Averting a Medicaid Coverage Cliff: CMS’s Continuous Enrollment Unwinding Guidance

Bracing for the inevitable end of the COVID-19 Public Health Emergency (PHE), CMS has begun issuing voluminous guidance to states on unwinding Medicaid’s continuous enrollment requirement without precipitating a calamitous drop in coverage. We’ve previously discussed the continuous enrollment requirement here, here and here.

By way of background, section 6008 of the Families First Coronavirus Response Act (FFCRA), Pub. L. No. 116-127, temporarily authorized a 6.2 percentage point Federal Medical Assistance Percentage (FMAP) increase through the last day of the calendar quarter in which the COVID-19 PHE ends. For a state to receive this FMAP boost, it must maintain continuous enrollment of Medicaid beneficiaries through the last day of final the month of the PHE (among other conditions). In other words, if the PHE expires in mid-October 2022, the continuous enrollment requirement will end November 1, 2022, and the enhanced FMAP will conclude at the end of that quarter (December 31, 2022).

According to a recent CMS webinar, enrollment in Medicaid and the Children’s Health Insurance Program (CHIP) has grown by more than 20 percent since the start of the PHE due, in large part, to this continuous enrollment requirement. As CMS has noted, the expiration of this requirement “presents the single largest health coverage transition event since the first open enrollment period of the Affordable Care Act.”  Indeed, at least 15 million people could lose Medicaid or CHIP coverage upon the expiration of the PHE, many of whom may be eligible through the Marketplace, Medicare, or other coverage.

While CMS is taking actions to inform the public of this impending shift, Medicaid is a federal-state partnership, and much of the work of resuming routine Medicaid eligibility and enrollment activities will fall on the states. This is likely to present an enormous challenge given the large volume of actions pending, the length of time since many enrollees’ last renewal, the likelihood of outdated contact information for enrollees who have moved during the PHE, and state staffing shortages.

We’ve outlined some of the key takeaways of CMS’s current guidance to states, including some of the time-limited flexibilities CMS intends to offer.  We expect to provide additional unwinding updates in the coming months as the situation evolves.

Slow and Steady Wins the Race

States will have a significant volume of Medicaid eligibility actions to complete when the PHE ends, including pending applications, renewals, verifications, and redeterminations due to changes in beneficiaries’ circumstances. CMS recognizes it will not be possible for states to address these actions immediately upon the PHE’s conclusion. CMS initially informed states they would have a 12-month unwinding period after the end of the PHE. However, CMS recently clarified that the agency will consider states to be in compliance with the 12-month unwinding period if they initiate all pending eligibility and enrollment actions during the 12 months following the end of the PHE.[1]  States will then have two additional months (for a total of 14 months) to complete all pending actions.

States should not wait until the final month of their unwinding period to initiate these actions, however. CMS warns states that “they are at risk of inappropriately terminating coverage for eligible individuals if they plan to initiate a high volume of renewals in a given month,” and that the failure to distribute work during the 12-month unwinding period could create unsustainable peaks in renewal volume in future years. Instead, CMS directs states to distribute eligibility and enrollment actions in a reasonable and systematic manner over the course of the unwinding period and recommends that states initiate no more than 1/9th of their total caseload of renewals during a given month of the unwinding period.

CMS is taking these requirements seriously. CMS intends to monitor states’ progress in meeting these timelines and will require states to submit certain information (e.g., how each state plans to distribute renewals during the unwinding period, baseline and monthly data on the ongoing disposition of renewals, and the state’s proposed or adopted strategies for mitigating inappropriate coverage loss). In addition, CMS may impose additional reporting requirements and/or require states to submit a corrective action plan to CMS in the event CMS identifies instances of potential non-compliance.

But First We Must Have a Plan

CMS recently reiterated its prior guidance that states need to develop a comprehensive “unwinding operational plan” to reflect how the state will complete outstanding eligibility and enrollment work in an efficient manner while ensuring uninterrupted coverage for eligible individuals. In particular, CMS is encouraging states to adopt a “risk-based approach” to prioritize pending renewals, changes in circumstances, and post-enrollment verifications during the unwinding period. While CMS outlines three possible risk-based approaches – population-based, time-based, and hybrid – CMS is deferring to states to identify the unwinding approach that works for them and does not expect states to submit their entire unwinding operational plans for CMS approval (although CMS does intend to collect information on all states’ plans and encourages states to share their unwinding operational plans publicly prior to implementation). To assist states in this process, CMS has released an updated planning template and encourages states to solicit input from stakeholders (e.g., Medicaid MCOs, providers, beneficiary advocates).

A number of states have already begun developing these plans, including California, Utah, Texas, Washington, Indiana, and Michigan.  These developing plans illustrate that states are thoughtfully approaching this massive challenge, taking into consideration their unique Medicaid programs and the available resources.

Time-Limited Unwinding Flexibilities

In its guidance, CMS reminds states of the general requirements for processing new applications and renewals, acting on changes in circumstances, providing advance notice and fair hearings, and establishing seamless transitions in coverage. However, in recognition of the enormous challenge unwinding will pose to states, CMS is also making certain flexibilities temporarily available to states during the unwinding period.

  1. Flexible Timing, With Opportunities for Alignment

Medicaid and CHIP enrollees normally have their eligibility renewed at least once per year. CMS’s unwinding guidance makes clear that states must initiate a full renewal for their total Medicaid caseload during the 12-month unwinding period and generally may not terminate a beneficiary’s coverage without completing a full renewal.[2] However, CMS is providing states with flexibility as to when those renewals may be performed and allowing states to wait to process new information regarding a change in a beneficiary’s circumstances until the state completes the beneficiary’s renewal in a subsequent month of the unwinding period.

In light of these flexibilities, and to reduce burden on both individuals and states, CMS has also identified certain alignment opportunities for states during the unwinding period (e.g., schedule Medicaid renewals for Supplemental Nutrition Assistance Program (SNAP) enrollees to coincide with individuals’ SNAP recertification, align renewals for all members of a household during the 12-month alignment period). In addition, to avoid gaps in coverage for individuals newly eligible for Medicare, CMS recommends aligning renewals for individuals who missed their Medicare initial enrollment period with the Medicare general open enrollment period, which runs from January 1 through March 31 each year.

  1. Strategies to Promote Continuity of Coverage and Mitigate Churn

As states prepare to resume routine operations, CMS has expressed a willingness to allow for the limited use of section 1902(a)(14) waiver authority to protect otherwise eligible beneficiaries at risk of inappropriately losing coverage.[3] While CMS is open to other ideas, the agency has outlined five targeted strategies for which CMS will allow states to seek approval to use this authority in a time-limited manner during the unwinding period, including to extend the timeframe to take administrative action on fair hearing requests. CMS also notes that states may make certain modifications to their fair hearings processes without additional waiver or state plan authority as long as the state is providing access to the fair hearing process in accordance with Medicaid regulations.

CMS also highlights a number of existing state plan flexibilities (e.g., continuous coverage for children, 12-months continuous postpartum coverage, express lane eligibility for children) and operational strategies to promote continuity of coverage and mitigate churn. In addition, CMS highlights ways for states to implement additional approaches that may help with transitions to and enrollment in a Qualified Health Plan through the Marketplace, including through improved communication with individuals making the transition, improved interagency data sharing, and coordination with community-based organizations and beneficiary advocates.

Additional Resources

For additional information, we recommend referring to CMS’s two State Health Official (SHO) letters specific to unwinding: SHO# 22-001 and SHO# 21-002. In addition, CMS issued a more general SHO letter regarding the conclusion of the PHE on December 23, 2020: SHO# 20-004, and has published a number of tools and resources for State Medicaid agencies and others. The agency has also begun a series of monthly webinars to run through the end of 2022 (you can register here). We expect additional guidance to be forthcoming as the end to the PHE nears.



[1] CMS is also giving states some flexibility as to when they start their unwinding period. While the unwinding process must begin no later than the first day of the month following the month in which the PHE ends, states may begin their 12-month unwinding period up to two months prior to the end of the month in which the PHE ends. This gives states some lead time to begin processing eligibility and enrollment actions. However, CMS reminds states that they must maintain continuous enrollment of beneficiaries through the last day of the month in which the PHE ends in order to receive the temporary FMAP increase under FFCRA for that quarter.

[2] CMS is permitting states to take adverse action based on an identified or reported beneficiary change in circumstance if: (1) a renewal was completed in the last 12 months prior to the change; and (2) the information regarding the change was received after that renewal was completed. On the other hand, if the beneficiary has not received a full renewal in the last 12 months, the state may not terminate the beneficiary without completing a full renewal.

[3] Section 1902(a)(14) of the Social Security Act allows waivers “as are necessary to ensure that states establish income and eligibility determination systems that protect beneficiaries.”

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