Unwinding Down

[Darth Gupta]

The expiration of the continuous enrollment condition authorized by the Families First Coronavirus Response Act (FFCRA) presents the single largest health coverage transition event since the first open enrollment period of the Affordable Care Act. As a condition of receiving a temporary 6.2 percentage point Federal Medical Assistance Percentage (FMAP) increase under the FFCRA, states were required to maintain enrollment of nearly all Medicaid enrollees during the COVID-19 Public Health Emergency.

In March of 2020, CMCS launched a regular All State Call series to bring the latest information available to support states and territories as they respond to the COVID-19 public health emergency and prepare for unwinding of COVID-19 flexibilities.

At the start of the pandemic, Congress enacted the Families First Coronavirus Response Act (FFCRA), which included a requirement that Medicaid programs keep people continuously enrolled through the end of the COVID-19 public health emergency (PHE), in exchange for enhanced federal funding. As part of the Consolidated Appropriations Act, 2023, signed into law on December 29, 2022, Congress delinked the continuous enrollment provision from the PHE, ending continuous enrollment on March 31, 2023. The CAA also phases down the enhanced federal Medicaid matching funds through December 2023. Primarily due to the continuous enrollment provision, Medicaid enrollment has grown substantially compared to before the pandemic and the uninsured rate has dropped. During the unwinding of the continuous enrollment provision, millions of people are expected to lose Medicaid and that could reverse recent gains in coverage, though not everyone who loses Medicaid will become uninsured. States could begin disenrolling people starting in April, but many did not resume disenrollments until May, June, or July. To be eligible for enhanced federal funding during the unwinding, states must meet certain requirements. To date, as reported in the KFF Medicaid Enrollment and Unwinding Tracker, there is wide variation in the number of people who have been disenrolled and in disenrollment rates across states with publicly available data.

This brief describes 10 key points about the unwinding of the Medicaid continuous enrollment provision, highlighting data and analyses that can inform the unwinding process as well as legislation and guidance issued by the Centers for Medicare and Medicaid Services (CMS) that lay out the rules states must follow during the unwinding period and the flexibilities available to them.

KFF estimates that enrollment in Medicaid/CHIP enrollment will have grown by 23.3 million to nearly 95 million from February 2020 to the end of March 2023, when the continuous enrollment provision ended (Figure 1). Overall enrollment increases reflect economic conditions related to the pandemic, the adoption of the Medicaid expansion under the Affordable Care Act in several states (NE, MO, OK), as well as the continuous enrollment provision included in the FFCRA. This provision requires states to provide continuous coverage for Medicaid enrollees in order to receive enhanced federal funding. By preventing states from disenrolling people from coverage, the continuous enrollment provision has helped to preserve coverage during the pandemic. It also increased state spending for Medicaid, though KFF has estimated that the enhanced federal funding from a 6.2 percentage point increase in the federal match rate (FMAP) exceeded the higher state costs through 2022.

The Consolidated Appropriations Act, 2023 decoupled the Medicaid continuous enrollment provision from the PHE and terminated this provision on March 31, 2023. Starting April 1, 2023, states could resume Medicaid disenrollments. States will be eligible for the phase-down of the enhanced FMAP (6.2 percentage points through March 2023; 5 percentage points through June 2023; 2.5 percentage points through September 2023 and 1.5 percentage points through December 2023) if they comply with certain rules. They cannot restrict eligibility standards, methodologies, and procedures and cannot increase premiums as required in FFCRA. Further, states must also comply with federal rules about conducting renewals. Lastly, states are required to maintain up to date contact information and attempt to contact enrollees prior to disenrollment when mail is returned.

While the number of Medicaid enrollees who may be disenrolled during the unwinding period is highly uncertain, KFF estimates that between 7.8 million and 24.4 million people could lose Medicaid coverage during the 12-month unwinding period reflecting an 8% and 28% decline in enrollment (Figure 2). If Medicaid enrollment decreased by 18%, the midpoint of the range, 17 million people would lose Medicaid coverage. These projected coverage losses are consistent with estimates from the Department of Health and Human Services (HHS) suggesting that as many as 15 million people will be disenrolled, including 6.8 million who will likely still be eligible. Findings from a survey of Medicaid enrollees fielded just prior to the start of the unwinding period suggest that many people who will be disenrolled in the coming months may continue to be eligible. While most enrollees were unaware that states are permitted to resume disenrollments suggesting they may not know that they will need to renew their coverage in the coming months, nearly two-thirds of enrollees said they have not had a change in income or circumstance that would make them ineligible for Medicaid.

States are taking different approaches to unwinding the continuous enrollment provision. CMS requires states to submit renewal redistribution plans that describe how the state will prioritize renewals, how long the state plans to take to complete the renewals as well as the processes and strategies the state is considering or has adopted to reduce inappropriate coverage loss during the unwinding period. As of May 9, 2023, 30 states had posted their renewal redistribution plan, which had to be submitted to CMS by February 15, 2023 for most states. Differences in state renewal and other policies and in how they implement those policies are likely to lead to differences across states in the extent of Medicaid enrollment declines during the unwinding period.

According to a KFF survey conducted in January 2023, states have taken a variety of steps to prepare for the end of the continuous enrollment provision (Figure 4). Under CMS guidance, states had the option to start the unwinding period by initiating the first batch of renewals in February, March, or April. Eight states started the process in February, another 15 started in March, and 28 states began in April. Most states (43) said they plan to take 12-14 months to complete all renewals (the remaining eight states said they planned to take less than 12 months to complete renewals). All states indicated they had taken steps to update enrollee contact information during the past year and nearly three-quarters of states (38) were planning to follow up with enrollees who do not respond to a renewal request before terminating coverage.

As states begin to unwind the continuous enrollment provision, there are opportunities to promote continuity of coverage among enrollees who remain eligible by increasing the share of renewals completed using ex parte processes and taking other steps to streamline renewal processes (which will also tend to increase enrollment and spending). CMS guidance notes that states can increase the share of ex parte renewals they complete without having to follow up with the enrollee by expanding the data sources they use to verify ongoing eligibility. However, when states do need to follow up with enrollees to obtain additional information to confirm ongoing eligibility, they can facilitate receipt of that information by allowing enrollees to submit information by mail, in person, over the phone, and online. While nearly all states accept information in-person (51 states) and by mail (50 states), slightly fewer provide options for individuals to submit information online (48 states) or over the phone (46 states).

A proposed rule, released on September 7, 2022, seeks to streamline enrollment and renewal processes in the future by applying the same rules for MAGI and non-MAGI populations, including limiting renewals to once per year, prohibiting in-person interviews and requiring the use of prepopulated renewal forms. Overall, every state has taken at least one action to align renewal processes for non-MAGI populations with those for MAGI populations, including 45 states that have eliminated in-person interviews, 42 states that limit renewals to once per year, and 33 states that send pre-populated renewal forms.
(Back to top)

As states prepare to complete redeterminations for all Medicaid enrollees, many may face significant operational challenges related to staffing shortages and outdated systems. To reduce the administrative burden on states, CMS announced the availability of temporary waivers through Section 1902(e)(14)(A) of the Social Security Act. These waivers will be available on a time-limited basis and will enable states to facilitate the renewal process for certain enrollees with the goal minimizing procedural terminations. As of February 24, 2023, CMS had approved a total of 188 waivers for 47 states (Figure 6). These waivers include strategies allowing states to: renew enrollee coverage based on SNAP and/or TANF eligibility; allow for ex parte renewals of individuals with zero income verified within the past 12 months; allow for renewals of individuals whose assets cannot be verified through the asset verification system (AVS); partner with managed care organizations (MCOs), enrollment brokers, or use the National Change of Address (NCOA) database or US postal service (USPS) returned mail to update enrollee contact information; extend automatic enrollment in MCO plans up to 120 days; and extend the timeframe for fair hearing requests.

c80f0f1006