Medicaid Eligibility Matters

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May 22, 2023

Should a health-care program for low-income seniors, the disabled, kids, and pregnant mothers be co-opted by hundreds of thousands of healthy adults? Adults not even eligible for assistance? Since March 2020, that’s been the reality for the Medicaid program.

But this spring, states regained their ability – for the first time in three years – to clean eligibility rolls and preserve Medicaid benefits for those who need them most.

At the outset of COVID-19, the federal government pressured and coerced states to stop routine Medicaid eligibility redeterminations in return for enhanced funding as part of the Public Health Emergency (PHE). That ended on March 31 of this year, and April saw states once again begin the formidable process of confirming participant eligibility.

It’s about time. A recent Paragon Health Institute study estimated that upwards of 18 million ineligible adults are using Medicaid. In Pennsylvania alone, more than 600,000 recipients are likely ineligible for Medicaid, and many of these ineligible recipients have other forms of insurance.

In short, states like Pennsylvania will spend hundreds of millions on care for noneligible adults, while truly disabled individuals seeking care in a community setting sit on waiting lists.

The clean-up process won’t be easy. For a large state like Pennsylvania, this means verifying the eligibility of millions of Medicaid recipients. Staffing shortages may present challenges to the review process, but the real complications lie with the onerous Obama-Biden era fast-track eligibility rules.

The federal government’s Medicaid fast-track enrollment policy requires that state workers renew Medicaid benefits even after having little to no communication with the actual recipients. States use any information available rather than ask recipients to fill out forms. The policy allows recipients to give information about matters such as income without providing proof.

States typically verify recipient eligibility once per year. And the federal government discourages states from reviewing more than one-ninth of their total caseload each month during the phase-out of the PHE. That’s not enough because many Medicaid recipients are transient, with fluctuating incomes.

When a state finds an ineligible recipient, it must give the individual at least 90 days to respond. In other words, for each ineligible recipient, states must make three or more months of improper payments – totaling tens of thousands of dollars – with little chance to recoup improper benefit outlays.

In short, the fast-track policy is an expensive, inefficient operational nightmare designed to keep people on Medicaid as long as possible.

Each eligibility decision matters in a welfare entitlement program like Medicaid, where spending and resources depend on enrollment. 
In Pennsylvania, Medicaid costs have soared to $42 billion per year. Nearly 40% of all federal and state spending in the state is allocated to the Medicaid program. Moreover, Pennsylvania’s Medicaid caseload ballooned from 2.2 million people in 2012 to 3.6 million in 2022.

Prior to the pandemic, Pennsylvania’s improper-payment rate had reached 14.24%, with most errors owing to erroneous eligibility determinations. In March, the state Office of the Inspector General (OIG) noted that the fraud rate across all Department of Human Services (DHS) programs is 40%. In other words, of the cases investigated by OIG, nearly half contained fraud.

State and federal lawmakers should take steps to improve program integrity and protect resources for the most vulnerable.

With the end of the PHE’s continuous-eligibility policy, Pennsylvania should encourage DHS to prioritize redeterminations for those suspected to be ineligible. These may include instances where the state has information that the recipient’s employment or income has changed, information is outdated, or the claims data show that services haven’t been used recently. The state also should be ready to close cases quickly according to federal guidelines if the recipient does not respond. States should ensure that their Medicaid departments have ample resources to enforce eligibility and reduce improper payments. Lastly, states like Pennsylvania should start to use program-integrity tools, like data matches and links to credit bureaus to verify income.

The federal government, in turn, should restore the ability of states to perform redeterminations more frequently, use more tools to verify information, and roll back the Obama-Biden fast-track policy.

The Medicaid program has long been unsustainable, but the growth of ineligible recipients is pushing it over the edge. When a program becomes financially unsustainable, benefit cuts inevitably follow that will hurt vulnerable citizens the most. Working with Washington, state lawmakers must act now to improve program integrity and protect benefits for the truly needy.

This article was originally published by RealClearPennsylvania and made available via RealClearWire.