How States Should Clean Up Their Medicaid Rolls
States should act expeditiously to properly
During the Obama and Biden administrations, the federal government relaxed Medicaid eligibility requirements, making it easier for millions of ineligible individuals to access the program and more challenging for states to verify applicant information and ensure that only those eligible were enrolled. This has contributed to the program’s significant expenditure growth and surge of improper payments over this period. Further, coverage of those who do not qualify for Medicaid crowds out private coverage—particularly employer-sponsored insurance—and shifts costs to taxpayers. All of this depletes resources for more vulnerable populations that need a safety net.
The paper was coauthored by Paragon’s Medicaid and Health Safety Net Reform Initiative director Gary D. Alexander, Paragon’s President Brian Blase, and Paragon Research Fellow Nic Horton.
- The continuous enrollment requirement for Medicaid during the COVID-19 public health emergency has led to upwards of 18 million Medicaid enrollees who do not meet eligibility requirements for the program.
- As of April 1, 2023, states have resumed regular eligibility redeterminations to preserve Medicaid for those who truly need the program and to protect taxpayers. States should prioritize resources and start with reviews of those most likely to now be ineligible.
- States have an incentive to act expeditiously, as enhanced federal COVID funding for Medicaid has already begun winding down and will be gone by the end of 2023.
- The vast majority of people enrolled in Medicaid who are ineligible already have other sources of coverage or will transition to other sources of coverage when their Medicaid enrollment ends.
- There are numerous protections for people who are removed from the program who are still eligible, including retroactive Medicaid coverage that pays for three months of past medical expenses.
Recommendations for States
Here are seven steps that states should take to perform expedited and efficient redeterminations.
- Prioritize reviews for those most likely to be ineligible. To move through the caseload expeditiously, states should use the following list for prioritizing the categories of recipients for redeterminations:
- Enrollees for whom the state has received information indicating a change in circumstances, such as a change in residency, employment status, or income. According to Arkansas DHS, there are roughly 422,000 such individuals in Arkansas.
- Enrollees for whom the state has outdated information or whom the state has not been in touch with for the past few years. Many of these enrollees might have been working at the beginning of the pandemic, and their incomes nearly exceeded the eligibility income limits prior to the PHE, or their incomes have subsequently significantly increased.
- Individuals identified through claims data as not having recently used services. If someone is enrolled in Medicaid, principally through a Medicaid managed care plan, and has not used medical services over the past 12-month period, he or she likely has another form of insurance and is no longer eligible for Medicaid.
- All other non-disabled enrollees because they are most likely to experience frequent changes in circumstances.
- Categorically ineligible recipients. After turning 19, in many cases, enrollees might lose their eligibility for Medicaid and CHIP and are subject to the more limited Medicaid eligibility criteria for adults. Most near-elderly Medicaid enrollees who then turn 65 should be removed from Medicaid.
- Everyone else.
- If recipients do not respond, close the case. State Medicaid agencies must send the enrollee a notice of the information that the enrollee must provide, giving the enrollee 30 days to respond. If the enrollee does not respond within the 30 days, the state should send a letter terminating coverage. If the enrollee provides information prior to the deadline and the information shows the person is no longer eligible for the program, the state should give a 10-day notice before terminating enrollment.
- Organize staff properly and ensure adequate resources. States and counties that are short-staffed should consider hiring retirees or contract workers on short-term or part-time contracts for the rest of 2023 to help process redeterminations more expeditiously as well as to be prepared for an expanded number of appeals. Further, states should consider organizing special units in county or field offices where staff can quickly review certain categories of enrollees. This would help to focus efforts and set achievable monthly goals. Program integrity staff should be integrated where possible to ensure that efforts focus on reducing fraud and wasteful spending.
- Resume using PARIS. As discussed above, PARIS should be reinstated as part of the eligibility process now that the PHE has ended. PARIS assists eligibility workers nationwide to identify recipients with multi-state enrollment. This system was suspended during the PHE.
- Ensure frequent data matches to identify third-party liability. Medicaid should be the payer of last resort if the person has another source of coverage. Many ineligible recipients have dual coverage, in which they are enrolled in both Medicaid and employer-sponsored insurance. Given the surge of able-bodied adult enrollment that occurred in Medicaid during the COVID-19 pandemic and the large increase in unemployment at the beginning of the pandemic, this focus is even more important as many of these working-age adults have gone back to work and have obtained, or are eligible for, employer-sponsored health insurance. If the recipient does not report another form of insurance, federal rules require states to perform matches with income and workers’ compensation databases and motor vehicle accident files in the state to determine if the government is due third-party liability payments. The state may also perform matches with other potential sources of coverage, such as the Department of Defense (DOD). Medicaid enrollees or dependents may also be on DOD plans. Matches such as this help the state recoup inappropriate funds expended through Medicaid.
- Establish links to credit bureaus and other state agencies. States can also verify eligibility by linking to credit bureaus and other state agencies such as departments of revenue and workforce services. These will be important to verify residency, income, and employment.
- Use enhanced data and artificial intelligence (AI). States should also consider using advanced data analytics tools and AI to help identify patterns that suggest misenrollment. Data analytics would help produce lists of likely ineligible recipients that can be shared with staff to expedite redeterminations.