On November 7, 2022, TCF health care policy fellow Thomas Waldrop submitted the following public comment to the U.S. Department of Health and Human Services (HHS) in response to their notice of proposed rulemaking (NPRM), “Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes” (file code CMS-2421-P). In his comment, Waldrop highlights how the proposed rule would ensure beneficiaries maintain their coverage as the end of the COVID-19 public health emergency ends.
I am pleased to provide comments to the Centers for Medicare and Medicaid Services’ request for public input on the notice of proposed rulemaking (NPRM), “Streamlining the Medicaid, Children’s Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes,” file code CMS-2421-P, on behalf of The Century Foundation.
My name is Thomas Waldrop and I serve as a health care policy fellow at The Century Foundation, a progressive independent think tank. The Century Foundation works to build on the Affordable Care Act and develop the next generation of health reform to achieve high-quality, affordable, and universal coverage in America. The team also works on issues related to reproductive rights and justice, maternal health equity, focusing on the structural barriers to access to health care, racial and gender disparities in health outcomes, and the intersections between health care and economic justice.
The proposed rule would help ensure that more eligible beneficiaries for Medicaid and CHIP would be enrolled in the program and prevent eligible beneficiaries from being disenrolled due to administrative hurdles. In particular, when the COVID-19 public health emergency (PHE) ends, the proposed rule would reduce the projected levels of disenrollment associated with unwinding.
Medicaid is a joint federal-state program that provides health coverage to low-income households, many of whom lack access to other sources of coverage. Historically, the program was limited to “categorically eligible” people—seniors, children, pregnant women, and disabled people. Under the Affordable Care Act (ACA), eligibility was expanded to all households with incomes at or below 138 percent of the federal poverty level (FPL), though the U.S. Supreme Court ruled in NFIB v. Sebelius that this expansion was optional. Thirty-eight states and the District of Columbia have expanded Medicaid under the ACA. The initial creation of the Medicaid program and its expansion under the ACA have significantly increased health coverage rates, especially for people of color, women, and LGBT people.
Facilitating Medicaid Enrollment
The first section of the proposed rule, “Facilitating Medicaid Enrollment,” includes several provisions that would improve health equity. TCF is especially supportive of two of these, described below: allowing medically needy individuals to deduct expected medical expenses from their income, and simplifying citizenship verification.
Allowing medically needy individuals to deduct prospective medical expenses from income
One of the proposed changes to the rule is to allow “medically needy” individuals to deduct anticipated medical expenses from their income. Medically needy individuals are those whose income is higher than the Medicaid eligibility threshold in their state but who have significant, costly health needs. Under existing regulations, medically needy individuals who reside in medical institutions are able to deduct their expected medical expenses from their income, essentially lowering their income by the amount their care costs over a given period.
The proposed rule would allow noninstitutionalized medically needy individuals to take this approach as well. The original regulations limiting medical expense deduction to institutionalized individuals was based on the idea that those expenses were more likely to be easily projected due to their constant and predictable nature. Many noninstitutional services are also constant and predictable, however. For example, more than half of Medicaid drug spending in 2021 was for drugs which cost more than $1,000 per claim, and more than 16 percent of spending was for drugs which cost more than $10,000 per claim. By allowing noninstitutionalized patients to deduct these predictable expenses, their Medicaid eligibility will become more consistent, acknowledging their health needs.
This more consistent coverage would minimize churn and have multiple benefits, which CMS recognizes in its proposed rule. First, reducing churn lowers administrative costs to the state. Rather than redetermining eligibility each budget period and examining medical expenses, states would examine a patient’s medical record initially to determine their recurring medical expenses and confirm they occur each month. This lower administrative burden will reduce state administrative spending. Second, reducing churn will also improve health outcomes for medically needy patients, which will also have the effect of lowering medical spending over time.
Simplifying citizenship verification
Federal law generally prohibits states from spending federal dollars on undocumented immigrants Medicaid and CHIP expenses, though states are permitted to pay for emergency services through Medicaid and cover pregnant women through CHIP. Federal law also requires “lawfully present” immigrants, such as lawful permanent residents, to wait five years to enroll in Medicaid or CHIP. States are permitted to cover undocumented immigrants with state funds and to waive the waiting period for lawfully present immigrants, and most states that have done so limit these approaches to children.
Existing regulations require states to attempt to electronically verify citizenship status through the social security administration, and they allow states to attempt to verify through other methods, such as a state vital statistics database. If a state uses a data source other than the Social Security Administration (SSA), it must also provide proof of identity. Under the proposed rule, CMS would clarify that state vital statistics systems, as well as a Department of Homeland Security system, meet the standard for proof of both citizenship and identity required under law.
This change will help ensure that eligible noncitizens are not inadvertently delayed in accessing the Medicaid coverage they are entitled to. Using these systems in addition to the SSA will avoid burdensome paperwork. Medicaid households are more than twice as likely as non-Medicaid households to report limited English proficiency, meaning that requiring additional paperwork could result in unnecessary delays in or even disenrollment from coverage due to language barriers. People of color—especially Latino and Asian people—are significantly more likely than white people to have limited English proficiency as well, highlighting the equity implications of this approach.
Promoting Enrollment and Retention of Eligible Individuals
The second section of the proposed rule, “Promoting Enrollment and Retention of Eligible Individuals,” also contains several provisions that would improve health equity. These regulations would help ensure that seniors and disabled Medicaid enrollees have an easier time renewing their eligibility and would improve the processing of information by Medicaid agencies for all enrollees. The improvements made here are especially important given the unwinding of the COVID-19 PHE, during which states will begin redetermining eligibility for their Medicaid and CHIP populations for potentially the first time in nearly three years.
Reducing and simplifying renewal requests for seniors and disabled enrollees
One of the most significant aspects of the proposed regulation is its effort to align enrollment and renewal processes for seniors and disabled beneficiaries with those for other beneficiaries. Under the ACA, CMS issued a new rule that significantly simplified enrollment and renewals for beneficiaries eligible for Medicaid and CHIP because of their income. The new rule required income-based beneficiaries to be able to submit a single application online, by telephone, by mail, or in person, and it prohibited in-person interviews as a part of the application process. For renewals, the rule prohibited states from conducting renewals more than once per twelve months and required states to complete a renewal based on already available information if possible.
While these reforms certainly helped make Medicaid enrollment and renewal easier for the newly eligible expansion population, they did not apply to beneficiaries eligible for other reasons, such as being age 65 or older or being disabled. This approach makes little sense, as seniors and disabled people are more likely to remain low-income, either due to retirement or disability preventing them from seeking higher-paying employment. Similarly, these same beneficiaries are more likely to fail to respond to repeated eligibility renewal requests due to reasons other than being ineligible, such as low technology-literacy or difficulty accessing transportation.
The proposed rule would align these requirements for all applicants and beneficiaries, allowing seniors and disabled enrollees to apply for and renew their Medicaid eligibility in the same manner and at the same frequency as income-based beneficiaries. Taking this approach, especially the limitation on renewals to no more than once per twelve months, would help improve health equity by ensuring that vulnerable populations maintain their Medicaid coverage more consistently.
Improving processing of changes in circumstances
In addition to simplifying eligibility and renewal standards, the proposed rule would also require states to improve their processing of beneficiaries’ changes in life circumstances. The proposed rule outlines several steps states must take to update their procedures, including requiring states to allow beneficiaries to report information through the same modes through which they can apply for Medicaid. The proposed rule would also require states to determine if a beneficiary is eligible for Medicaid through another eligibility pathway or for another insurance program and, if eligible, transfer them into this new program.
In addition to simplifying and bolstering steps that states must take when submitting information, the proposed rule also protects patients by standardizing the timeline that a state must follow to request additional information from a beneficiary. Under the proposed rule, if a state requests additional information, it must provide a minimum of thirty days from when the request is either postmarked or sent electronically for a beneficiary to respond. If the beneficiary fails to respond, the proposed rule would require states to provide a ninety-day reconsideration period to that beneficiary. During this period, the state would be required to reevaluate their eligibility without requiring a new application.
All of these changes will have the effect of reducing inappropriate disenrollment of beneficiaries and promoting easier enrollment of new beneficiaries. As discussed earlier in this comment, reducing health insurance churn saves states both administrative and health spending, as well as promoting better health outcomes for patients.
Timely processing of information requests
The third set of reforms included in this section of the proposed rule establishes new standards for timeliness for states to process the information received from beneficiaries. Current regulations specify that states must process new applications within forty-five calendar days, except for applications based on disability, which must be processed in ninety calendar days. These requirements only apply to new applications, not renewals, and they do not establish a timeline by which a state must process information requested from a beneficiary.
CMS has proposed a new set of requirements for states to ensure that both eligible beneficiaries are enrolled in Medicaid more quickly and ineligible beneficiaries have their coverage terminated efficiently. CMS has also explicitly sought input on several aspects of these proposed requirements, which TCF provides input on below.
When a state requests additional information from a new applicant, the proposed rule generally requires states to provide applicants at least fifteen days to collect and submit that information and at least thirty days for applicants applying based on disability. CMS explains in the rule that the shorter timeline for new applications than for renewal information requests has two reasons: first, new applicants would presumably be more likely to expect some sort of correspondence from the state than renewing beneficiaries, and therefore would likely be more prepared to respond. Second, CMS believes that new applicants, even if they would be eligible for retroactive coverage, would be unlikely to try to access health services if they have not been approved.
CMS has requested input on whether this proposed minimum timeline should be finalized or if another timeline should be adopted. TCF believes that aligning all beneficiaries’ requests for information with a standard thirty-day response period is most appropriate, as this will give all applicants sufficient time to gather necessary information while still allowing patients to submit information more quickly than the full thirty days. CMS has also requested input on whether calendar or business days are most appropriate, and TCF believes that business days are the most appropriate. While calendar days could potentially provide beneficiaries with coverage more quickly, the other entities that applicants may need to work with to gather the requested information (such as employers, health providers, or other government agencies) may not operate outside of normal business hours.
As with the renewal information requests described above, the proposed rule proposes a thirty-day reconsideration period during which an applicant can submit the requested information without requiring a new application. This differs from the proposed ninety-day period for renewals under a similar logic as the timely processing proposal: new applicants are more likely to expect a communication from the state than renewing beneficiaries. CMS has requested input on whether this thirty-day period, an aligned ninety-day period, or some other timeline is most appropriate for new applicant information. TCF believes that a forty-five-day period is most appropriate. This would provide new applicants with a slightly longer period to provide the information while still prioritizing covering new applicants as quickly as possible.
Finally, the proposed rule would provide states with an additional forty-five days to process an application generally and an additional ninety days to process an application based on disability, both of which would begin when requested additional information is submitted. Under this proposal, the applicant’s eligibility date would remain the same—the date their application was submitted—but states would have additional flexibility to process the requested information. CMS has requested input on whether the eligibility date should be the application date or, as with renewal requests, the eligibility date should be the date the new information was submitted. TCF believes that the original application date should remain the eligibility date. Unlike renewing beneficiaries, whose coverage remains in effect until a final determination of ineligibility has been made, new applicants may not have any coverage until their application is processed. Treating these two opportunities to request additional information differently will help ensure that patients are best connected with coverage in both instances.
Addressing returned mail
The proposed regulation would also require states to take more action to connect with a Medicaid beneficiary when their mail is returned to the state. While federal law generally requires states to attempt to automatically renew eligibility based on other information already available, many states complete less than half of their renewals this way. States often send renewal information via mail if an automatic renewal is not possible, potentially opening up beneficiaries to being inappropriately disenrolled if they do not receive or do not respond to this mail.
Under the proposed rule, states would be required to take several steps to contact a Medicaid beneficiary if mail to that beneficiary is returned to the state. First, they would be required to check for updated mailing information from their Medicaid information system, managed care plans if the state has contracted with any, and at least one of the state’s SNAP agency, the state’s TANF agency, the state Department of Motor Vehicles, or the United States Postal Service (USPS). If they receive another address from one or all of these, they must reattempt to contact the beneficiary at that address via mail, as well as through one non-mail form of contact, such as email, phone call, or text message. For these non-mail contacts, the state would be required to make at least two attempts at least three business days apart.
If the state remains unable to contact a beneficiary after exhausting these methods, the state would then be able to take actions, depending on whether the forwarding address provided by the USPS or managed care plan was in-state or out-of-state. For in-state addresses, the state must use the new in-state address for the beneficiary’s account. CMS has asked for input on whether a state should use an address provided by the USPS or managed care plan if these differ. TCF believes that states should use the USPS address, as the USPS verifies forwarding addresses and charges a fee to submit a change of address. Whichever option is chosen for the final rule by CMS, the state should send mail to both the USPS address and the managed care plan address notifying them of the decision. For out-of-state addresses, the proposed rule would allow the state to begin the disenrollment process.
Collectively, these new requirements for returned mail will ensure that patients are not inappropriately disenrolled due to difficulties contacting them. In particular, the requirement to perform at least two non-mail contact attempts will reach more beneficiaries than mail alone. Louisiana’s pilot program experimenting with using text messages to contact beneficiaries about renewal resulted in a ten-percentage-point increase in successful renewals, highlighting the success of this approach. This intentional effort to improve outreach rates is even more important as the COVID-19 PHE unwinds, as many beneficiaries have likely moved since the disenrollment prohibition began in 2020 and may not have updated their contact information.
Conclusion: Simplifying Public Insurance Enrollment Will Improve Health Equity
Access to quality health coverage like the coverage that CMS programs provide is essential to accessing the health services a patient needs and is crucial to achieving health equity. The proposed changes to enrollment and processing of new applications, renewal requests, and additional information will help ensure that a greater number of eligible beneficiaries are quickly enrolled and help avoid those same beneficiaries from being disenrolled due to administrative burdens.
As the COVID-19 PHE unwinds, states will face significant challenges in ensuring that ineligible beneficiaries are no longer enrolled in programs like Medicaid and CHIP while also avoiding a loss of coverage due to failures to respond to renewal requests. Requiring, rather than encouraging, states to adopt the practices outlined in this rule will ensure that all beneficiaries, regardless of which state they reside, have the same access to an easy enrollment and renewal process. I appreciate the opportunity to comment on this proposed rule.