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Dive Brief:

• The Biden administration is threatening state Medicaid agencies with sanctions for improperly removing children from the safety-net coverage during ongoing eligibility checks kickstarted by the end of the COVID-19 public health emergency.
• Regulators on Wednesday sent letters to all 50 states and Washington, D.C., after finding “a number of states” using automatic renewal systems to review the eligibility of families all at once, despite a lower bar for children to remain eligible. That could lead children to lose Medicaid coverage.
• States have until mid-September to assess their systems, pause disenrollments if they find faults and reinstate coverage for any affected individuals. States could be fined if they don’t fix the issue, the CMS said.

Dive Insight:

States began checking Medicaid beneficiaries’ eligibility for the program as early as April, after a three-year pause during the coronavirus pandemic. Since then, at least 5.5 million Americans have been booted off Medicaid coverage, according to a KFF tracker.

Incomplete state data complicates efforts to pinpoint precisely how many children have been disenrolled. Of the 15 states that report disenrollments by age, at least 1.1 million children have been removed from Medicaid during redeterminations.

A number of groups, including patient advocates and Democrat lawmakers, have raised concerns about the high level of procedural disenrollments, which occur over paperwork errors that are not due to actual ineligibility.

Procedural disenrollments make up roughly three-fourths of all disenrollments to date, according to the KFF.

The Biden administration has attempted to crack down on procedural disenrollments, offering more flexibility to states in getting renewal help from managed care partners and even forcing states to pause redeterminations to curb administrative errors.

Now, worries over procedural disenrollments are intensifying over kids enrolled in Medicaid or the Children’s Health Insurance Program.

The CMS has urged states to use automatic renewals using existing information, which regulators say eases documentation burden on beneficiaries and lowers the chance of paperwork errors.

But some states using this process, called “ex parte” renewals, are enacting renewals for entire households at once, without taking into account that different members of the household might have different eligibility requirements, the CMS wrote in its letter to state Medicaid agencies.

Since children often have higher income eligibility thresholds than their parents, they could remain eligible even if the adults in their household no longer qualify. That could lead to children improperly losing coverage, the CMS said.

The CMS did not identify which states are improperly removing children, but it’s likely more of an issue in states that haven’t expanded Medicaid to a higher portion of low-income adults, since the disparity in income eligibility between children and their parents is larger, according to Joan Alker, executive director of the Georgetown University Center for Children and Families.

In the letter, Medicaid director Daniel Tsai said that states moving forward “must review eligibility for all children and household members to identify and manually renew coverage for those who remain eligible” for any multi-member household that doesn’t return paperwork.

The CMS is requesting states that disenrolled qualified individuals to submit a corrective action plan. If they don’t, regulators could levy fines or other penalties, like removing higher federal match payments in the program, Tsai said.