Stop, Drop and Reenroll: How Medicaid Redeterminations, Renewals, and Disenrollment Can Affect the Revenue Cycle
As featured in MedCity News – April 3, 2023
When Congress enacted the Families First Coronavirus Response Act as a response to the COVID-19 Public Health Emergency Declaration (“COVID PHE”), it provided for a significant increase in federal funding for Medicaid and Children’s Health Insurance Programs on the condition that such programs provide for automatic reenrollment throughout the Public Health Emergency period and for one month after. As such, since the Public Health Emergency was declared, Medicaid programs allowed enrollees to remain enrolled even if they were ineligible and Medicaid organizations did not perform any reviews to confirm enrollees’ eligibility. This caused Medicaid enrollment to grow substantially, and the overall uninsured rate to drop.
However, with the enactment of the Consolidated Appropriations Act, 2023 and the announcement by the Administration that the COVID PHE will end in May 2023, the enhanced federal funding in exchange for the automatic Medicaid reenrollment is now set to expire on March 31, 2023. Because state agencies that administer Medicaid plans will now be encouraged to resume redeterminations and eligibility reviews, millions of current enrollees could lose Medicaid coverage due to a new lack of eligibility and eligible enrollees may lose coverage due to administrative challenges of reenrolling.
Although the enhanced federal funding for Medicaid programs will be phased down and states may resume redeterminations, renewals, and disenrollment at a gradual rate over many months, the effects remain unknown. Nonetheless, insurance companies that operate Medicaid plans are already preparing to address the revenue risks that they may face. Healthcare revenue cycle teams are encouraged to do the same, as healthcare systems may face additional consequences in light of the COVID PHE term.
First, healthcare systems are susceptible to facing a greater degree of uncertainty when it comes to predicting revenue, because of unprecedented aggregate changes in the insurance makeup.
While the impacts on the revenue cycle may be uncertain, a recent study based on research conducted by NORC at the University of Chicago shows that in Florida alone 1.4 million current enrollees are expected to lose Medicaid during the redeterminations process this year. Out of the 1.4 million people, it is predicted that close to 25% will become uninsured. This will increase the percentage of self-pay patients presenting to healthcare systems.
On the other hand, the study projects that 50% of dis-enrollees will obtain health insurance through employer insurance plans and 10% are expected to enroll in individual plans through the marketplace. Since commercial insurance plans tend to reimburse healthcare systems at a rate higher than Medicaid, it is likely that healthcare systems may see an increase in overall commercial reimbursements.
Even so, the study does not capture the full impact of Medicaid disenrollment because it does not account for eligible enrollees that fail to reenroll in Medicaid after the disenrollment period. Given the population of Medicaid enrollees (an estimated 91 million) and the communities where the majority of Medicaid enrollees are from, it is expected that eligible beneficiaries may be unable to enroll due to certain barriers, including language and age barriers. With this in mind, healthcare systems may be forced to significantly increase debt write-offs, which in turn impacts the revenue cycle.
Additionally, providers often negotiate their contracts based on membership volume. With significant changes in enrollment across every plan type, healthcare systems may be unable to predict the estimated membership volume or income generated by that membership, which volume tends to be a huge factor in the contract negotiations process.
Similarly, the timeframe for the disenrollment and subsequent enrollment in other health insurance plans may fluctuate. Although Medicaid plans are required to adopt a plan to implementredeterminations, renewals, and disenrollment, it is not yet clear how or when Medicaid plans will accomplish this. It is possible that current enrollees will be disenrolled from Medicaid at the onset, and that the coverage issues mentioned above will be almost immediate. On the other hand, it is possible that Medicaid plans will keep current Medicaid enrollees until the end of the unwinding period, in which case the enrollees who will seek other coverage may not do so for several months. As such, healthcare systems are left at an even greater disadvantage of not being able to predict when certain changes are set to occur.
Second, the disenrollment and renewal processes create an unparalleled administrative burden on healthcare systems when seeking to collect reimbursement.
Millions of eligible Medicaid enrollees may face a gap in Medicaid coverage due to barriers in completing the renewal process and delays in the processing of applications. If Medicaid-eligible enrollees present to healthcare systems for medical services during a Medicaid gap time, the healthcare system may face difficulty determining eligibility and obtaining payment after services are rendered to the patient. This can create significant confusion among the healthcare system’s staff members, as well as patients because additional concerns about insurance coverage will need to be addressed.
Moreover, hospitals, especially locations in low-income areas, are often tasked with assisting Medicaid-eligible patients to enroll in Medicaid. As it is, hospitals may have dedicated employees for this purpose, or they may contract with outside organizations to assist patients in applying for Medicaid. With the disenrollment and renewal process, hospitals will likely need to assist more people with applying for Medicaid.
Additionally, it is possible that eligible beneficiaries may experience a gap in Medicaid coverage between the time they are disenrolled and before they are able to be reenrolled again. Healthcare systems will be required to submit claims after patients are retroactively reenrolled.
Healthcare systems may expect systemic issues within the systems used by Medicaid plans for verifying coverage, obtaining certification/authorization, and processing claims. To the extent that plans give incorrect information regarding patient enrollment, coverage, and authorizations, providers will be expected to handle the consequences. Moreover, this may contribute to continuity of care issues that healthcare systems will be required to address.
How can Florida Healthcare Systems prepare for the end of automatic Medicaid reenrollment?
The effect that the Medicaid redetermination, renewal, and disenrollment process may have on healthcare systems may be greater in Florida than in other states. Florida is one of the few states that has not expanded Medicaid eligibility as allowed under the Affordable Care Act and therefore, there is a large gap among Florida residents, specifically those who are overqualified for Medicaid but do not qualify for an exchange plan. Additionally, Florida experienced a high enrollment rate during the pandemic and is at a greater risk of enduring drastic redistributions among overall insurance coverage.
Florida healthcare systems may prepare by analyzing the current percentage of Medicaid patients within the system. Healthcare systems with only small percentages of Medicaid patients will not be as impacted. Florida’s Agency for Health Care Administration publishes sixteen Medicaid enrollment reports on a monthly basis. Healthcare systems may analyze this information to try to determine the rate that Medicaid plans are disenrolling current enrollees and reenrolling Medicaid-eligible enrollees. These reports have historically helped providers review the population of patients that they may be responsible for serving at their facilities. However, it is uncertain whether these reports will continue to be helpful for predicting the population of enrollees.
Additionally, healthcare systems should ensure that they have the bandwidth to assist patients with enrolling in alternative coverage when necessary. Healthcare systems should consider the number of staff members who are currently able to assist patients with Medicaid enrollment and assess if the current team is well-equipped to handle a greater caseload.
Healthcare systems that have a lot of Medicaid patients may face a greater fallout and are encouraged to consider reassessing self-pay forms and hardship waivers for charity and financing options. Additionally, providers may need to create different collections strategies to boost revenue and provide more options for financing.
Although there may not be a proactive way to rectify systemic issues that may arise, healthcare systems should be mindful that such issues may exist when verifying active coverage, and when obtaining prior authorization approvals for certain dates of service and covered services. Further, healthcare systems may expect a delay in claims processing and payment.
Overall, Florida healthcare providers are prone to experience unpredictable changes in the revenue cycle when Medicaid plans begin the redetermination, renewal, and disenrollment process. By taking additional precautions ahead of time, healthcare systems may be able to mitigate the potential effects of the end to the COVID PHE period.
 The Health and Human Services Department estimates that approximately 15 million people will lose Medicaid coverage once redeterminations resume. See Nona Tepper, A State-by-State Look at the Impact of Medicaid Determinations, Modern Healthcare, https://www.modernhealthcare.com/medicaid/medicaid-redeterminations-by-state-coverage-centene-molina (last visited 3/23/23).
 Centene Corporation, which grew tremendously during the pandemic and now predicts an approximate 2.2-million-dollar loss during the Medicaid redetermination process, has already started prioritizing outreach to eligible individuals. Mari Devereaux, Centene Predicts Big Losses During Medicaid Redeterminations, Modern Healthcare, https://www.modernhealthcare.com/finance/centene-medicaid-2023-sarah-london-redetermination-medicare-advantage (last visited 3/23/23).
 The revenue cycle consequences that are discussed herein apply to various types of providers, although this article primarily focuses on healthcare systems.
 See Tepper, supra note 1.
 According to the Florida’ Department of Children and Families, Florida saw a significant increase Medicaid enrollment, from 3.8 million enrolled in March 2020 to 5.5 million in November 2022. Florida Department of Children and Families, Medicaid Redetermination https://www.myflfamilies.com/Medicaid (last visited 3/16/23).