Health Reform WK-EDGE ACA-related backlogs and delays result in modification of prior settlement
Thursday, April 7, 2016

ACA-related backlogs and delays result in modification of prior settlement

By Harold Bishop, J.D.

A district court modified a 1999 settlement order entered into by Medicaid applicants and recipients (beneficiaries) and the District of Columbia (District) to account for significant changes in circumstances regarding the District’s current processing of initial Medicaid applications and the Medicaid benefits renewal process. The 1999 settlement order was negotiated by the beneficiaries and the District after the court found that the District was not properly administering its Medicaid program. Since the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) ushered in changes to the Medicaid program in 2013, the beneficiaries allege severe backlogs in the District’s processing of Medicaid applications, delays in the Medicaid renewal process, and a number of computer glitches in the District’s Medicaid program. The court concluded that the beneficiaries’ proposed amendments to the settlement order, with a slight modification by the court, were suitably tailored to address the altered circumstances (Salazar v. District of Columbia, April 4, 2016, Kessler, G.).

Background. In 1993, the beneficiaries filed a complaint alleging various statutory and constitutional violations in the course of the District's provision of Medicaid benefits. In 1996, following a bench trial, the court found the District liable for violations of statutory provisions of the Medicaid statute and other federal law. Specifically, the court found that the District: (1) did not process applications for Medicaid eligibility in a timely manner; (2) did not provide adequate advance notice before suspending or terminating benefits; (3) failed to provide early and periodic screening, diagnostic and treatment (EPSDT) services for children under 21 years of age; and (4) did not adequately notify eligible families regarding the availability of EPSDT services. On January 25, 1999, the parties' negotiated, and the court entered, a settlement order memorializing the District's obligations to remedy these violations.

ACA implications. Passage of the ACA modified the Medicaid recertification process. Section 1413 of the ACA required the District to move to a “passive renewal” model in which beneficiaries' eligibility is determined to the extent possible on the basis of reliable information available to the District, such as data available through the Internal Revenue Service or the Social Security Administration (42 C.F.R. 435.916). The 1999 settlement order does not rest on the ACA's passive renewal model. Instead, it assumed that Medicaid beneficiaries would have to actively renew their benefits on an annual basis.

New problems. In light of severe backlogs in the processing of Medicaid applications, delays in the Medicaid renewal process, and a number of computer glitches caused by ACA-related changes to the District's administration of the Medicaid program, the beneficiaries filed, on December 22, 2015, a motion for preliminary injunction seeking relief on behalf of Medicaid beneficiaries in the District who might be prejudiced by the implementation difficulties.

The beneficiaries’ motion sought an order requiring the District to: (1) provisionally approve all Medicaid applications pending over 45 days until a final determination can be made; and (2) continue the eligibility of all Medicaid recipients due to have their Medicaid benefits renewed or recertified. The beneficiaries asked that these remedies remain in place until the District demonstrated to the Court, based on substantial evidence, that its technology and business processing systems for making timely eligibility determinations on applications and providing adequate notice to Medicaid recipients and applicants of the decisions on renewals and applications were functioning as required to ensure and protect the rights of Medicaid recipients and applicants.

On February 9, 2016, the beneficiaries chose to supplement their request for preliminary relief with a motion for modification of the settlement order which sought relief on a permanent basis that was nearly identical to the relief requested in their motion for preliminary injunction, except that the motion for modification added one additional duty: that the District report monthly on their compliance with its terms of the modified settlement order.

Analysis. The court granted, with slight modification, the beneficiaries’ motion for modification of the settlement order and denied their motion for preliminary injunction as moot.

The court found that based on the evidence, it was clear that circumstances had changed significantly since entry of the 1999 settlement order. The evidence demonstrated that numerous Medicaid-eligible residents of the District were denied benefits to which they were entitled due the District's failure to timely process initial applications, failure to deliver adequate and timely renewal notices, and failure to efficiently process renewal requests. The court found that the changed circumstances violated the Constitution and the ACA and affected the beneficiaries. Accordingly, the court concluded that modification of the settlement order to address these violations was warranted.

The court further concluded that the beneficiaries' proposed amendments to the settlement order were suitably tailored to address the changed circumstances, except for one provision. The court found that the requested relief that would indefinitely continue the benefits of all Medicaid recipients due to be renewed or recertified, swept too broadly. That requested relief, according to the court, would virtually eliminate the District’s ability to terminate coverage for individuals who are not eligible or entitled to Medicaid benefits at heavy costs to the District’s taxpayers. Because such a result could not be justified, the court found that this relief was not suitably tailored to resolve the problems discussed above.

Therefore, the court modified this relief to state: “The District shall continue the eligibility of all Medicaid recipients due to be renewed or recertified for 90 days after each recipient's renewal or recertification deadline unless the District has affirmatively determined that the recipient is no longer eligible for Medicaid.”

The case is No. 93-452 (GK).

Attorneys: Bruce J. Terris (Terris Pravlik & Millian, LLP) and Lynn E. Cunningham (Law Offices of Lynn E. Cunningham) for Oscar Salazar. Alan S. Block (Bonner Kiernan Trebach & Crociata, LLP) and Bradford Collins Patrick, Office of the Attorney General, for District of Columbia.

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