Tegria Services for Payers
Fact Sheet Dec 05, 2022
On April 1, 2023, state Medicaid agencies began redetermination activities outlined in The Consolidated Appropriations Act of 2023. This marks the end of pandemic-era continuous Medicaid enrollment that boosted Medicaid numbers to an all-time high of 93 million enrollees in January 2023.
As the result of redetermination activities, an estimated 18 million Medicaid enrollees will lose coverage. Some 14.2 million of these individuals are expected to transition to an alternative form of insurance, and 3.8 million are expected to become uninsured. Along with other new and emerging CMS regulations, this is expected to impact population health, access to care, and health plan operations.
According to the Kaiser Family Foundation Medicaid Enrollment and Unwinding Tracker, 21 states have released data from the first few months of the reverification process. As of June 13, 2023, at least 1,078,000 individuals have been disenrolled from Medicaid. Early data show that a large share of these are “procedural” disenrollments resulting from administrative barriers or errors—because an individual failed to complete the required paperwork or could not be contacted.
Currently, seven states report a procedural disenrollment rate greater than 80%, while fewer than 20% were disenrolled because they failed to meet program eligibility requirements. These administrative barriers are often felt more heavily by the most vulnerable populations, especially those who have moved, are part of the immigrant population, or have limited English proficiency. As a result, the unwinding of the Medicaid continuous enrollment policy is expected to have a disproportionate impact on vulnerable populations.
Prior to COVID-19, approximately 65% of enrollees who disenrolled from Medicaid experienced a coverage gap (period with no insurance) during the year following disenrollment. Individuals who become uninsured or underinsured after Medicaid reverification are likely to experience access and financial barriers to routine and preventive care services.
These gaps in care may be a silent issue in the short term but could result in long-term population health impacts. As individuals forgo preventive care and chronic condition maintenance, their long-term health costs are likely to rise due to higher rates of disease progression and adverse health events that may have been avoidable or mitigated with routine preventive care services.
Many enrollees likely to lose coverage are adults under the age of 65 who enrolled in Medicaid during the pandemic due to job loss. These members typically represent a lower proportion of Medicaid spending as compared to Medicaid enrollees who qualify due to disability or long-term financial challenges. As a result, some experts speculate that, while enrollment numbers will decrease significantly in the coming year, the total cost of care will not proportionally decrease; in fact, the average per member per month cost could increase.
Additionally, states will lose the additional funding received during the pandemic for following the continuous enrollment provision (6.2% of FMAP, Federal Medical Assistance Percentage). The FMAP pandemic funding met or exceeded the cost of increased enrollment in each of the 50 states. It also shifted Medicaid budgets so that a larger proportion of funding was received from federal sources. As funding returns to status quo, the balance between state and federal funding will also shift.
Many states and Managed Medicaid Organizations leveraged increased funding over the past three years to expand operations to meet increased enrollment. Reverification and loss of the additional FMAP funding will decrease the funds available to run Medicaid operations and likely require states and organizations to scale back operations. Medicaid plans will need to be thoughtful in how they scale back services while strategically building future offerings with fewer funds.
States and Managed Medicaid Organizations are not the only industry players expected to see impacts from the end of Medicaid’s continuous enrollment provision. Providers who care for the Medicaid population may see a drop in the total number of Medicaid patients on their panel. Patients may experience disenrollment from Medicaid in between visits, and providers will need to be aware of any changes to insurance to ensure appropriate billing and coverage. Hospitals may see a long-term increase in the number of uninsured individuals who arrive with catastrophic injuries or emergency situations potentially resulting in unaddressed medical debt.
The outcomes and lessons from this period are still unfolding. However, the events of the past few years and the current changes to regulations are bringing new energy and focus to questions around ongoing access to care and health equity for the most vulnerable members of society. We hope to help payers navigate these challenges as we leverage technology to lower the cost of care and improve access to critical services for Medicaid beneficiaries and uninsured populations.