Mar, 29, 2024

CMS Releases Expansive Final Rule on Medicaid and CHIP Eligibility, Enrollment, and Renewal

Kinda Serafi, Patti Boozang, and Kaylee O’Connor, Manatt Health

On March 27, the Centers for Medicare & Medicaid Services (CMS) released a final rule, “Medicaid Program; Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment and Renewal Processes.” The expansive final rule, initially proposed in September 2022, is the first large-scale eligibility and enrollment rule released since two Affordable Care Act implementing regulations were finalized in March 2012 and July 2013.[1] The final rule, which largely aligns with the proposed rule with modest modifications, seeks to strengthen existing government-sponsored coverage program eligibility, enrollment, and renewal in an effort to minimize churn; align processes for enrollees; and reduce administrative burden on states. Specifically, the final rule:

  • Streamlines verification requirements for all Medicaid and Children’s Health Insurance Program (CHIP) enrollees.
  • Establishes new timeliness and process requirements at application, at renewal, and upon changes in circumstances for Medicaid and CHIP enrollees.
  • Extends for the first time modernized processes currently used to determine eligibility for MAGI populations (those whose eligibility is determined based on Modified Adjusted Gross Income, including children, parents, pregnant individuals, and expansion adults) to non-MAGI populations (e.g., people who are aged, blind, and disabled). This alignment includes eliminating the state option to require an in-person interview as part of the application and renewal processes and establishing that renewals may not be more frequent than every 12 months for non-MAGI populations.
  • Eliminates access barriers for children enrolled in CHIP by prohibiting premium lockout periods, waiting periods, and annual and lifetime benefit limitations.
  • Secures transitions of enrollee accounts between Medicaid and CHIP when a family income changes, changing their program eligibility.
  • Strengthens current Medicaid and CHIP record-keeping requirements.[2]

Perhaps the most notable change in the final rule from what was proposed is that CMS provides a three-year phased in timeline for states to comply with new requirements. Depending on the rule provision, states will need to come into compliance with the new requirements either upon the rule’s effective date, or 1 year, 18 months, 2 years, or 3 years thereafter (see the table below for CMS’ list of effective dates). CMS notes that this phased-in compliance approach intends to strike the balance of making the streamlined processes in the final rule available as soon as possible while also being mindful that states are devoting significant resources towards continuing to unwind the Medicaid continuous coverage requirement and coming into full compliance with underlying federal renewal requirements. Some states are already complying with the new federal guidance or have policy, operational, and IT system changes underway to align to the new rules; and all states will soon need to build upon their current platforms and planning processes to comply with all federal requirements.

Table: Compliance Timeframes[3]

Provision Compliance Date

Facilitate enrollment by allowing medically needy individuals to deduct prospective medical expenses (§§ 435.831 and 436.831)

Option available upon effective date

Establish new optional eligibility group for reasonable classification of individuals under 21 who meet criteria for another group (§ 435.223)

Option available upon effective date

Improve transitions between Medicaid and CHIP (§§ 431.10, 435.1200, 457.340, 457.348, 457.350, 600.330)

Upon effective date

Remove optional limitation on the number of reasonable opportunity periods (§§ 435. 956 and 457.380)

Upon effective date

Apply primacy of electronic verification and reasonable compatibility standard for resource information (§§ 435.952 and 435.940)

Upon effective date

Remove requirement to apply for other benefits (§§ 435.608 and 436.608)

12 months after effective date

Prohibit premium lock-out periods (§§ 457.570 and 600.525)
Upon effective date; 12 months after effective date for states sunsetting existing lock-out periods*

Prohibition on waiting periods in CHIP (§§ 457.65, 457.340, 457.350, 457.805, and 457.810)

12 months after effective date*

Prohibit annual and lifetime limits on benefits (§ 457.480)

12 months after effective date*

Agency action on returned mail (§§ 435.919 and 457.344)

18 months after effective date

Recordkeeping (§§ 431.17, 435.914, and 457.965)

24 months after effective date

Verification of Citizenship and Identity (§ 435.407)

24 months after effective date

Align non-MAGI enrollment and renewal requirements with MAGI policies (§§ 435.907 and 435.916)

36 months after effective date

Establish specific requirements for acting on changes in circumstances (§§ 435.916, 435.919, 457.344, and 457.960)

36 months after effective date

Establish timeliness requirements for determinations and redeterminations of eligibility (§§ 435.907, 435.912, 457.340, and 457.1170)

36 months after effective date

*Note: Policy will be effective 60 days after publication of the final rule; at that time, states will no longer be permitted to adopt new premium lock-out periods, waiting periods, or annual and lifetime limits on benefits. States with these existing policies in place will have 12 months to remove them (and establish a substitution monitoring strategy following removal of a waiting period). States with biennial legislatures that require legislative action to implement these requirements can request an extension of up to 24 months following the effective date of the final rule.

[1] The final 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.

[2] CMS finalized the provisions in the September 2022 proposed rule related to streamlining enrollment for Medicare Savings Programs on September 21, 2013 through the “Streamlining Medicaid; Medicare Savings Program Eligibility Determination and Enrollment” (Federal Register Vol. 88, No 182.). See this SHVS expert perspective for more information.

[3] See page 182 of CMS’ final rule, “Medicaid Program; Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment and Renewal Processes.”