CMS: Ex Parte Systems May Disenroll Eligible Medicaid, CHIP Enrollees

August 31, 2023 - CMS has identified system errors that may unnecessarily disenroll eligible Medicaid and Children’s Health Insurance Program (CHIP) enrollees during the redetermination process and is calling on state Medicaid programs to assess and rectify these issues immediately.

“To ensure compliance, CMS is instructing all Medicaid and CHIP agencies to review their renewal processes, including all related standard operating procedures, renewal forms, and notices and to test the renewal logic in your eligibility system to assess that your system is compliant with requirements to determine eligibility for each individual in the household,” the letter explained.

Auto-renewals—also known as ex parte renewals—can make the redetermination process more efficient. However, CMS found that some auto-renewal systems are evaluating redeterminations by family, instead of by individual.

Ex parte renewals use existing data to automatically renew an individual’s Medicaid coverage. However, sometimes states request additional information from beneficiaries using a renewal form to confirm their eligibility.

Some families have a mix of Medicaid or CHIP eligibility statuses. An auto-renewal system may disenroll individuals who are eligible for Medicaid or CHIP coverage because other family members are deemed ineligible or do not reply to renewal forms.

Two categories of Medicaid or CHIP beneficiaries are particularly susceptible to this erroneous disenrollment.

Children living in a household with at least one Medicaid-eligible adult may be incorrectly disenrolled if a renewal form confirming a household member’s Medicaid eligibility is not returned. Also, when states request more information to confirm a household member’s Medicaid eligibility and the household member does not reply, other Medicaid beneficiaries may be at risk of disenrollment.

CMS expressed concern that other populations may be at risk for unnecessary disenrollment due to system errors.

The error may violate CMS regulations in two ways. First, it fails to assess eligibility on an individual basis. Second, in some cases, it may require those who have already been approved for Medicaid or CHIP coverage through ex parte methods to submit additional information confirming their eligibility.

CMS warned that, if left unchecked, these violations place states out of compliance and make them ineligible to receive the federal medical assistance percentage increase. Additionally, the agency may require the states to submit a corrective action plan. Failure to submit the plan will result in fines and may even disqualify the state from receiving FMAP increases.

State Medicaid agencies should assess their automatic renewal systems for errors. If they discover issues, they should take four steps.

First, they should pause their procedural terminations. The hiatus should remain active until states have fixed the error.

Second, states should reinstate coverage for those who have been wrongfully terminated. When they identify individuals who have been terminated, states must enact retroactive eligibility and communicate with beneficiaries about their coverage status.

If quickly identifying the individual in a household who has been wrongfully terminated is not possible, states should provide Medicaid and/or CHIP coverage for the whole household.

Third, states should rectify the issue in their systems before implementing the auto-renewal process again. The systems must assess eligibility by individual and cannot request additional information to confirm eligibility.

Finally, states should ensure that they have prevention strategies in place to stop the proliferation of these issues as they fix their systems.

For example, after a household member fails to return a renewal form, states may review ex parte eligibility and manually renew coverage for eligible household members. Alternatively, states might suspend renewals entirely for multi-member households, which might require extending the coronavirus unwinding period.

States also could waive redeterminations for impacted individuals. Household members who have been affected by the error may receive up to a year of Medicaid or CHIP coverage. CMS will consider additional strategies that states submit.

After reviewing their systems, CMS gave states until September 13, 2023 to alert the agency to any non-compliant systems, including the populations affected and states’ strategies for repairing the system and mitigation.

 States that do not find any issues with their system have to provide documentation attesting to this fact.