Striking a Balance During Medicaid’s Unwinding

Unwinding

By April 2023, all 50 states, DC and the territories will have launched their efforts to conduct eligibility screening for every individual currently using Medicaid for their health insurance as part of the “unwinding” of the federal requirements ushered in by the pandemic’s public health emergency. With more than 90 million individuals counted as Medicaid members, this is the largest undertaking of its kind by the program.

What’s the background on Medicaid’s unwinding?

During the pandemic, Medicaid programs in all states, DC and the territories have been a vital means of ensuring access to health care for low-income seniors, people with disabilities, families, working adults and children. Not only did Medicaid cover COVID-19 testing and vaccines, but it pivoted to allow people to get many types of medical and behavioral health care through accessible means including telehealth.

In addition to the critical access to health care that the program provided to individuals, many of whom were otherwise struggling with loss of employment and other challenging life circumstances, Medicaid also infused millions of dollars into the struggling health care infrastructure, particularly in rural and underserved urban areas where access was challenging well before the national health emergency.

When the pandemic started, Congress enacted a federal requirement that states and territories continue to cover every person who became eligible for Medicaid until the public health emergency was lifted, even if their income or other circumstances changed – the so-called “continuous coverage” requirement. Recognizing the progress that the country has made in responding to the pandemic, however, in December 2022, Congress authorized states, DC and the territories to begin the process of redetermining the eligibility of all people on the program.

This big undertaking – the “unwinding” process – started in February 2023 and will continue for over the next 14 months, depending on when a state starts its unwinding period. Medicaid agencies remain committed over this time to:

• Observing all normal procedural requirements for eligibility redeterminations;
• Paying special attention to people who are the most likely to be disconnected from the health care system, including older adults, people of color and people with disabilities; and
• Being compliant with all federal requirements for unwinding.

What will happen to Medicaid coverage during unwinding?

Millions of people will remain eligible for the program and will continue to use Medicaid to access the health care they need. More than 90 million Americans are currently covered by Medicaid. National sources estimate that at least 70 million of those people will remain eligible for Medicaid after redetermination.

Some individuals and families will no longer be eligible for Medicaid. National sources estimate that between five and 18 million people will be determined to be ineligible for the program. States and stakeholders are working to connect people who are no longer eligible for Medicaid to other sources of insurance, for example through the state-based or federal insurance marketplace or employer coverage.

Even though federal legislation extended the subsidies that have made it much more affordable for people who lose Medicaid eligibility to qualify for coverage on the federal marketplace or through state-based health insurance exchanges, a certain percentage of individuals and families simply won’t make that transition because of a lack of awareness, language barriers, or other administrative hurdles.

Given that the unemployment rate has improved to near a pre-pandemic level, experts project that a subset of those currently covered by Medicaid will be able to switch to insurance through their employer or are already using a combination of Medicaid and employer-sponsored insurance. There are likely to be challenges for those who are eligible for employer coverage as it is often much less affordable and covers less than Medicaid.

State Medicaid agencies typically do not have systems to determine in real time whether people who become ineligible for Medicaid health insurance access other health insurance. The best means of estimating transition to other sources including employer-sponsored insurance include the unemployment rate, enrollment trends experienced by state and federal marketplaces and feedback from Medicaid health plan partners.

What strategies are states, DC and the territories using to conduct redeterminations?

States, DC and the territories have been planning for and using several strategies for months or longer to prepare for redeterminations including:

• Contacting Medicaid members by multiple means including via mail, phone and text;
• Adopting public education campaigns, many of which have been ongoing for more than a year;
• Using “ex parte” eligibility renewal, which uses existing data sources to verify eligibility without requiring members to complete applications;
• Partnering with health plans, community health centers and other providers and advocacy organizations that serve Medicaid to connect with members to alert them to the need to be redetermined, and to support them in that process; and
• Collaborating with the federal and state-based marketplaces to help connect people to subsidized marketplace plans.

Are/how are states, DC and the territories helping people no longer eligible for Medicaid find new health insurance?

States have been planning for this in context of their unwinding operational plans. Strategies to help people no longer eligible for Medicaid include public education campaigns, collaborative work with stakeholders including community-based organizations, and coordination with state-based insurance exchanges and the federal insurance marketplace.

Many states have also been working closely with federally-funded Navigator organizations on strategies related to the unwinding, including having Navigators hold outreach events and adding information about how to access Navigators to unwinding-related messaging.

Related, CMCS has had a longstanding partnership with its colleagues at CCIIO, the success of which is evident in the latest open enrollment period figures. CCIIO has also launched specific efforts around the unwinding, including:

• Launching a new special enrollment period for individuals who lose Medicaid or CHIP coverage during the unwinding;
• Providing targeted funding;
• Piloting new direct assister-to-member outreach strategies and additional letters to members; and
• Using the existing Federal marketplace system matching functionality to enhance screening.

Marketplace coverage and networks are typically more narrow than Medicaid coverage, so folks will face loss of services (e.g. dental, NEMT). It is likely that many people will continue to “churn”, i.e., migrate on and off Medicaid due to fluctuation in income and other circumstances.

What challenges do states, DC and the territories face in conducting more than 90 million redeterminations?

Medicaid agencies exist to serve our communities and neighbors, and states work hard to ensure processes that put people first and honor the critical role health insurance plays in the lives of individuals and families.

Over the past year, states have worked diligently to develop a thoughtful and measured approach to conducting redeterminations that balances the amount of work with the risks of moving too quickly on redeterminations. Accelerating the process can exacerbate challenges states already face and put unnecessary strain on members, state staff and systems, Medicaid plans, and health care providers.

So, what have states, DC and the territories been considering and balancing as they move forward?

• The large volume and complexity of the work. The sheer volume of work that must be completed over a 12-month period is significant. Medicaid agencies perform redeterminations as a normal course of business; however, state systems have handled a much lower volume on a historical basis, conducting redeterminations at a much lower rate, spaced out over known intervals.
• The defined timeframe for unwinding. While the one-year period for completing this work is tight, states have been planning for it and have developed a plan that works for them. Medicaid agencies know that moving too fast to unwind could have unintended cost implications, including:
  • Administrative costs related to processing errors, staff time needed to respond to member complaints and to conduct fair hearings requested by people whose eligibility is terminated, and redundant reviews of eligibility for people who “churn”, i.e., come on and off the program;
  • Programmatic costs, notably, the potential loss of the enhanced federal funds states currently receive if states are noncompliant with requirements for unwinding. There are also potential civil monetary penalties levied by CMS for states who are not compliant with corrective action plans;
  • Costs to Medicaid’s partners, including health plans whose capitated payments are based on calculations that are likely to shift significantly as overall Medicaid participation declines.
  • High vacancy rates in the state eligibility workforce. Like other sectors, state government is experiencing workforce challenges. In a recent survey of Medicaid agencies across the U.S., the average vacancy rates ranged from as low as 14 percent to as high as 30 and 40 percent. Just like other sectors of the economy states are struggling to find, attract and train highly skilled candidates.