Retrospective eligibility was built into federal Medicaid law early on as a safety net protection for very low-income people and their medical providers. It encourages providers to treat patients knowing they'll get paid and to help them sign up quickly for the program.
Another key rationale is that unlike in private insurance, many Medicaid beneficiaries “churn” on and off coverage due to changes in income and because states impose a demanding annual eligibility redetermination process. It's estimated that 25% or more of beneficiaries are at least temporarily disenrolled as a result of the redetermination process and other factors.
Many other people aren't even aware they are eligible. The Kaiser Family Foundation recently reported that 6.8 million uninsured adults and children were eligible for Medicaid but were uninsured in 2017.
All these factors leading to loss of coverage for eligible people makes retrospective eligibility an important backstop, patient advocates say.
But some state and federal officials long have complained about the cost of retroactive coverage, which generally can't be passed on to the private Medicaid plans that administer most state programs.
Tennessee received a waiver in 1994 as part of its major Medicaid coverage expansion program known as TennCare. Even though that program largely has been rolled back and the state has not expanded Medicaid under the Affordable Care Act, the elimination of 90-day retroactive coverage remains in place for nearly all beneficiaries.
That has led to many Medicaid-eligible people incurring large medical bills before their Medicaid applications are approved, with some facing lifetime debt, said Michele Johnson, executive director of the Tennessee Justice Center, which tries to help people clear up these bills.
The problem was exacerbated by a recent major computer glitch in the state's Medicaid enrollment system, which left thousands unable to file their annual enrollment redetermination applications online.
Before her Medicaid application was approved, one Memphis woman racked up $250,000 in bills resulting from her baby being born with severe health problems. “She said that was the hardest thing in her life—going home with a disabled child and being consigned to poverty for the rest of her life,” said Johnson, whose group helped with her case.
After a nine-month court fight, the woman finally got Tennessee's Medicaid program to pick up the entire bill.
Yet there has never been a study of the policy's impact in Tennessee. “It hasn't led people to sign up ahead of time,” Johnson said. “All these other policies make it almost impossible to sign up. If the state were interested in that, they would make the whole process less bureaucratic.”
In 2017, Iowa received a CMS waiver of the 90-day retrospective eligibility requirement, including for nursing home residents, despite warnings that nursing homes would refuse to admit people who were awaiting Medicaid eligibility. Last year, under pressure from nursing homes, the state Legislature restored retroactive coverage for that population.
Brent Willett, CEO of the Iowa Health Care Association, said it takes an average of 71 days to assemble complicated income and assets information, file the application, and receive approval for Medicaid nursing home coverage. Under the policy the state reversed, facilities only received payment back to the first day of the month when the application was filed, even though they may have admitted the resident many weeks earlier.
The association projected that policy would cost Iowa nursing homes $7 million in the first year. “It sounds nice that people should start the application process early and we agree, but it's not practical in practice,” Willett said. “If we are maintaining a system to ensure coverage for people who don't have assets for care, it makes no sense to penalize providers for providing that care. That policy wasn't cost containment, it was a cost shift to providers.”