2023 Outlook: Redeterminations, Social Needs Will Keep Medicaid Plans Busy

April 17, 2023

2023 Outlook: Redeterminations, Social Needs Will Keep Medicaid Plans Busy

2023 Outlook: Redeterminations, Social Needs Will Keep Medicaid Plans Busy

Reprinted with AIS Health permission from the Feb. 2, 2023, issue of Radar on Medicare Advantage

Medicaid managed care organizations this year will have their hands full as they support state efforts to resume eligibility redeterminations and try to help members avoid gaps in coverage, or “churn” historically associated with failing to meet cumbersome paperwork requirements. At the same time, MCOs may have more opportunities to address health-related social needs (HRSNs) as CMS encourages states to pursue new funding flexibilities around items like food and housing, industry experts tell AIS Health, a division of MMIT.

As a condition of receiving enhanced federal matching funds during the COVID-19 public health emergency —which will end on May 11 — states had to maintain continuous coverage for Medicaid enrollees. But the Consolidated Appropriations Act of 2023 (CAA) decoupled that requirement from the expiration of the PHE. Per the CAA, the temporary 6.2 percentage-point increase in the Federal Medical Assistance Percentage will phase down over three quarters starting on April 1, when states may begin terminating Medicaid coverage for individuals who no longer qualify. States have up to 12 months to begin — and 14 months to complete — eligibility redeterminations for all individuals enrolled in Medicaid.

“The Public Health Emergency [pause on] redetermination is the 800-pound gorilla in the room and is the biggest thing that has happened to Medicaid since the Affordable Care Act,” remarks Jerry Vitti, founder and CEO of Healthcare Financial, Inc. (HFI). “I think the challenge is continuity of care is going to really take a hit, and the vulnerable populations are really at risk.”

HFI, which connects low-income, elderly, and disabled populations with Medicaid and other public benefit programs, has been working to accelerate the process of enrolling people with disabilities in Medicaid through the Social Security Administration, thereby excluding them from redeterminations as long as they are on Social Security Disability Insurance, explains Vitti. Otherwise, he worries that the “uneven aspect” of renewals poses a large problem for high-need, high-cost individuals who are in case management and may be unable to enroll without assistance.

There are also downstream implications for the health care system when vulnerable patients experience gaps in coverage, become sicker and end up seeking treatment in the hospital, where they ultimately end up getting re-enrolled in Medicaid. “If folks are no longer eligible for the program, they should come off the rolls; it’s the folks who are most vulnerable who are eligible but lost coverage and then get re-enrolled…that volatility in the system is going to be overwhelming. And plans have definitely been empowered and active in trying to minimize the effects of this.”

To assist states, plans have been hard at work over the last year or so making sure their beneficiary contact information is up to date, but they have avoided overcommunicating with members about the pending change since the PHE was renewed so many times, explains Kacey Dugan, director of policy & regulatory affairs with Faegre Drinker Consulting in Washington, D.C. “Everyone has been resistant to start rolling out education campaigns…because when you do that and then the redeterminations keep getting delayed, it loses its potency and you’re less likely to get people’s attention,” she tells AIS Health. “So that was one big concern.”

Now that the start of redeterminations is known, “I would expect plans to really be focused on starting to contact people and letting them know the change is happening, messaging around who an enrollee might expect to receive something from in the mail…and that they should return the information,” says Dugan. At the same time, plans with “multiple lines of business are thinking about how they can retain people who are in a Medicaid plan and ease the transition to an ACA product for example.”

Indeed, insurers like Centene Corp., Elevance Health, Inc. and UnitedHealthcare have said they’ll look to leverage their overlapping Medicaid and Affordable Care Act (ACA) exchange footprints to offset some of the expected declines in Medicaid enrollment and revenue.

Estimates vary as to how many individuals will come off the Medicaid rolls due to redeterminations. Modeling from McKinsey & Co. has Medicaid enrollment declining by about 10 million lives over five years with the resumption of eligibility redeterminations. Meanwhile, a recent Urban Institute analysis projected that about 18 million Medicaid enrollees could be shed from the program’s rolls in the 14 months after redeterminations resume in April. The largest portion, 9.5 million, would move to employer-sponsored plans, the analysis predicted, while the second-largest number group  would become uninsured. That analysis predicted that just 1 million would move to nongroup coverage, mainly through the ACA exchanges.

Meanwhile, a new Kaiser Family Foundation (KFF) analysis of pre-pandemic data suggested that many of the millions of people expected to go off Medicaid could end up without health coverage for months or more. Looking at enrollment data from the 2016-2019 Medical Expenditure Panel Survey, KFF found that 65% of people who were disenrolled from Medicaid or CHIP became uninsured for all or part of the 12 months that followed. Moreover, 41% of people who were disenrolled eventually re-enrolled in Medicaid/CHIP within a year. KFF previously estimated that up to 14 million would lose Medicaid coverage when continuous enrollment ends.

“Ultimately, churning on and off Medicaid/CHIP can limit access to care and lead to delays in getting needed care,” observed the new analysis. “Even for people who have other coverage before re-enrolling in Medicaid/CHIP, churning can cause disruptions in coverage when it requires people to change their health care providers or to navigate through different benefit packages.”

Expansion Talks, New Demonstrations Are Encouraging

Redeterminations aside, the future of Medicaid is not all “gloom and doom,” says Vitti. For example, “there is still some momentum in states that haven’t expanded [Medicaid] to do either full or some partial expansion,” he says, adding that even talk of partial expansion is encouraging. All eyes are on North Carolina, where Democratic Gov. Roy Cooper’s continued efforts to get Medicaid expansion through a Republican-controlled legislature are facing less opposition. Similarly, Kansas Gov. Laura Kelly (D) plans to reintroduce an expansion measure in the Republican-controlled legislature.

In Mississippi, which could gain about $1 billion in federal funding if it expanded, 80% of recently polled respondents — including 70% of Republicans — indicated that they either strongly agree or somewhat agree the state should “accept federal funds to expand Medicaid.” And after getting its Section 1115 demonstration approval reinstated for the Georgia Pathways to Coverage program, that state may finally extend Medicaid coverage to parents and childless adults with incomes at 100% of the federal poverty level.

States are testing a variety of other program flexibilities through newly approved Section 1115 waivers, many of them aimed at addressing HRSNs. While many states implemented an option to expand continuous eligibility for children enrolled in Medicaid up to 12 months — which is now a requirement, per the CCA — Oregon took that one step further by seeking authorization to provide multiyear continuous Medicaid enrollment for children and adults. The new state policy, approved on Sept. 28, will ensure that children enrolled in Medicaid or CHIP receive continuous coverage until age 6 and provides two years of continuous enrollment for adults and children 6 or older, regardless of income fluctuations or other changes that otherwise would impact eligibility.

“Continuous enrollment for Medicaid beneficiaries will lead to improved health outcomes, more predictable costs and more consistent preventive care,” observed a Manatt report on the Oregon demonstration. “Given that 12-month continuous coverage for children is now mandatory, and the broad enthusiasm from children’s health care providers and advocates and support from CMS for broader, multiyear expansion beyond 12 months, other states are likely to seek to build on Oregon’s approach and pursue similar 1115 demonstrations.”

At the same time, Oregon received authorization to fund housing and nutritional supports for people in a variety of transitional scenarios, such as being displaced by extreme climate events, leaving psychiatric residential facilities, aging into a Medicare-Medicaid dual eligibility status or exiting incarceration, including “justice-involved” youth. (More recently, CMS on Jan. 26 approved a Section 1115 demonstration in California allowing the state for the first time to provide coverage to justice-involved individuals before they’re released from jail, prison, or a youth correctional facility.)

“Not only are these times where people are in transition, but we really feel that it’s a time of houselessness…and that’s the first step to being able to take care of physical/behavioral health and dental needs,” explained Lori Coyner of the Oregon Health Authority during a Jan. 9 webinar hosted by Manatt. “The other piece is our housing services and nutrition services focus on tenancy-sustaining services, so we will have a focus on keeping people…housed, because we know that there’s limited housing stock and one of the best ways to handle that is by providing people the resources they need to stay in their current living situation.”

On the same day that CMS authorized Oregon’s demonstration, the agency gave Massachusetts expanded authority to provide certain time-limited housing supports, clinical nutrition education, and medically tailored food assistance services to a range of at-risk populations, including postpartum individuals for up to 12 months. Massachusetts will also provide additional meal support for certain households when an eligible beneficiary is a child or pregnant woman with special clinical needs.

Shortly thereafter, CMS also approved a waiver request from Arizona that will enable it to provide temporary housing — which it had been doing on a limited basis for individuals with serious mental illness — to more individuals and with direct rental assistance. Through that approval, Arizona can provide housing support for up to six months to help individuals transition out of situations such as homelessness or incarceration and conduct outreach to find out who needs these services, explained Dana Flannery of the Arizona Health Care Cost Containment System during the Manatt webinar. Manatt Partner Cindy Mann, who moderated the webinar, noted that this is the first time CMS has approved direct rental payments as a funded Medicaid service, whereas previously it supported things like utilities and deposits through demonstration approvals.

With these approvals and a similar demonstration approval in Arkansas, CMS essentially established a framework outlining how it will exercise discretion in future waivers seeking similar flexibilities and funding, observed Mann. For example, CMS included a budget neutrality cap that is based on what the state projects it’s going to spend over the course of the waiver on the HRSN, increased the savings states can roll over from prior demonstrations from five to 10 years, and allowed states to treat certain HRSN expenditures as “hypothetical” for purposes of budget neutrality calculation. Speakers during the Manatt webinar agreed that those last two pieces gave states a little more certainty when it came to envisioning a cost-effective program over a five-year period.

Dugan and Vitti agree that these approvals will likely influence other states to continue seeking ways to address HRSNs to improve health outcomes and address inequities.

“There’s just so much awareness about the social determinants of health, and allowing plans to use some of their money more flexibly in order to address social determinants of health is something that’s long overdue. And I think the plans want to and have been experimenting with stuff, and the more flexibility and more dollars that can go there the better, so I see that as a trend that’s moving forward,” says Vitti.

Meanwhile, another pathway for addressing HRSNs that could gain momentum this year is the “in lieu of services” policy, adds Dugan. CMS in January issued guidance to clarify that states have in their toolbox the flexibility to allow their contracted Medicaid managed care plans to pay for social supports not otherwise covered in Medicaid. Additionally, states in their managed care requests for proposals are likely to make more requests around addressing health equity, says Dugan.

– Lauren Flynn Kelly