By Elena Eyber, J.D.
As states prepare to return to normal operations post COVID-19 pandemic, policymakers should consider a range of policies that promote more stable and continuous Medicaid coverage.
Coverage disruptions and coverage loss in Medicaid frequently occur among Medicaid beneficiaries. Churning occurs when people lose Medicaid and then re-enroll within a short period of time. Gaps in health coverage occur because many people experiencing churning do not transition successfully to Marketplace or employer-based coverage for the months in which they were not enrolled in Medicaid. The Families First Coronavirus Response Act (FFCRA) maintenance of eligibility (MOE) and continuous enrollment requirements have temporarily halted most Medicaid churning. Under the continuous enrollment provision in FFCRA, states that accept the law’s temporary increase in federal Medicaid funding are prohibited from terminating most beneficiary enrollment for the duration of the public health emergency. In this report, the HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE) reviewed evidence on churning among the Medicaid population and different policy options for states and the federal government to reduce churning, including continuous eligibility, Medicaid expansion to adults, express lane eligibility, presumptive eligibility, multimarket plans, and limiting premiums and cost-sharing (ASPE Report, April 12, 2021).
ACA Medicaid expansion to adults. Research has found that part of the Affordable Care Act’s (ACA’s) reduction in the uninsured rate can be attributed to increased retention of Medicaid enrollees, and states that have adopted the Medicaid adult group expansion have lower rates of churning in and out of Medicaid than non-expansion states. Among Medicaid beneficiaries aged 19–64, disruption in coverage decreased by 4.3 percentage points in states that expanded Medicaid compared to states that have not expanded, amounting to approximately half a million beneficiaries maintaining their coverage each year. Among pregnant women, nearly half of women in Medicaid non-expansion states experienced an insurance disruption from preconception to postpartum between 2015-2017, compared to one-third of women in Medicaid expansion states. Further, there was a greater decrease in disruptions of coverage among people of color compared to white individuals in expansion states compared to non-expansion states. Researchers have highlighted three likely ways Medicaid expansion has reduced churning: 1) The higher income threshold of 138 percent of federal poverty level (FPL) accommodated larger monthly fluctuations in income without loss of eligibility; 2) The standardized upper eligibility threshold simplified requirements across states; and 3) Expansion states generally increased their outreach efforts and enrollment assistance for Medicaid.
The American Rescue Plan (ARP) encourages non-expansion states to take up Medicaid expansion by providing an additional temporary fiscal incentive. Under the ARP, states receive the ACA 90% Federal Medical Assistance Percentage (FMAP) for the adult group expansion population costs. In addition, states that do not have expansion in place when the ARP was enacted are eligible for a 5 percentage-point increase in the state’s traditional FMAP rate for two years (2021-2022) if they implement the expansion for the adult group. The traditional FMAP applies to most services for non-expansion groups, including children, non-expansion adults, seniors, and people with disabilities. In addition to receiving the ARP’s temporary FMAP increase, states will also receive the 90 percent ACA FMAP for the expansion population costs.
Continuous coverage. Continuous eligibility policies allow Medicaid beneficiaries to maintain continuous coverage even if they experience a change in circumstances (e.g., income) during the continuous eligibility period. One 2015 analysis found Medicaid churning within a calendar year would decrease by 30 percent with 12 months of continuous eligibility. This translates to 20 percent (5 million) more beneficiaries covered all year, increasing the average monthly caseload by 17 percent (6.8 million). States have been able to allow children to stay enrolled in Medicaid and/or CHIP for up to 12 months regardless of changes in their families’ circumstances under the continuous eligibility option since 1997. As of January 2020, 23 states provide 12-month continuous eligibility for children in Medicaid and 25 states do so for children enrolled in CHIP. Children living in these states are much less likely to be uninsured (7.8 percent vs. 11.7 percent) and to have had a gap in coverage in the previous 12 months (11 percent vs. 15.9 percent) compared to children in states without continuous eligibility.
The ARP established a new state plan option for states to extend postpartum coverage in Medicaid and CHIP to women for 12 months and provide continuous eligibility through the extended postpartum period. Starting in April 2022, women covered under this option will receive comprehensive Medicaid benefits, not just pregnancy-related benefits, and will have continuous eligibility for the extended postpartum coverage period regardless of change in circumstances for the 12-month period. This option will be available to states for five years, granting states the opportunity to extend postpartum coverage without a section 1115 demonstration.
Express Lane Eligibility and Presumptive Eligibility. Express Lane Eligibility (ELE) allows states to use eligibility findings from other public programs to verify Medicaid and CHIP eligibility for children, eliminating duplication of administrative efforts and easing the burden on families from having to provide the same information to multiple agencies. ELE agencies may include: Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and Women, Infants, and Children (WIC). ELE may be adopted by states through a state plan amendment, which 13 states have done for children in Medicaid and/or CHIP. These states have reported reduced administrative burden and cost savings.
Presumptive Eligibility (PE) is a Medicaid state option to allow specific qualified entities, such as health care providers, hospitals, schools, government agencies and community-based organizations, to screen pregnant women, children, parents and other non-elderly adults for Medicaid eligibility and temporarily enroll them. These policies allow individuals determined presumptively eligible to secure covered health care services without delay while they complete the regular application process for ongoing coverage. As of January 2020, 30 states had implemented PE policies for pregnant women, 19 states had PE for children, 9 states had PE for parents, and 8 states provided PE for other non-elderly adults. PE can be used in conjunction with targeted efforts at the community level to find and enroll the hardest to-reach, uninsured children. It also simplifies the enrollment process through direct, one-on-one assistance.
Shared plans between Medicaid and Marketplace. Having the same insurers in both Medicaid and the Marketplace can help keep beneficiaries in more consistent coverage with similar provider networks even if they have to transition from Medicaid to Marketplace or vice versa. The ability for issuers to participate across multiple public financing arrangements and provide stable provider networks is essential to achieving continuity of care. Medicaid managed care companies may be suited to playing a role in this area. In 2021, 47 percent of all parent insurers offered a Marketplace plan and Medicaid plan in the same state, and there were 36 states with at least one of these parent insurers. However, these multimarket plans, while reducing the potential disruption from churning, only address churning between Medicaid and Marketplace coverage (but not employer coverage) and do not eliminate the underlying disruption in coverage, unlike some of the other policies discussed in this report.
Limiting premiums and cost-sharing. States have implemented premiums and cost sharing in Medicaid with the stated goals of promoting personal responsibility, preparing beneficiaries to transition to commercial and private insurance, and supporting consumers in making value-conscious health decisions. However, research has shown premiums act as a barrier to accessing care and maintaining coverage, including increasing disenrollment and shortening length of enrollment in Medicaid and CHIP among adults and children.
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