New State Health Official Letter Extends Post-PHE Processing Timelines, Implements Redetermination Requirement

We’ve previously discussed the numerous flexibilities CMS offered state Medicaid programs to respond to local outbreaks and address health concerns associated with the COVID-19 public health emergency (PHE).

Back in March 2020 (which feels like ages ago, right?) my colleague Tom discussed the enhanced 6.2% Federal Medical Assistance Percentage (FMAP) funding—authorized by the Families First Coronavirus Response Act (FFCRA) and amended by the CARES Act—including the continuous-enrollment requirement for beneficiaries who had been enrolled in Medicaid on or after March 18, 2020.

In December 2020, the Trump Administration issued State Health Official (SHO) letter #20-004, providing guidance—and new flexibilities—to states seeking to meet the continuous-enrollment requirement of the FFCRA.  My colleague Ross had summarized the new flexibilities in his post titled, “States Can Now Keep Enhanced COVID-19 Match, Make Coverage and Benefit Changes.”  As you can imagine, reception to the December guidance from Medicaid advocates was largely negative.

On August 13, 2021, the Biden Administration’s CMS released an updated SHO letter titled #21-002, Updated Guidance Related to Planning for the Resumption of Normal State Medicaid, Children’s Health Insurance Program (CHIP), and Basic Health Program (BHP) Operations Upon Conclusion of the COVID-19 Public Health Emergency, which outlines CMS’ planned policy changes to help states transition their operations once the PHE is lifted.  Notably, the August SHO letter makes key policy changes to the Trump-era guidance, restoring, in part, a number of protections for Medicaid beneficiaries at-risk of losing coverage.

Rationale for the SHO letters

In this most recent guidance, CMS explains how states should expect to complete significant amount of eligibility and enrollment actions, such as renewals and post-enrollment verifications, due to the continuous-enrollment requirement.  As Medicaid and CHIP enrollment increased during the pandemic, the volume of enrollment and eligibility actions also rose.  The PHE is still active (it was most recently renewed in July 2021), therefore states may face an even greater backlog of enrollment and eligibility actions than previously anticipated.  CMS also explains how some states have expressed concern about possible “renewal bulges,” due to the December 2020 SHO letter’s requirement for states to complete outstanding actions within six months of the PHE ending.  The August letter goes on to explain how compressed timelines and pending workloads could result in less time for states to conduct outreach and engage in redetermination processes—resulting in beneficiaries losing coverage.

In its August SHO letter, CMS updates its December 2020 guidance to help states with processing pending eligibility and enrollment actions.  Specifically, CMS revises its December guidance in two areas: (1) Extending the timeline for states to complete enrollment and eligibility actions to 12 months after the PHE is lifted, and (2) requiring states to complete an additional redetermination for individuals who were determined to be ineligible for Medicaid during the PHE, after the PHE concludes, prior to disenrolling individuals.

CMS will extend the timeline for enrollment and eligibility actions to 12 months after the PHE ends

In the August SHO letter, CMS explains that the time extension is appropriate because it will “ensure states can reestablish a renewal schedule that is sustainable in future years.”  However, this new timeline does not impact the timeframe during which states are required to “resume the timely processing of all applications,” which the December SHO letter determined would be up to four months after the month during which the PHE ends.  CMS notes the FFCRA “did not limit states’ ability to process applications during the PHE and to ensure timely access to coverage for eligible individuals,” therefore it is appropriate to retain the December 2020 resumption timeframe.

States must complete an additional redetermination for individuals determined ineligible for Medicaid during the PHE

According to CMS, while states have continued processing enrollment and eligibility actions throughout the PHE, states have not taken “any adverse actions for Medicaid beneficiaries that would violate the continuous enrollment requirement,” as a condition for receiving the temporary FMAP increase.  In its December 2020 SHO letter, CMS gave states the option to not complete an additional redetermination before terminating an enrollee’s coverage after the PHE ends if certain conditions are met—including that “the eligibility action processed during the PHE was completed within six months of the beneficiary’s termination after the PHE.”  In its August SHO letter, CMS explains how its December policy carries an “inherent risk” that some eligible beneficiaries may lose coverage.  Since CMS is giving states 12 months after the PHE to complete pending actions, the agency is rescinding its December option: for the duration of the PHE, states cannot terminate coverage for anyone determined “ineligible” for Medicaid, who has not been terminated yet (including those who did not respond to requests for information), until the state completes a redetermination after the PHE is lifted.

Additional content

CMS concludes the SHO letter by encouraging states to “end any flexibilities that are no longer needed,” such as Section 1135 waivers.  The agency also instructs states to ensure that pending work is completed in a manner that limits processing delays and supports continuity of coverage.

Though the COVID-19 PHE is still in force, states can still begin planning for work-completion processes; CMS plans to issue further guidance to help states with prioritizing these actions.  We at Medicaid and the Law will continue to monitor for CMS guidance and policy announcements.

Leave a Reply

Your email address will not be published. Required fields are marked *