Millions Could Lose Medicaid Coverage. Can Insurers Help?

It’s been nearly three years since state Medicaid agencies needed to assess an enrollee’s eligibility. During the COVID-19 pandemic, states wanting to receive enhanced federal funding were required to provide 12 months of continuous coverage. The goal was to ensure that vulnerable populations didn’t lose coverage. The policy spurred a 30% climb in Medicaid and CHIP enrollment.

All of that changed on April 1, 2023, when the continuous coverage policy ended under a federal appropriations bill, and the job of determining eligibility reverted to the states. That, coupled with the official end of the public health emergency on May 11, puts pressure on state agencies, insurers, and providers to prevent people from falling into a health coverage gap. Close to 15 million people could lose Medicaid or CHIP coverage over the year, the Department of Health and Human Services predicts.

While the Centers for Medicare and Medicaid Services issued guidance for how states can resume eligibility reviews, we’ve heard anecdotally from Medicaid managed care organizations that there’s confusion over a variety of issues, including how to use state-based data and conduct outreach to members. Ultimately, insurers need to work closely with state regulators to ensure that they can reach members quickly about their coverage options. Collaboration is made even more pressing by the fact that one in four Medicaid agencies report having staffing vacancies exceeding 20%.

Keeping Members Covered

Enrollees may not know that they are losing or at risk of losing coverage. Almost 8% of Medicaid enrollees lose coverage every year just from administrative churn — people who have trouble navigating the system or if the state or a Medicaid managed care organization can’t contact them, according to HHS.

While some enrollees may find alternative sources of insurance, including employer-sponsored coverage or on Healthcare.gov, those options may not be open to or affordable for everyone, even with subsidies to buy Affordable Care Act coverage extending to 2025. If historical trends hold, a significant percentage of disenrolled Medicaid and CHIP members could suffer from a coverage gap, according to a Medicaid and CHIP Payment and Access Commission analysis.

Where do Medicaid beneficiaries go when they lose coverage?

How Insurers Can Prepare

Transitioning coverage is sure to be confusing for beneficiaries who haven’t had to worry about maintaining their Medicaid enrollment for the past three years. Providers must communicate with patients who have ongoing treatments or appointments about their coverage and go over the potential financial obligations if their coverage changes. Meanwhile, insurers should bolster outreach to members, but doing so requires attention in a few areas:

Analytics: Insurers should leverage member data to understand those most at risk of becoming ineligible for Medicaid. Relevant data can include reported income, employment status, healthcare claims, age, and household members. Insurers should also look at how the states in which they operate are approaching Medicaid determinations and tailor analytics as best as possible.

Member Engagement: CMS recommends a host of actions for insurers to take, in collaboration with their state agencies. Those include:

• Minimize members becoming uninsured by educating them on redetermination, including how to update their contact information and their coverage options if they are found not eligible
• Identify members undergoing renewal and provide support to complete the process
• Conduct outreach and help members reapply if they lost coverage for failing to connect with the state agency or if they had difficulty navigating the renewal process
• Pursue proactive efforts to engage members where they share information about redetermination through partnerships with a community-based organization
• Insurers with exchange plans can support members transiting from Medicaid to ACA coverage

Insurers must ensure that they don’t run afoul of federal and state regulations on member outreach. CMS says there aren’t prohibitions against the above action items, but payers need to understand state-specific regulations and push state agencies to support and enable CMS’ recommendations. Importantly, payers must push state agencies to share appropriate data to enable these actions. Targeted member engagement will be especially important for enrollees with limited English proficiency.

Financial Impact: The financial impacts will vary by state and payer based on market share distribution, the operating model of payers, and the regulatory environment. Regardless, the expiration of public health emergency will lead to a reduction in Medicaid membership but also create opportunities to capture these members in other lines of coverage such as employer-sponsored insurance or on the ACA Exchange.

Operational Readiness: Payers should ensure their teams are trained and resourced to educate members, assist members with the redetermination process, and help them enroll in Exchange products if they are ineligible. Redetermination readiness should be a cross-functional effort, meaning enrollment, customer service, health navigators, communications, and marketing all must be engaged.

Don’t Delay

Efforts should already be underway to ensure redetermination readiness. Issuers must assess their strategy and collaborate closely with their state agencies to ensure members do not become uninsured and transition to appropriate coverage. Oliver Wyman will continue assessing the broader implications of the public health emergency coming to an end and will more insights in the coming months.