Sep, 26, 2024

CMS Releases Guidance Outlining Expectations for State Compliance with Medicaid and CHIP Renewal Requirements

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

Introduction

On September 20, 2024, the Centers for Medicare & Medicaid Services (CMS) issued guidance detailing the timeline and expectations for states to fully comply with federal Medicaid and Children’s Health Insurance Program (CHIP) renewal requirements. This guidance—including a CMCS Informational Bulletin (CIB) and an accompanying template and slide deck—was developed in response to CMS identifying a number of issues with states’ eligibility and enrollment (E&E) systems and processes during the “unwinding” period. To address these challenges and prevent barriers to coverage and care for enrollees, CMS worked with states to implement mitigations,[1] and made clear its expectation that all states eventually achieve full statutory and regulatory compliance with federal renewal requirements.

With this guidance, CMS is requiring every state to submit by December 31, 2024 a plan (using CMS’ template) that assesses state compliance with the federal renewal requirements at 42 C.F.R. §§ 435.916 and 457.343 and describes the plan for addressing deficiencies to achieve full compliance by December 31, 2026.

State Expectations

CMS, in its CIB and accompanying template, stipulates that states will need to include the following elements in their compliance plan due in December 2024:

  • Compliance Assessment. CMS is requiring states to assess compliance against each renewal requirement and directs states to review CMS renewal guidance (including forthcoming guidance[2]) against state systems, policies, and operations. If a state attests that it is complying with a renewal requirement, the state must also demonstrate compliance by providing documentation/other evidence[3] and a description of state policies and processes.
  • Plan for Addressing Deficiencies. For each deficiency identified as part of the compliance assessment, states must describe key activities/milestones and associated timelines for coming into compliance. States may propose to CMS to maintain and/or initiate mitigations [e.g., continue certain section 1902(e)(14) waivers] until compliant.


States that do not comply with all federal renewal requirements must submit to CMS every six months updates on key activities/milestones until deemed fully compliant, with the expectation that states achieve full compliance two years after submitting the initial plan to CMS.

CMS Monitoring and Oversight

In addition to reviewing states’ compliance plan updates, CMS will monitor state progress in complying with the federal renewal requirements through reviewing state renewal data and other available information. CMS also commits to posting states’ approved compliance plans to Medicaid.gov in an effort to promote transparency. According to CMS, states that are not meeting their milestones and are at risk for not achieving compliance by December 2026 may be subject to additional requests for information and/or more frequent reporting of their progress. States that fail to demonstrate compliance with all renewal requirements by December 2026, may face additional agency action based on CMS’ assessment of the state’s circumstances and the nature of the non-compliance.

Long-Term E&E Considerations

Because CMS plans to assess state compliance based on regulations in effect when the template is submitted, states generally will not need to demonstrate compliance with the provisions included in CMS’ Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes Final Rule (the E&E final rule).[4] (See CMS’ supplemental slide deck for information on renewal-related provisions included in the rule.) However, as states and vendors/contractors take on the work of updating and redesigning IT systems, they may identify efficiencies by incorporating additional changes to comply with the E&E final rule (e.g., to align Modified Adjusted Gross Income (MAGI) and non-MAGI renewal processes).[5]

States may also identify opportunities to streamline, automate, and modernize their eligibility systems, ultimately improving the Medicaid program for enrollees and day-to-day operations for state staff in the long-term. States should consider pursuing advance planning documents and look to maximize the 90% enhanced federal match rate available for their IT systems work, specifically the “design, development, or installation of mechanized claims processing and information retrieval systems, including on designing, developing, and installing approved processes, systems, and activities necessary to ensure compliance … ”

[1] Also see CMS, Preliminary Overview of State Assessments Regarding Compliance with Medicaid and CHIP Automatic Renewal Requirements at the Individual Level, as of September 21, 2023.

[2] CMS plans to issue a suite of sub-regulatory guidance through year-end to provide “clarity on renewal requirements across several key topics, including income verification, ex parte renewals, and requirements related to renewal forms.”

[3] CMS notes that it will “provide additional guidance on appropriate documentation and other evidence of renewal compliance, which could include systems, policy, and operational documentation.”

[4] The E&E final rule took effect June 3, 2024, but phases in new requirements through June 3, 2027, with compliance timeframes varying by provision.

[5] For more on part two of the final rule, see this State Health and Value Strategies webinar.