CMS may withhold Medicaid funding over redeterminations issues
By Alison Bennett / December 4, 2023
The Centers for Medicare and Medicaid Services outlined its plans to get Medicaid redetermination disenrollments under control in an interim final rule published Monday.
States that fail to comply with federal Medicaid policies as they review their benefit rolls for ineligible enrollees risk reduced federal funding under the regulation, which comes after 11.8 million Medicaid beneficiaries have been removed from the program since April, according to CMS data compiled by KFF.
States, territories and the District of Columbia are obliged to ensure that only those eligible for Medicaid are enrolled, but Congress suspended regular reviews during the early stages of the COVID-19 pandemic. States began unwinding continuous coverage in the spring.
President Joe Biden’s administration has been under fire over the coverage losses, and this new rule builds on efforts CMS has made for months to push states to preserve coverage for qualified beneficiaries while they cull the program of people whose incomes no longer make them eligible.
But more than seven in 10 of disenrollments as of Dec. 1 were for procedural reasons, such as a state being unable to contact an enrollee, not for eligibility reasons. In September, CMS ordered 30 states to halt disenrollments and restore coverage to people inappropriately cut off.
Under the new rule, which takes effect Wednesday, states that do not provide CMS with monthly redetermination reports would have to submit corrective action plans. States that CMS determines are still out of compliance with reporting requirements face reductions in the federal share of their Medicaid budgets of up to 1 percentage point. The federal government pays for at least 50% of Medicaid spending and states finance the remainder.
States that do not devise correction action plans or do not complete them may be forced to pause procedural disenrollments and could be subject to civil financial penalties of up to $100,000 per day.
States may appeal Medicaid funding cuts and fines.
The federal government will only exercise these enforcement actions after attempting to assist states, CMS wrote in the interim final rule.
“If CMS’ efforts to work collaboratively with states are successful, and the state takes necessary steps to address beneficiary harm and prevent future harm (such as reinstating eligibility for affected beneficiaries and suspending procedural disenrollments, where appropriate), CMS might not initiate compliance action,” the regulation states.
State officials have complained that significant administrative difficulties and insufficient federal guidance hamper the redeterminations process.
Because this is an interim final rule, CMS will accept public comments until Feb. 2 and may revise the regulation. “Had CMS proceeded through notice-and-comment rulemaking, the resulting delay would have been significant, thereby increasing the risk that beneficiaries would be harmed by losing coverage due to states’ violation of federal redetermination requirements,” the rule says.