoring for state and federal auditors. The proposed rule seeks to strengthen current regulatory requirements and respond to the United States Department of Health and Human Services (HHS) Office of Inspector General reports and Payment Error Rate Measurement findings that Medicaid and CHIP case records sometimes lack sufficient documentation. The proposed rule details specific records and documentary evidence that must be retained as part of each electronic case record and sets out timeframes for how long Medicaid and CHIP records must be maintained. Per the preamble, CMS notes that states are in various stages of electronic record keeping and that a portion of non-MAGI enrollee case records are currently in a paper-based format.

Facilitates enrollment into Medicare Savings Programs (MSPs), especially for those who are dually eligible for Medicare and Medicaid.[10] The proposed rule seeks to facilitate enrollment and retention in MSPs in an effort to increase the number of low-income Medicare enrollees who receive assistance with paying for their premiums and cost sharing; in 2022, the Medicare Part B premium was $170.10 per month. MSPs include the following mandatory Medicaid eligibility groups: Qualified Medicare Beneficiary, Specified Low-Income Medicare Beneficiary; and Qualifying Individuals.


CMS seeks comment on reasonable implementation timelines for each requirement, acknowledging that a state’s ability to comply with the proposed requirements will depend on their workforce and IT systems’ capacity and need to make state statutory and/or regulatory changes, among other factors. States also will be actively moving through their backlog of pending redeterminations at the end of the PHE, which is now expected to occur in 2023. Per the proposed rule’s preamble, CMS is considering adopting an effective date of 30 days following the publication and a separate compliance date (e.g., 90 days, six months, and/or 12 months) following the effective date, which will vary by requirement. 

With this proposed rulemaking, the Biden administration is seeking to remove unnecessary barriers for eligible individuals to enroll in and maintain their public health insurance coverage—at a time when experts have estimated that as many as 15 million individuals, or 17.4% of current Medicaid and CHIP enrollees, could lose coverage due to the impending unwinding of the continuous coverage requirement under the federal PHE.[11] If CMS finalizes the proposed rule in early 2023, the new requirements will roll out at the same time that the PHE is expected to end. If these rules are finalized, state Medicaid and CHIP agencies will be faced with considerable work to begin planning for and implementing these changes, most of which will require considerable policy, IT systems, and operational process changes. This tension—between the imperative to maintain coverage for those eligible for Medicaid and CHIP and the implementation challenges faced by states—is likely to play out in the public comment period ahead and will be left to CMS to reconcile in the final rule.

Comments on the proposed rule are due no later than November 7, 2022.


[1] For more on the CMS Access to Coverage and Care Request for Information, see the Manatt on Health analysis.

[2] The new proposed rule is also responsive to two of President Biden’s executive orders: Strengthening Medicaid and the Affordable Care Act and Continuing to Strengthen Americans’ Access to Affordable, Quality Health Coverage.

[3] For more on the Medicaid continuous coverage requirement and other flexibilities under the PHE, see the State Health and Value Strategies expert perspective, CMS Guidance on Expectations for Unwinding Federal Medicaid Continuous Coverage.

[4] 42 C.F.R. § 435.407; 42 C.F.R. §§ 435.956 and 457.380; 42 C.F.R. § 435.608; 42 C.F.R. § 435.952; 42 C.F.R. § 435.831.

[5] 42 C.F.R. § 435.907; 42 C.F.R. § 435.912; 42 C.F.R. §§ 435.919 and 457.344.

[6] 42 C.F.R. § 435.907; 42 C.F.R. § 435.916.

[7] 42 C.F.R. §§ 457.570 and 600.525(b)(2); 42 C.F.R. §§ 457.65, 457.340, 457.350, 457.805, and 457.810; 42 C.F.R. § 457.480.

[8] 42 C.F.R. §§ 435.1200, 457.340, 457.348, and 457.350; 42 C.F.R. §§ 435.1200, 457.340, 457.348, and 457.350.

[9] 42 C.F.R. §§ 431.17, 435.914, and 457.965.

[10] 42 §§ C.F.R. 435.4, 435.601, 435.911, and 435.952; 42 C.F.R. § 435.601; 42 C.F.R. § 435.909; 42 C.F.R. 406.21.

[11] United States HHS, Office of the Assistant Secretary for Planning and Evaluation, “Unwinding the Medicaid Continuous Enrollment Provision: Projected Enrollment Effects and Policy Approaches,” August 19, 2022.