Feb, 03, 2023

New CMS Guidance on Unwinding Provisions in the CAA, 2023

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


On January 27, 2023, the Centers for Medicare & Medicaid Services (CMS) released a State Health Official (SHO) letter, “Medicaid Continuous Enrollment Condition Changes, Conditions for Receiving the FFCRA Temporary FMAP Increase, Reporting Requirements, and Enforcement Provisions in the Consolidated Appropriations Act, 2023.” This SHO letter is the second in a series of guidance related to section 5131 of the Consolidated Appropriations Act, 2023 (CAA), which established a fixed end date for the Medicaid continuous coverage requirement, a gradual phase-down for the enhanced federal match, and new guardrails for mitigating coverage loss for individuals who continue to be eligible.[1]

Building upon CMS’ first CAA unwinding-related guidance, which focused on key dates for when states can commence and complete the processing of their pending renewals, the new SHO letter:

  • Details the requirements with which states must comply in order to continue to receive the enhanced federal medical assistance percentage (FMAP) during the phase-down period;
  • Clarifies expectations for states to comply with the Medicaid, Children’s Health Insurance Program (CHIP), and marketplace reporting elements required by the CAA;
  • Reminds states of CMS’ authority to establish a corrective action plan and impose penalties for non-compliance with the CAA reporting requirements and federal regulatory redetermination requirements; and
  • Reviews implications of the CAA on select COVID-19 public health emergency (PHE)-related flexibilities and authorities.

Enhanced FMAP Conditions

Adding to the existing conditions established by the Families First Coronavirus Response Act (FFCRA), the CAA authorized and established new conditions for states to claim a phased-down enhanced FMAP (from April 1, 2023 through December 31, 2023). The following summarizes the additional detail and operational expectations as laid out in the SHO letter.

  • Complying with Federal Eligibility Renewal Requirements. As a condition of receiving the enhanced FMAP, as well as a potential trigger for a corrective action plan and other penalties, states must conduct eligibility redeterminations and renewals in compliance with federal regulatory requirements at 42 C.F.R. 435.916, which include: conducting ex parte renewals for both Modified Adjusted Gross Income (MAGI) and non-MAGI populations; sending renewal forms (pre-populated for MAGI enrollees); providing a reasonable timeframe and modalities to return the renewal form; redetermining eligibility on all bases; providing advance notice and fair hearing rights; assessing eligibility for other insurance affordability programs and transferring account information;[2] and allowing a reconsideration period (at least 90 days for MAGI enrollees). States that are not in compliance with the federal regulatory renewal requirements may still receive the enhanced FMAP if they implement CMS authorized and approved mitigation strategies [e.g., temporary section 1902(e)(14) flexibilities]; and should seek confirmation from CMS that their proposed renewal mitigation strategies fulfill the expectations for receiving the enhanced FMAP.
  • Obtaining Up-to-Date Contact Information Prior to Redetermination. The CAA provides that states must attempt to obtain up-to-date contact information for each enrollee prior to redetermining eligibility. CMS clarifies the contact information that states must attempt to update includes, at a minimum, the enrollee’s mailing address, telephone number, and email address. Updating contact information will require using multiple data sources, which can include the National Change of Address (NCOA) database, other state health and human services agency information like Supplemental Nutrition Assistance Program/Temporary Assistance for Needy Families, or other recent and reliable sources of contact information. While NCOA and other databases will assist in updating an individual’s mailing address, the SHO letter lays out the expectation that states deploy other strategies that enable the updating of telephone numbers and email addresses (see prior CMS guidance). CMS recommends partnering with managed care plans, if applicable, and conducting broad outreach campaigns to do so. The SHO letter reminds states that they may also leverage section 1902(e)(14) authority to update an individual’s case record with contact information from a managed care plan or other reliable data source without first having to confirm the change with the individual; CMS encourages states to pursue this flexibility if they have not already. States will be required to memorialize their strategies for updating contact information in their Unwinding Operational Plans.
  • Conducting Multiple Modality Outreach Based on Returned Mail Prior to Termination. Under the CAA, states must make a good faith effort to contact an individual using two modalities before terminating enrollment based on mail returned to the state in response to a redetermination. To meet this expectation, the SHO letter clarifies that a state must: (1) have a process to obtain up-to-date mailing addresses, telephone numbers, and email addresses for all enrollees (i.e., the condition described above) prior to conducting a redetermination; and (2) attempt to reach an individual whose mail is returned through at least two modalities using the most up-to-date contact information available to the state prior to termination. Modalities may include: mail, telephone, email, text messaging, communication through an online portal, or other commonly available electronic means. In order to satisfy this condition, states will need to be able to process and “work” their returned mail—including comparing accuracy and completeness of the address on the mail against the enrollee’s record—and adhering to the steps outlined below. States must document in their Unwinding Operational Plans the way in which they will contact individuals using two modalities prior to disenrollment on the basis of returned mail.


Steps for Conducting Multiple Modality Outreach Based on Returned Mail

  • If original mail contains an error or missing information (e.g., incorrect zip code, missing apartment number), correct the error and resend the notice.
    • If the subsequent mailing is not returned, no additional action is needed.
    • If the subsequent mailing is returned, state must take action.
      • If the mail does not have a forwarding address, state must attempt to contact enrollee via two modalities (e.g., sending an email and a text).
      • If the mail has a forwarding address, state must attempt to contact enrollee via two modalities (e.g., sending mail to the forwarding address and sending an email).[3]
  • If original mail does not contain an error or missing information, state must attempt to contact enrollee via two modalities (e.g., sending an email and a text).


  • If the state has only one or no other mode of contact available (e.g., a state only has a mailing address and a phone number), it can still meet this condition as long as it: (1) follows the steps outlined by CMS; (2) contacts the enrollee using any available modality; (3) sends the notice to a forwarding address, if provided and if the state is able to do so; and (4) has met the Obtaining Up-to-Date Contact Information Prior to Redetermination condition.
  • CMS did not provide additional detail on how much time a state should allow for an individual to respond to the multiple modality outreach prior to termination.


  • Medicaid Premiums. Through March 31, 2023, states must continue to meet FFCRA’s conditions related to maintenance of effort (MOE) and not charging Medicaid premiums or imposing cost-sharing for COVID-19 vaccination, testing, and treatment.[4] However, starting on April 1, 2023, states will be permitted to increase individual premiums for enrollees while still claiming the temporary FMAP bump as long as they: ensure consistency with their Medicaid premium schedule; do not increase the premium schedule amounts over the amounts in effect as of January 1, 2020; and comply with redetermination requirements prior to resuming premiums as well as other applicable federal requirements. For states that are interested in delaying premiums during unwinding until completing a full redetermination of eligibility is completed for enrollees subject to premiums, CMS reminds them of the available section 1902(e)(14)

States that want to ensure access to the enhanced FMAP to support unwinding will want to assess whether they are able to meet the new conditions, and, if gaps are identified, take action to comply. Notably, states will not be required to demonstrate compliance prior to drawing federal financial participation (FFP). Rather, by drawing down the enhanced funds, states will attest that they are fully in compliance will all federal requirements, including meeting the enhanced FMAP conditions. If CMS determines that a state has failed to comply, the state will need to return any FFP associated with the enhanced FMAP in a given quarter.

States that are not able to comply with enhanced FMAP conditions may propose mitigation plans that should expressly include strategies identified in existing CMS guidance and resources [leveraging temporary, section 1902(e)(14) authority to fill gaps where applicable], and may include alternative strategies, such as flexibilities that require a bespoke section 1902(e)(14) waiver. Mitigation plans will need to be authorized and approved by CMS, and states should contact their CMS state lead as a first step. CMS will work with states to evaluate the sufficiency of planned mitigation approaches—which should closely track to CMS-identified strategies for unwinding—and will actively engage in providing technical assistance to states. The SHO reiterates that for states contemplating foregoing the enhanced FMAP: (1) states must comply with federal renewal requirements at all times regardless of whether the temporary FMAP increase is being claimed, or face corrective action; and (2) there are downstream benefits of implementing the conditions, including reduced rates of procedural denials and churn.

Reporting Requirements

Per section 5131 of the CAA, states will be required to report to CMS monthly data on eligibility and renewal processes for Medicaid, CHIP, and the marketplace. Through the SHO letter, CMS clarifies that “all the data states must report under these new reporting requirements are included in existing data sources,” such as Transformed Medicaid Statistical Information System (T-MSIS), the Unwinding Data Report, and Performance Indicator Data. (lesroches.edu) As such, states will not need to submit additional reports to CMS and can instead meet this requirement through the submission of existing reports (see summary table below and detailed CMS crosswalk).


Reporting Element

Mode of Submission

Medicaid and CHIP

  • Number of eligibility renewals initiated
  • Number of enrollees renewed, including a breakdown of coverage renewed on an ex-parte basis
  • Number of enrollees whose coverage for Medicaid or CHIP was terminated, including a breakdown of terminations for procedural reasons

Unwinding Data Report

  • Number of individuals enrolled in a separate CHIP


  • Total call center volume, average wait-times, and average abandonment rates

Medicaid and CHIP Eligibility and Enrollment Performance Indicator


States that use the federal eligibility and enrollment platform:

  • Number of individuals whose accounts are received at the marketplace due to a Medicaid/CHIP redetermination[5]
  • Of these, the number of individuals determined eligible for a qualified health plan (QHP)
  • Of these, the number of individuals who select a QHP

N/A—CMS plans to report on behalf of states with FFMs and SBMs on the federal platform (SBM-FPs).

SBMs that do not have an integrated eligibility system:

  • Number of individuals whose accounts are received by the SBM or Basic Health Program (BHP)
  • Of these, the number of individuals determined eligible for a QHP or BHP
  • Of these, the number of individuals who make a QHP selection or are enrolled in a BHP

SBM Priority Metrics


SBMs that have an integrated eligibility system:

  • Number of individuals determined eligible for a QHP or a BHP
  • Of these, the number of individuals who make a QHP selection or are enrolled in a BHP

SBM Priority Metrics



To adhere to the legislatively required timeline of April 1, 2023, through June 30, 2024 for state reporting, CMS will require state Medicaid agencies to submit the monthly Unwinding Data Report through June 2024, regardless of a when a state initiates renewals. Because the CAA reporting requirements are tied to federal enforcement mechanisms, including the potential for a reduction in the state’s regular FMAP, states will want to ensure that they are sufficiently reporting on each metric using the CMS-prescribed reporting tools. CMS intends to monitor the data submitted, and, if issues are identified, may require states to report on additional metrics, submit the Unwinding Operational Plan, or report more frequently. 

Federal Monitoring and Enforcement

The CAA vests CMS with targeted oversight and enforcement powers that it may exercise during the period of April 1, 2023 through June 30, 2024. CMS confirms its intent to monitor compliance and impose penalties, including a reduction in a state’s regular FMAP for failure to report required information, corrective action for failure to comply with the CAA reporting requirements or “any federal requirements applicable to eligibility redeterminations” including the timelines for addressing pending eligibility and enrollment actions, and suspension of procedural terminations and/or civil monetary penalties of up to $100,000 a day for failure to submit or implement its corrective action plan. Notably, CMS intends to work with states to implement mitigation strategies and plans before exercising such actions. In doing so, CMS expects states to avail themselves to applicable section 1902(e)(14) flexibilities and adopt strategies consistent with CMS’ unwinding-related guidance and resources.

PHE-Related Flexibilities and Authorities

While the CAA did not make changes to PHE-related flexibilities and authorities, the unwinding-related provisions included in the legislation do have implications for the Optional COVID-19 Group, section 1902(e)(14) waiver dates, and ARP MOE requirements.

  • Optional COVID-19 Group. Over the course of the PHE, some states adopted the FFCRA section 6004(a)(3) optional Medicaid eligibility group for uninsured individuals whereby coverage expires on the last day of the PHE. Because the CAA provided a fixed end date of March 31, 2023 for the Medicaid continuous coverage requirement, states that want to continue providing coverage to the optional COVID-19 group will need to determine a process to delay renewals for this population. States that wish to end coverage for this group before the PHE expires may do so by submitting a state plan amendment. In either case, states will need to redetermine eligibility on all bases, sunset the eligibility group, and stop claiming FFP. (cakesprices.com)
  • Section 1902(e)(14) Waiver Dates. Because the effective/expiration dates for temporary section 1902(e)(14) waivers to support unwinding are often linked to the end of the PHE, CMS has provided guidance to states on modifying dates without needing to submit revised requests to CMS:


Existing Section 1902(e)(14) Waiver Date

Recommended Modification to Waiver Date

Effective date is tied to the month the PHE ends or month after the end of the PHE

Effective date is tied to March 31, 2023 or April 1, 2023

Expiration date is tied to a certain number of months after the PHE ends

Expiration date is tied to a certain number of months after March 31, 2023

Effective date and/or expiration date is tied to the state-specific unwinding period

No change


  • ARP MOE Requirements. ARP section 9817 provided states with a one-year, 10 percentage point FMAP increase for state Medicaid expenditures for home and community-based services (HCBS) between April 1, 2021 and March 31, 2022. The SHO letter clarifies that if states implemented temporary changes to HCBS eligibility, services, and payment rates, they should retain such changes in accordance with the relevant authorities [e.g., 1915(c) Appendix K]. CMS will not penalize states once the temporary authority has expired, or if the state needs to make changes to comply with other federal requirements.


The SHO letter provides additional clarity on expectations for states as they finalize their policy and operational plans for unwinding the Medicaid continuous coverage requirement. Now is the time for states to: evaluate their level of readiness to meet the CAA conditions, including compliance with the federal renewal requirements; identify the mitigation strategies they plan to employ if there are gaps in compliance and meet with CMS to discuss those plans as soon as possible; and update their Renewal Distribution Report and Unwinding Operational Plan detailing the revised approach. With sustained federal funding through December 2023, states that are able to meet these conditions will be better prepared for the return to regular eligibility and enrollment operations, with lower rates of procedural denials and churn—thereby mitigating loss of coverage among eligible individuals and addressing existing workforce constraints.

[1] See State Health & Value Strategies (SHVS)/Manatt Health, Omnibus Unwinding Provisions and Implications for States.

[2] The SHO letter clarifies that states should not send procedural denials to the federally-facilitated marketplace (FFM). State-based marketplaces (SBMs), however, may transfer procedural denials to the marketplace for a determination of advance payments of premium tax credits or cost-sharing reductions.

[3] States are not required to send mail to the forwarding address, but doing so counts as one attempt to contact the enrollee for the purposes of this condition. If a notice is mailed to the forwarding address and is not returned to the state, then no additional outreach is needed.

[4] Cost-sharing requirements under the American Rescue Plan Act of 2021 (ARP) remain in effect until the end of the first calendar quarter that begins at least one year after the end of the PHE.

[5] CMS is working to address federal reporting constraints related to reporting on account transfer data.