CMS Streamlines Medicaid, CHIP Renewal And Enrollment In Final Rule

Dive Brief:

• The Biden administration has finalized a rule aimed at simplifying enrollment and renewal in Medicaid that was applauded by patient advocates and safety-net health plans for removing barriers to coverage. However, the rule could put additional burden on resource-strapped states overseeing the program.
• The final rule released Wednesday standardizes enrollment processes nationwide and includes a number of provisions meant to protect consumers and make it easier for eligible individuals, including children, to stay covered, the Biden administration said.
• Currently, states have a large degree of latitude in administering Medicaid operations, causing notable variation in enrollment and renewal processes. Streamlining Medicaid administration has been a key priority for the CMS as states continue rechecking members’ eligibility for the safety-net program after a pause during the COVID-19 pandemic.

Dive Insight:

Medicaid and the Children’s Health Insurance Program, or CHIP, swelled during COVID to cover more than one in four Americans. The programs are valuable sources of healthcare coverage for low-income individuals, but can be difficult for beneficiaries to apply for and remain on due to a bevy of administrative hoops.

Such procedural barriers have been exacerbated by Medicaid redeterminations, which began last spring as states resumed eligibility checks. At least 19.2 million people have been removed from Medicaid because of redeterminations to date, according to a KFF tracker. Almost three-fourths of individuals have lost coverage for procedural reasons like missing paperwork instead of actual ineligibility.

The new final rule should ameliorate that administrative burden and help reduce gaps in coverage for Medicaid beneficiaries, experts said.

The rule is the “most robust and meaningful” regulation streamlining Medicaid eligibility since rules implementing the Affordable Care Act were finalized a decade ago, said Kinda Serafi, a partner with health law and business consultancy Manatt Health, via email.

The rule requires states to give people applying to Medicaid for the first time at least 15 days to provide additional documentation if needed. People renewing coverage will have at least 30 days.

In addition, states won’t be allowed to conduct renewals more than once a year. As of 2021, six states — Minnesota, New Hampshire, Texas, Utah, Washington and West Virginia — require regularly scheduled renewals for certain enrollees more frequently than every 12 months, the CMS said.

The rule also requires states to provide a 90-day reconsideration period for renewal applicants who submit documentation after being terminated. And, states aren’t allowed to require beneficiaries to come in for in-person interviews for the purposes of Medicaid application or renewal.

Under the rule, states are also required to allow individuals to submit Medicaid applications through a number of modalities, including by telephone and online.

Such provisions will particularly help the aged and disabled populations, which are more likely to need Medicaid coverage and fall afoul of administrative barriers, according to Serafi.

“This final rule by CMS makes it easier for people who qualify for coverage to receive it,” said Margaret Murray, CEO of safety-net plan group the Association for Community Affiliated Plans, in a statement Wednesday.

As for CHIP, the rule eliminates annual and lifetime limits on coverage and eliminates waiting periods for coverage. It also prohibits states from locking children out of CHIP coverage if their family is unable to pay premiums.

As of 2020, 12 states imposed the maximum 90-day lockout period as a penalty for nonpayment, according to the KFF.

Joan Alker, executive director of the Georgetown University Center for Children and Families, said she was “so pleased” to see the CMS eliminate waiting periods for CHIP.

“Goodbye and good riddance,” Alker said in a statement Wednesday.

However, there are concerns that the rule — which may require states to change eligibility systems and enrollment processes — could create additional burden for state Medicaid departments already struggling to slog through redeterminations.

The rule is also projected to run states $2.6 million in one-time administrative costs — but save them $66 million a year, the CMS said. And, the Biden administration is giving states three years to phase in the new requirements.

“We recognize that many of the provisions … will generate upfront costs,” regulators wrote in the rule. But “we believe the changes will create administrative savings that will continue to accrue in the future.”

Overall, the CMS expects the rule to result in $37.4 billion in additional health spending over the next five years for the federal government and another $23.2 billion for the states.

However, it should save federal and state governments $15.4 billion in reduced subsidies in the Affordable Care Act marketplaces from more beneficiaries remaining on Medicaid.

Wednesday’s regulation is the second rule finalizing provisions from a rule proposed in September 2020. The first, finalized in September 2023, made similar changes specifically for people dually eligible for both Medicare and Medicaid.