- Federal regulators are cracking down on the growing number of procedural disenrollments during ongoing Medicaid redeterminations, warning that states could lose federal funding and face fines if they fail to follow federal requirements, according to a CMS interim final rule published Monday.
- The rule, which takes effect on Wednesday, allows regulators to force states to submit a corrective action plan if they don't comply with monthly reporting or eligibility requirements. If states don't create or follow the plan, the agency can suspend disenrollments, impose monetary penalties and reduce the federal government’s share of Medicaid program costs.
- The latest regulation comes as nearly 11.8 million beneficiaries have been disenrolled from the program for low-income people, according to a tracker by health policy research firm KFF. In states with available data, 71% of people disenrolled were removed for procedural reasons, where beneficiaries are cut for administrative reasons but could still be eligible for Medicaid.
Medicaid enrollment soared during the COVID-19 pandemic as states paused checking eligibility for the safety-net program in return for enhanced federal funding. But that period of continuous enrollment ended in the spring this year, kicking off the redeterminations process that has removed millions from Medicaid.
The federal government has expressed concern about procedural disenrollments and moved to curb them, including ordering states to pause coverage terminations. In September, regulators directed 30 states to halt procedural disenrollments after nearly 500,000 people, including children, were inappropriately removed from Medicaid and the Children’s Health Insurance Program due to issues with the automatic renewal system.
States are required to file monthly reports on the redeterminations process. They also have to maintain up-to-date contact information and undertake a “good faith effort” to contact beneficiaries using more than one method before they’re disenrolled.
In the latest interim final rule, which is issued when an agency believes it had cause to publish a final rule without a proposal, the CMS could put states on a corrective action plan if they don’t follow federal guidelines and impose fines of up to $100,000 for each day a state doesn’t comply with a corrective plan. Regulators could also reduce the Federal Medical Assistance Percentage determined for the quarter, which couldn’t exceed one percentage point.
The interim final rule’s publishing comes after the CMS determined the traditional notice-and-comment rulemaking process would take too long, potentially resulting in harm to beneficiaries.
“While we are unable to determine the proportion of individuals who were procedurally disenrolled but continued to meet substantive eligibility criteria, the high rate of procedural disenrollments suggests that the options and strategies that CMS has been working with States to implement through their mitigation plans may not be sufficient to protect the continued enrollment of individuals who continue to meet substantive eligibility criteria,” the interim rule states
Comments on the rule are open until Feb. 2.