CMS toughens Medicaid oversight after ‘unwinding’ mess

By Bridget Early / July 25, 2024

The Centers for Medicare and Medicaid Services has embarked on a new era of Medicaid enrollment oversight after the disorderly redeterminations process highlighted widespread compliance issues at the state level.

Inappropriate disenrollments and massive applications backlogs proliferated once states resumed Medicaid eligibility checks 15 months ago after suspending them during the COVID-19 public health emergency.

Since that messy and difficult process all but concluded this spring, CMS has shown it’s paying closer attention to how states manage renewing enrollees and new applicants. In doing so, the agency is taking on systemic deficiencies at state Medicaid bureaucracies that contributed to millions of eligible beneficiaries being kicked off benefits.

“As states conduct renewals in the future, CMS will continue to take its monitoring and oversight role seriously and take action to hold states accountable to federal renewal requirements,” a spokesperson wrote in an email. “CMS will issue additional information on this work as well as guidance on federal renewal requirements later this year.”

States are mostly finished unwinding the pandemic-era continuous coverage policies tied to enhanced federal Medicaid funding, which expired at the end of 2023.

As of Tuesday, more 24 million people had been disenrolled during the unwinding, according to CMS data compiled by KFF. Nearly 70% of those disenrollments were procedural in nature, meaning people lost coverage for reasons other than ineligibility, such as states being unable to contact them.

CMS took enforcement actions against more than two dozen states with high rates of procedural disenrollments at the height of redeterminations last year.

The agency’s posture hasn’t changed since, and it has taken several actions more recently that suggest it has adopted a more muscular approach to enforcing federal enrollment rules.

CMS activities such as collecting more enrollment data from states, pausing procedural terminations for certain populations and improving automatic renewals are likely to become permanent fixtures, said Jack Rollins, director of federal policy at the National Association of Medicaid Directors.

“It’s a transparency and accountability mechanism that's entirely understandable,” Rollins said.

CMS offered states various regulatory flexibilities during the unwinding to increase automated renewals, help enrollees complete forms, update contact information and facilitate reenrollment for people cut off for procedural reasons. The agency indicated that these policies would be necessary after redeterminations, too.

“Many of the strategies adopted by states during their unwinding periods will continue to be needed to protect beneficiaries while the states implement policy, systems and operational fixes to address areas of noncompliance with federal renewal requirements that were identified during unwinding,” Center for Medicaid and Children’s Health Insurance Program Services Director Dan Tsai wrote to states in May.

CMS extended the unwinding-related waivers through the end of 2025. And the regulator is considering making more of them permanent, according to a report the Government Accountability Office, a nonpartisan congressional investigative agency, published last Tuesday.

The agency already wrote some of those waivers into a final rule published in March. For example, CMS freed states to seek contact information from the U.S. Postal Service to locate beneficiaries.

“These waivers have been popular,” said Jennifer Tolbert, deputy director of the Program on Medicaid and Uninsured and director of state health reform at KFF. “What we don't know is the extent to which states have rolled some of the waivers back or are planning to once they complete their unwinding.”

That same regulation also included significant changes to the eligibility process in response to the high levels of disenrollments that CMS contends will simplify the process for qualified people to enroll in Medicaid coverage and maintain it.

The eligibility rule eliminated several state practices that CMS argued deter people from accessing or renewing Medicaid coverage, such as requiring people with disabilities, people who are blind and people 65 or older to sit for in-person interviews. The regulation also places the onus on states to conduct automated renewals using income data from other benefit programs, known as ex-parte renewals.

CMS told the GAO it would issue guidance to states after finding nearly all of them weren’t adhering to ex-parte renewal rules, according to the report. Those procedural issues were at their worst during the early months of the unwinding and drove CMS to pause redeterminations in 30 states and restore Medicaid benefits to more than 400,000 people in September.

Underpinning these oversight activities is a trove of data CMS began collecting over the past several years.

CMS required states to submit monthly updates during redeterminations under authority from the Consolidated Appropriations Act of 2023. Those mandate expired in June, but the agency is pushing states to continue providing reports on renewals, disenrollments and pending applications.

“Collecting this data has provided states, the public and CMS with unprecedented transparency into, and operational understanding of, Medicaid and CHIP eligibility and enrollment processes,” Tsai wrote in his May letter.

CMS is gathering additional information from states such as Missouri, New Mexico and Texas, which the agency believes are not following federal enrollment standards. CMS notified those three states last month that they may be subjected to corrective action plans if they fail to meet the agency’s parameters. CMS took similar steps to address problems in Nevada in March.

“Enforcement happens,” said Joan Alker, executive director of the Georgetown University Center for Children and Families. “A lot of times it happens because they're protecting the federal treasury. It can happen in an administration that cares about health coverage, because they're trying to protect beneficiaries. There's a heck of a lot on the line.”