The Centers for Medicare and Medicaid Services (CMS) sent a letter on Wednesday to all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands, informing them that they must examine if they have an issue with their Medicaid eligibility system that’s causing eligible people to be removed from coverage. 

This comes as Medicaid unwinds the continuous enrollment requirement, which stopped states from disenrolling beneficiaries during the Covid-19 public health emergency. The provision ended in March, and states have returned to the typical renewal process for Medicaid and the Children’s Health Insurance Program. It’s estimated that about 18 million people will be disenrolled during this process.

CMS said one of the best ways to ensure that eligible people remain enrolled in Medicaid or CHIP is through auto-renewals — also known as “ex parte renewals” — in which states will automatically renew a member if they determine the individual is still eligible for Medicaid.

“States are required by federal regulation to use information already available to them through existing reliable data sources (e.g., state wage data) to determine whether people are still eligible for Medicaid or CHIP. Auto-renewals make it easier for people to renew their Medicaid and CHIP coverage, helping to make sure individuals are not disenrolled due to red tape,” CMS stated in a news release.

CMS said that in some states, auto-renewals are happening at the “family-level and not the individual-level,” despite the fact that different family members could have different eligibility statuses. For example, Medicaid and CHIP eligibility levels are typically higher for children than for adults, meaning children in a family could still be eligible for coverage even if their parents are not.

“While a state may have sufficient information during the ex parte process to renew Medicaid or CHIP coverage for some individuals in a multi-member household, states are sending renewal forms requesting information for all household members, and, if the renewal form is not returned, states are disenrolling all individuals in the household, including those who should have been determined to be eligible through the ex parte process,” the letter stated. “These actions violate federal renewal requirements and must be addressed immediately.”

If states determine that they are having this issue, then CMS said they must follow these four steps:

• Pause procedural disenrollments for impacted members. Procedural disenrollments are when members are removed from coverage because they did not complete the renewal process, but may still be eligible for coverage.
• Reinstate coverage for those who were impacted.
• Implement at least one CMS-approved strategy to stop incorrect disenrollments.
• Fix state eligibility systems and processes.

So far, more than 5.5 million Medicaid enrollees have been disenrolled from coverage, and 74% were disenrolled for procedural reasons, according to KFF.

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