Medicaid and Income Verification

The big news out of Ohio today is the announcement by the State Medicaid Director John McCarthy that, at the end of week, 61,000 Ohioans are set to lose their Medicaid coverage for failure to verify household income.  According to McCarthy, the federal government requires states to verify income each year to ensure that Medicaid recipients still qualify for coverage.

So what do the Federal rules and regulations say about Medicaid income verification? Is Director McCarthy correct that the State has no choice but to disenroll these individuals?  Is Ohio’s method for income verification required?

As we have previously discussed, the ACA sought to dramatically simplify Medicaid eligibility and enrollment.  The law did this by setting a new standard income threshold for eligibility (individuals earning less than 138% of the FPL are eligible for Medicaid) and by moving to a new measure of income (modified adjust adjusted gross income, or MAGI).  ACA section 1413 also established a new requirement for the Secretary of Health and Human Services to provide states with a streamlined form that may be used to apply for all public health care programs active in the State and that may be submitted online, in person, by mail or by telephone to an exchange or any state agency operating a public health care program.  Among the numerous requirements for the new income eligibility system is a requirement that the application is “structured to maximize an applicant’s ability to complete the form satisfactorily, taking into account the characteristics of individuals who qualify for applicable State health subsidy program.” The law permits States to utilize their own form, but that form must be consistent with the standards established under section 1413.  Section 1413 also requires that data for these new streamlined applications will be verified primarily through self-attestation and  electronic data accessed through the Federal Data Hub and other federal and state data sources.

On March 23, 2012 CMS finalized regulations implementing Section 1413.  Under the new federal rules, when someone submits a new application, the regulations provide that (1) the applicants attestations are verified by “reasonably compatible” data matches; (2) states have considerable flexibility to define such compatibility; and (c) if both the attestation and the data show income below 138 percent of FPL, the application is financially eligible (assuming the State has expanded Medicaid eligibility to this level). See 42 C.F.R. 435.603.

When enrollees are reaching the end of their coverage periods, the regulations provide that the “the agency must make a redetermination of eligibility without requiring information from the individual if able to do so based on reliable information contained in the individual’s account or other more current information available to the agency.”  Note that the regulations do not define the phrase “reliable information.”

So is Director McCarthy correct that the state must disenroll these individuals in order to comply with federal regulations regarding the annual redetermination of eligibility? Yes and no.  There is no doubting that the federal regulations at 42 C.F.R. 435.916 require a redetermination of eligibility every 12 months.  However, the regulations permit the state to make this redetermination without any regular action on the part of the beneficiary.  A great piece by the Urban Institute discusses the use of “business rules” in order to make the automatic redetermination seamless.

It is still unclear who these 61,000 beneficiaries are and whether or not Ohio has attempted to verify their information using information available to them from electronic data sources, or whether the state is requiring a response from every individual. The final rule makes clear a response is not necessary for a redetermination unless “the state has information that suggests the information available is inaccurate.”  If in fact Ohio is requiring a response from each and every Medicaid individual in order to continue their coverage, it is likely surpassing the minimum requirements for a periodic redetermination.

We will continue to follow the Ohio story as it unfolds


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