Six months in, the nationwide effort to cull ineligible beneficiaries from the Medicaid rolls has proven to be as messy and consequential as predicted.
More than 9 million people have lost Medicaid coverage since states resumed eligibility checks in April after pausing them during the COVID-19 public health emergency. That's more than halfway toward the 15 million the Health and Human Services Department projected. And the vast majority of disenrollments are the result of procedural matters—states being unable to reach Medicaid beneficiaries, people returning incomplete forms and so on—not the result of states affirmatively identifying the people no longer qualify for coverage.
Millions of people losing health benefits is already having an effect on the healthcare system. Health insurance companies that administer Medicaid for states are losing customers. Providers are seeing an uptick in uncompensated care as newly uninsured patients continue to seek treatment. Federal authorities have expressed alarm and pressured states to slow down and focus their efforts on removing people they know are ineligible.
Here’s a look at what is going right and wrong as states carry out unwinding the continuous coverage policy that preserved Medicaid benefits at the height of the pandemic:
As of Oct. 19, at least 9.1 million Medicaid enrollees have been disenrolled, while another nearly 16.3 million have had their coverage renewed, according to state data compiled by KFF. More than 70% of disenrollments are attributed to procedural reasons.
Those improperly kicked off have 90 days to contest it and, if successful, will have their coverage retroactively reinstated. People who justifiably no longer qualify for Medicaid have options, such as signing up for subsidized private plans from a health insurance exchange. But the Centers for Medicare and Medicaid Services and other groups nevertheless worry that many will fall between the cracks and become uninsured.
"What continues to be the immediate highest priority for us at [the Center for Medicaid and Children's Health Insurance Program Services] is Medicaid renewals. We take our compliance and oversight role extremely seriously here at the federal level,” center Director Dan Tsai said during a call with healthcare stakeholders on Oct. 17.
In September, CMS ordered more than half of states to pause procedural disenrollments until they can promise eligible people will not lose coverage. The agency revealed that 29 states and the District of Columbia had identified problems with their automatic renewal systems and needed to retroactively reinstate coverage for enrollees wrongly dropped. Among other things, CMS directed states to use income and other data collected for different benefit programs to check whether individuals are eligible for Medicaid.
A convoluted process
The sheer volume of cases to review, poor technological infrastructure, short-staffing and other challenges are hampering what was always going to be a difficult task. Incomplete and outdated records and a low-income population that historically has proved difficult to reach also contribute to the problem.
Medicaid's inherent complexity is another factor. The program has about 40 eligibility categories, and members of a single household may qualify for Medicaid under different rules that come with different income limits and other stipulations.
“Ultimately, what we're seeing is underlying problems with the enrollment and redetermination systems that have always existed. We are just seeing them with better data and with more clarity because of the scale that we're dealing with right now,” said Arielle Kane, director of Medicaid initiatives at the liberal advocacy organization Families USA.
People from certain groups are at greatest risk of losing coverage, such as children, people with disabilities, those with limited English proficiency and older adults, according to CMS.
State officials have been critical of CMS guidance about redeterminations, including how federal auto-renewal rules apply.
State strategies vary
North Carolina, Oregon and Rhode Island have relied most heavily on auto-renewals while Pennsylvania and Texas have used the technology the least, according to KFF.
“Elected officials are the ones in charge, and they can direct their Medicaid agencies to do better, or they can prevent them from doing better,” said Tricia Brooks, research professor at the Georgetown University Center for Children and Families.
Concerns about the redetermination process have also wound up in court. In August, the National Health Law Program filed a lawsuit against Florida, which it aims to extend to a class action, alleging the state violated federal law by failing to sufficiently notify enrollees that their Medicaid coverage was ending or to inform them how to appeal.
Health insurance companies have been closely watching the unwinding process and seeking ways to reduce the impact on their businesses.
Insurers such as Molina Healthcare and Centene that are more exposed in the Medicaid market stand to suffer the most. Molina, for instance, may lose $2 billion by the time redeterminations are complete, according to Bloomberg Intelligence.
Centene, the largest Medicaid carrier, is steeling itself for financial consequences, CEO Sarah London said when the company announced its second-quarter earnings in July. Centene expects Medicaid revenue to decline 8.3% and that former Medicaid members switching to exchange plans will worsen risk pools next year.
Investor analysts see larger health insurers with big commercial operations such as UnitedHealth Group, CVS Health subsidiary Aetna and Elevance Health as better positioned to weather headwinds from Medicaid redeterminations.
Still, Elevance Health expects to lose 55%-60% of its Medicaid enrollees because of redeterminations, the company said when it released its third-quarter earnings on Oct. 18. Health insurance exchange enrollment is rising to partially compensate, although fewer people than expected are transitioning to employer-sponsored health plans, Elevance disclosed.
UnitedHealth Group's Medicaid membership has likewise been affected, executives said while reporting the company's third-quarter earnings on Oct. 13. UnitedHealth Group has seen reenrollment rates between 15% and 20%, depending on the state.
“Our teams are really leaning in, speaking with thousands of consumers each day. Through a comprehensive outreach program, we're helping people navigate the process and connecting them with the resources they need to retain or reinstate their health benefits or to help them find other affordable coverages,” UnitedHealth Group Chief Financial Officer John Rex told investor analysts.
The American Hospital Association has been working with CMS, its member hospitals and state hospital associations to help patients retain Medicaid or secure other coverage.
Uncompensated hospital care has risen in 2023, likely because of redeterminations, the AHA reported in September. The median rate of uncompensated care for hospitals increased from 6.4% in March to 8.7% in July, according to data from Syntellis Performance Solutions.
“When we look at the impact of uncompensated care, we've already seen an uptick in that both in terms of the bad debts that hospitals are incurring and charity care,” said John Allison, the AHA's associate director for health analytics and policy. The full impact on hospitals remains to be seen, he said.
What's to come
CMS has emphasized that carrying out Medicaid redeterminations in a fair and accurate way requires an all-hands-on-deck approach and collaboration between the federal government, state agencies, healthcare providers, insurance companies, schools, religious organizations and community groups.
States are supposed to finish unwinding continuous Medicaid coverage within 14 months, meaning those that started this April should be done by next June. But CMS forcing most states to slow down and avoid disenrolling eligible beneficiaries may throw off that timeline.
“CMS has now indicated that [states] are able to tack on additional time at the end of their unwinding period. They're not required to do that, but they have the option to do that. We definitely expect that this will go well into 2024,” Brooks said.
Alison Bennett contributed to this story.