The Medicaid Reenrollment Coverage Gap Will Be Much Smaller Than You Might Think

The single largest health coverage transition event since the launch of the Affordable Care Act is underway, but how many patients are really at risk of losing coverage completely? Surprisingly, it’s far less than anticipated.

Experts anticipate nearly 15 million people will lose Medicaid or Children’s Health Insurance Program (CHIP) coverage through the current effort underway to redetermine eligibility for Medicaid enrollee

Since 2020, states were prohibited from performing routine Medicaid eligibility redeterminations or disenrollment to receive the 6.2% increase in federal Medicaid funding during the public health emergency (PHE). However, on March 31, the Biden administration ended this continuous coverage requirement in anticipation of the PHE coming to an end on May 11. This means that states are now required to reassess the eligibility of all Medicaid and CHIP recipients and remove those who are no longer eligible.

Phasing out the 3-year run of Medicaid continuous enrollment has started

The expiration of the continuous enrollment condition authorized by the Families First Coronavirus Response Act (FFCRA) presents the single largest health coverage transition event since the first open enrollment period of the Affordable Care Act.

States are required to resume eligibility redeterminations for all Medicaid enrollees and disenroll those who no longer qualify.

Up to 15 million people could lose their current Medicaid or CHIP coverage through the eligibility renewal process.

CMS is working with states and other stakeholders to ensure people with Medicaid or CHIP take the necessary steps to renew coverage and transition to other health coverage if they’re no longer eligible.

19M people enrolled in Medicaid / CHIP between Feb. 2020 + Aug. 2022

The continuous coverage requirement prohibited states from performing routine eligibility redeterminations and disenrolling those no longer eligible for the program, driving Medicaid enrollment to historical peaks.

15 million enrollees projected to lose Medicaid coverage

States are required to resume eligibility redeterminations for all Medicaid enrollees and disenroll those who no longer qualify for the program over a 12-month unwinding period, with an additional two months to complete any pending actions.

In the past, 55% of people who were disenrolled from Medicaid did not meet the eligibility requirements, while the remaining 45% lost their coverage despite being eligible. This loss of coverage often happened due to administrative issues such as missing paperwork deadlines or not updating their address.

However, during the current transition it is expected that the percentage of eligible people losing coverage will be much lower than the historic average due to states taking a more active role in the process and working to prevent administrative issues like missing paperwork.

Only 5% of people are expected to fall in the coverage gap

While 15 million people are expected to lose Medicare coverage, only 5% are at risk of losing coverage entirely. Most people impacted have other coverage options including employer-sponsored insurance (ESI) and subsidized marketplace plans.

Continuous enrollment provision stopped “churn”

Those with complex medical conditions, disabilities, severe mental illnesses and seniors are less likely to be impacted by administrative churning because they have more frequent healthcare encounters and coverage lapses are quickly noticed.

States are working to process renewals automatically

Medicaid administrators aim to minimize the reenrollement burden on enrollees and state staff by automating renewals through the ex parte renewal process. The ex parte process allows states to leverage all available and reliable federal, state and commercial data sources like the Social Security Administration and Equifax’s Work Number to confirm member eligibility criteria like household income and wage information instead of sending paperwork for someone to complete.

Automating the renewal process will minimize gaps in coverage by reducing the administrative burden and time required to complete the manual renewal process.

Of the 43 states processing ex parte renewals for modified adjusted gross income (MAGI) groups, 18 states report completing at least half using ex parte processes.

In Summary

While 15 million people are expected to lose coverage during the Medicaid and CHIP reenrollment process that’s underway, only roughly 5% of those are expected to lose coverage completely. For healthcare providers, this means the vast majority of patients impacted by the reenrollment process won’t forego access to care due to cost or coverage concerns. It also means patient liability and uncompensated care won’t skyrocket as some providers have anticipated.

Healthcare organizations should understand their state’s enrollment process and analyze their patient population to determine the volume of patients at high risk of losing all coverage. This will help inform decision-making on where to focus resources so patients falling in the coverage gap can still receive care and healthcare organizations can financially plan for the impact.

Ensemble Health Partners is a full-service revenue cycle management company, delivering holistic financial health for more than 250 healthcare providers across the country. With a complete platform of services, technology, business intelligence and analytics, Ensemble manages the entire revenue cycle so providers can focus on delivering exceptional care in their communities.