CMS issues interim rule addressing Medicaid disenrollments effective immediately

During the pandemic, states were able to dramatically increase enrollment in their Medicaid programs due to an enhanced federal funding requirement that states keep beneficiaries enrolled in Medicaid for the duration of the public health emergency period. The end of the “continuous enrollment” policy on March 31, 2023, has led states to reinstate full eligibility review of their Medicaid enrollees, resulting in the loss of coverage for many Americans.

As the federal government seeks to monitor how states re-implement their Medicaid re-enrollment determination polices, newer statutory authority passed by Congress enables the Centers for Medicare and Medicaid Services (CMS) to exercise increased enforcement authority in an effort to stem the tide of unnecessary and improper disenrollments.

In the latest effort by CMS, a new interim final rule has been issued focusing specifically on increased state Medicaid reporting requirements and the use of corrective action plans (CAP) for states that fail to meet federal requirements for eligibility determinations. CMS is accepting comments in connection with the interim final rule through February 2, 2024.

Key elements of the interim rule include requiring states to provide metrics on Medicaid disenrollment as well as any transitions from Medicaid to state Exchange plans. According to the CMS, “[r]eviewing and publishing these monthly data will give CMS and the public information to help hold States accountable for following redetermination requirements and will promote transparency.”

For any fiscal quarter during the period beginning July 1, 2023, and ending June 30, 2024, if a state fails to meet the reporting requirements of section 1902(tt)(1) of the Social Security Act, CMS will reduce that state’s Federal Medical Assistance Percentage (FMAP) by 0.25 percent multiplied by the amount of fiscal quarters that the state has been noncompliant, not to exceed one percent. Thus, the teeth in the interim rule include a potential reduction in matching dollars for states.

The interim rule also authorizes CMS to issue a CAP to states that do not meet federal requirements related to eligibility redeterminations or reporting requirements. If the state fails to submit and implement a CAP, the interim rule allows CMS to require the state to suspend some or all disenrollments from Medicaid for procedural reasons, impose a civil monetary penalty (CMP) of US$100,000 for every day the state remains in noncompliance or both.

Concern about unnecessary and improper disenrollments has been a focus of HHS and public health advocates. On June 12, 2023, Secretary Xavier Becerra sent a letter to all state governors urging them to take action to prevent procedural disenrollments. According to the Kaiser Family Foundation, nearly 12 million Medicaid enrollees have been disenrolled following the unwinding of the continuous enrollment provision, 71 percent due to procedural reasons rather than eligibility reasons.

Comments in connection with the interim rule may be submitted via mail or electronically on the regulations.gov website.

For assistance with drafting and/or submitting comments in connection with this interim rule or understanding obligations in connection with the interim rule, please do not hesitate to reach out to our team here at Norton Rose Fulbright.