New CMS Guidance on Expectations for Unwinding Federal Medicaid Continuous Coverage
Kinda Serafi, Manatt Health
On March 3, the Centers for Medicare & Medicaid Services (CMS) released a State Health Official (SHO) letter, “Promoting Continuity of Coverage and Distributing Eligibility and Enrollment Workload in Medicaid, the Children’s Health Insurance Program (CHIP), and Basic Health Program (BHP) Upon Conclusion of the COVID-19 Public Health Emergency.” The highly anticipated guidance clarifies CMS expectations for state Medicaid and CHIP agencies as they prepare to process outstanding eligibility and enrollment actions when the federal Medicaid continuous coverage requirement ends. When continuous enrollment discontinues, states will resume the administration of renewals for Medicaid eligibility, some of which have been pending for two years. Nearly 85 million people enrolled in Medicaid will have their eligibility redetermined, triggering a high risk of coverage loss of eligible individuals due to administrative reasons.
The current Medicaid continuous coverage requirement, enacted by the Families First Coronavirus Response Act (FFCRA) in March 2020, prohibits states from disenrolling individuals from Medicaid for the duration of the public health emergency (PHE) as a condition of accessing the enhanced Medicaid funding of 6.2 percentage points included in FFCRA. The PHE is currently slated to end on April 15, per the latest renewal in January, and the continuous coverage requirement would therefore end on April 30. As part of the release of the guidance, CMS reiterated the United States Department of Health and Human Services’ (HHS’) previous commitment to provide states with 60 days’ notice prior to the expiration of the PHE. Given the lack of notice from HHS within the promised 60-day window ahead of April, another extension of the PHE is expected, which would move the end of the continuous coverage requirement to July 31, 2022.
The new CMS guidance builds upon and clarifies previously released SHO letters that were released in August 2021 and December 2020 to outline state obligations and strategies with respect to redetermining eligibility for individuals. Below, we summarize key takeaways laid out in the new guidance related to timelines and operational strategies states can leverage to mitigate churn and ensure eligible individuals remain enrolled in coverage.
Overview of the Unwinding SHO Letter
Unwinding Operational Plan. Per the guidance, states will be expected to develop an “unwinding operational plan” that includes a description of how states will address outstanding eligibility and enrollment actions in a way that reduces erroneous loss of coverage and enables a sustainable distribution of renewals in future years. With this requirement, CMS is demonstrating a concern about mitigating coverage losses both now and in the future by encouraging states to spread redeterminations across a longer period of time now as a strategy to spread out annual redeterminations in upcoming years. In conjunction with this SHO letter, CMS released an updated planning tool to support states in the development of their unwinding operational plan. The planning tool highlights specific areas for which states will need to plan as they resume eligibility and enrollment operations. While states will not be expected to submit these unwinding plans for CMS approval, they will need to make plans available upon request. CMS encourages states to make their plans publicly available and solicit input on the implementation approach.
12-Month Unwinding Period. The SHO provides additional clarification to August 2021 guidance in that states have up to 12 months after the end of the PHE to complete post-enrollment verifications, redeterminations based on changes in circumstances, and renewals. In response to state concerns about completing renewals exactly within a 12-month period, CMS will consider a state in compliance if it has: (1) initiated all renewals for the state’s entire Medicaid and CHIP caseload by the last month of the 12-month unwinding period; and (2) completed all such actions by the end of the 14th month after the end of the PHE. CMS also clarifies that states may use information gathered during a renewal that was initiated up to two months prior to the end of the PHE to take final action in the month after the month in which the PHE ends.
Process for Completing Renewals During the Unwinding Period. The SHO letter reiterates previously issued guidance released in August 2021 that states must initiate a full renewal for all individuals during the 12-month unwind period, including those for whom the state already conducted a renewal during the PHE. For example, if a state previously found someone ineligible but did not terminate eligibility during the PHE, the guidance clarifies that the state must redetermine eligibility prior to terminating eligibility in case circumstances have changed again. When conducting the full renewal, states must comply with federal requirements including conducting an ex-parte renewal by checking available information and data sources first and then requesting documentation when eligibility is unable to be verified using available information and data sources. Per the guidance, states have flexibility to initiate renewals at any time during the unwinding period, both for individuals for whom the state did not conduct a renewal during the PHE and for individuals whom the state previously determined ineligible for renewal within the previous 12 months.
Risk-Based Approach for Prioritizing Pending Actions. Consistent with December 2020 guidance, CMS expects states to adopt a risk-based approach when prioritizing pending eligibility and enrollment actions. A risk-based approach could be:
- Population-based, which would prioritize outstanding actions based on characteristics of cohorts or populations that are likely to have become eligible for more expansive benefits or eligible for different coverage (e.g., individuals who have reported a decrease in income);
- A time or age-based approach, which prioritizes cases based on the length of time the case is pending;
- A hybrid approach, which combines the population and time-based approaches; or
- A state-developed approach, on the condition that it meets the goals of maintaining coverage of eligible individuals, minimizes the extent to which potentially ineligible individuals remain enrolled, achieves a sustainable renewal schedule, and meets the 12-month unwinding timeline expectations.
Distributing Renewals. When establishing a distribution schedule that processes renewals over a 12-month unwinding period, CMS recommends that states initiate no more than one-ninth of their “total caseload” of renewals in a given month–both to mitigate the risk of churn now and establish a sustainable renewal schedule for the future. The guidance emphasizes that an evenly-distributed renewal plan will mitigate future challenges states might experience if they process a large volume of actions in a short period of time (creating a renewal “bulge”) and will help to minimize errors in processing renewals and inappropriately terminating coverage if cases are processed in a more compressed time period. CMS defines a total caseload as all Medicaid and CHIP individuals enrolled at the end of the month prior to the beginning of the unwinding period; total caseload can be based on either the total number of individuals or households enrolled in the program. CMS will require states to submit their plan through a CMS-provided form that has not yet been released. The plan will need to describe how a state will distribute their renewals and will use the information provided to identify states at greatest risk of inappropriate coverage loss. CMS intends to follow-up with states to ensure mitigation strategies are put into place that reduce inappropriate terminations and establish a sustainable workload in future years.
Renewal Alignment Strategies. While states may not shorten an individual’s coverage period to shorter than 12 months, states may coordinate their unwinding strategy by aligning to other eligibility actions. For example, states may delay Medicaid renewals to align with a Supplemental Nutrition Assistance Program (SNAP) recertification period or choose to align renewals for all household members if they are on different renewal schedules. CMS encourages states to identify Medicare-eligible individuals who missed their Medicare initial enrollment period and advise them to enroll in Medicare during their initial enrollment period (the seven month period that starts three months before an individual is first eligible to enroll in Medicare) or during the current Medicare general enrollment period.
Change in Circumstances. As a result of the federal continuous coverage requirement, states may have not conducted mid-year redeterminations when individuals reported a change in circumstances. The SHO clarifies that during the unwinding period, states must conduct a full renewal prior to taking an adverse action based on a change in circumstances. However, the state does not need to conduct a full redetermination if a renewal was completed within the prior 12 months that resulted in a determination that the individual continues to meet eligibility criteria and the state received information that the individual’s circumstances changed after the last renewal was completed. This exception permits states to terminate eligibility based on that change of circumstances.
Section 1902(e)(14)(A) Strategies. Section 1902(e)(14)(A) of the Social Security Act allows for waivers “as are necessary to ensure that states establish income and eligibility determinations systems that protect beneficiaries.” Under this waiver authority, CMS lays out five potential targeted enrollment strategies that can be used to facilitate renewals that lead to fewer procedural terminations during the 12-month unwinding period. CMS will also consider additional 1902(e)(14)(A) strategies submitted by states. The targeted enrollment strategies include temporarily permitting:
- Reliance on SNAP data renewals for non-disabled individuals under age 65, despite differences in household composition and income counting rules;
- Ex-parte renewals for households whose attestation of zero-dollar income was verified within the last 12 months (at application or renewal) when no information is returned through data sources;
- Renewals on an ex-parte basis for individuals for whom no information was returned by the Asset Verification System Data within a reasonable timeframe;
- The acceptance of updated individual contact information provided by Medicaid managed care plans without additional confirmation from an individual; and
- An extension of the timeframe to take final administrative action on fair hearing requests, on the condition that states provide benefits pending the outcome of the fair hearing and without recoupment if the final decision is adverse to the individual.
States can request Section 1902(e)(14) waiver authority by submitting a letter to their CMS state lead.
Transitioning Medicaid, CHIP and BHP Individuals to the Marketplace. The SHO reiterates the importance of ensuring smooth transitions to the Marketplace for individuals found ineligible for Medicaid, CHIP, or BHP. The SHO emphasizes strategies that support transitions, including: improving notice language in consumer communication; transmitting all available contact information including email addresses, phone numbers, and consumer communication preferences to the Marketplace; and transmitting in the account transfer all eligibility information the state has on an individual.
Monitoring State Progress and Corrective Action Plans. All states will be required to submit monthly data for a minimum of 14 months through a forthcoming CMS-developed reporting template. CMS will use the forthcoming template to monitor state progress in completing pending applications and initiating renewals, along with the disposition of such renewals. CMS will request that states report additional data and/or report more frequent information if the state does not meet expected timelines or where data demonstrates potential non-compliance, including potential erroneous disenrollments. For states that are out of compliance, CMS may require the submission of a corrective action plan that details strategies and timelines for coming into compliance.
Payment Error Rate Measurement (PERM) or Medicaid Eligibility Quality Control (MEQC) Programs. Eligibility and enrollment actions that were delayed as a result of the PHE will not be considered untimely for the purposes of PERM or MEQC programs if a state complies with the timelines outlined in the SHO. The SHO also clarifies that states with approved 1902(e)(14)(A) waivers will be considered in compliance with Medicaid statute and regulation for the purposes of PERM and MEQC reviews.
In addition to the new guidance, CMS released materials for states and managed care organizations to support smooth coverage transitions post-PHE. The Medicaid and CHIP Continuous Enrollment Unwinding Communications Toolkit provides states and groups that assist people with Medicaid coverage with messaging strategies, including social media and outreach products, email and text message templates, and call center scripts. The toolkit will be updated on an ongoing basis. Tracking Medicaid Coverage Post the Continuous Coverage Requirement: Using Data Dashboards to Monitor Trends examines the current status of data collection to assess Medicaid enrollment and retention and describes some of the best practices states should consider when developing a data dashboard to display this type of information. For more information on state strategies to support Medicaid/CHIP coverage retention and plan for the end of the continuous coverage requirement, see the State Health and Value Strategies (SHVS) resource page.
CMS also released an updated slide deck on strategies that managed care plans can use to maximize continuity of coverage during the unwinding period. Updates to this deck include new information on how plans can partner with states to assist in outreach and engagement, including obtaining updated enrollee contact information, enabling plans to conduct outreach to individuals who lose Medicaid or CHIP coverage, and transitioning individuals to the Marketplace. Significantly, the updates clarify that “there are no federal regulatory barriers that prevent states and managed care plans from working together to help individuals who are terminated from Medicaid and CHIP coverage, including transitions to other sources of coverage.” The updated slides clarify that Medicaid managed plans can take certain steps to provide information and conduct outreach to enrollees about the eligibility renewal process without violating Medicaid managed care marketing regulations. For example, plans may conduct outreach to people who have lost coverage as long as the communication is not intended to influence an individual to enroll in a specific Medicaid managed care plan (or to not enroll in, or disenroll from another specific Medicaid managed care plan).
With the PHE expected to sunset in July, the new CMS guidance gives states and stakeholders several months to plan for an orderly redetermination process, aimed at reducing churn due to administrative barriers. Particularly in light of evidence that risks to coverage are almost certain to fall disproportionately on Black and Latino(a) individuals who have experienced significant harm and dislocation during the PHE, CMS’ focus on unwinding is consistent with the agency’s strategic goals of promoting both access and equity.