As Medicaid Terminations Resume, States Should Take Action to Preserve People’s Coverage

The Medicaid continuous coverage requirement officially ended on March 31, 2023, which means that states can resume Medicaid coverage terminations as of April 1. Millions of eligible individuals and families — particularly people of color and children — are at risk of losing coverage during the “unwinding” process. States have many proven strategies they can and should use to streamline the renewal process and ensure that eligible people remain enrolled.

The continuous coverage requirement required states to maintain Medicaid coverage for most enrollees — and barred terminations — from March 2020, when the pandemic began, through March 2023. For the duration of the provision, states paused most Medicaid terminations and eligibility reviews. Now that these procedures are resuming, state and local agencies face an extraordinary workload to renew coverage for the over 85 million people enrolled in the program.

Medicaid terminations are starting now in some states but won’t begin until later months in other states due to variations in renewal processing timelines. Five states — Arizona, Arkansas, Idaho, New Hampshire, and South Dakota — have reported that April 1 is the effective date for their first coverage terminations. Fifteen states have set a date of May 1, and the remaining 30 states, Washington, D.C., Puerto Rico, and other territories will begin coverage terminations in subsequent months.

During unwinding, Medicaid agencies have 12 months to initiate renewals and 14 months to complete them, allowing them to spread out the workload. Unwinding will not occur as one single event — the process will take significant time through the rest of 2023 and well into 2024. The Centers for Medicare & Medicaid Services (CMS) has provided guidance on actions that states must take as they unwind, along with recommended strategies they should consider adopting to make the process smoother and more streamlined.

To receive enhanced federal funds through 2023, states must follow federal eligibility redetermination requirements (including renewal strategies authorized under Section 1902(e)(14)(A) of the Social Security Act, or other alternative processes and procedures approved by CMS), maintain updated enrollee contact information, and make good-faith efforts to contact enrollees before their coverage is terminated due to returned mail. States are also required to submit monthly reports of key unwinding metrics or be subject to a .25 percentage point reduction in their Federal Medical Assistance Percentage for each quarter of noncompliance with the reporting requirement.

­CMS may require states that do not comply with federal redetermination requirements or unwinding reporting requirements to submit a corrective action plan; failure to do so could result in states having to pause all coverage terminations for procedural reasons, in financial penalties, or both. To reduce the risk of people losing coverage for administrative reasons, CMS is working closely with state Medicaid agencies to ensure they are in compliance with redetermination requirements or have appropriate mitigation measures in place.

Many people will lose coverage despite remaining eligible for Medicaid or becoming eligible for other types of low-cost coverage due to administrative hurdles they must overcome to maintain their coverage. But massive coverage losses aren’t inevitable. States should prioritize changes that they can act on quickly and that will have the greatest impact in keeping eligible people covered.

We’ve released a suite of resources that highlight some of the key strategies states should consider:

• To improve communication with enrollees: “FCC Ruling Allowing Automated Text Messaging Will Help State and Local Agencies With Unwinding Medicaid Continuous Coverage.” States should use methods in addition to paper mail, such as text messages and email, to reach enrollees and inform them of upcoming actions they need to take to maintain their coverage. A key ruling earlier this year from the Federal Communications Commission confirmed how state- and locally administered Medicaid programs can send automated texts to enrollees. This ruling will help Medicaid agencies send timely information to enrollees during the unwinding process.

• To streamline the renewal process: “States Should Streamline Medicaid Enrollment and Renewal for Older Adults and People With Disabilities Ahead of Unwinding.” States should also extend streamlined processes that apply to MAGI groups (whose eligibility is based on a technical income standard called “modified adjusted gross income”) to non-MAGI groups or adults aged 65 and older and people with disabilities who face unique challenges with the Medicaid enrollment and renewal process. States should also increase ex parte renewals, where coverage is renewed based on existing data sources without enrollees having to submit a renewal form. This is an effective way to reduce procedural denials and churn and significantly reduce agency workload.
• To bolster staffing: “States Should Use Federal Matching Funds to Ensure Adequate Staffing During ‘Unwinding’ of Medicaid Continuous Coverage.” State Medicaid agencies are grappling with staffing shortages, with 1 in 4 states reporting a workforce vacancy rate of 20 percent or higher. Agencies should ensure that they have adequate staffing to handle the increased volume of work during the unwinding process by hiring additional staff, allowing overtime, or temporarily bringing back past workers like retirees. Fortunately, a 75 percent federal match is available for hiring eligibility workers, which should make it easier for states to increase staffing, conduct relevant trainings, and increase salaries where needed to attract and retain staff.

Unwinding will be a herculean task for Medicaid agencies and enrollees. States should implement these effective strategies to preserve coverage for millions of eligible people.