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Six States Respond to Federal Demand to Fix Medicaid Backlogs

By Rebecca Adams, CQ HealthBeat Associate Editor

July 15, 2014 -- California officials hope to reduce the unprecedented number of people stuck waiting for the state to process their Medicaid applications from 900,000 people to 350,000 people by mid-August, according to a 17-page response that the state sent to federal officials.

California—which has the biggest backlog in the nation—was one of a dozen states that recently received letters from the Centers for Medicare and Medicaid Services (CMS) questioning why they were taking so long to get people enrolled in the federal-state health program for the poor.

Half of those states responded by Monday night to requests sent June 27 from CMS to come up with plans to solve the problem. The other six states were warned in July 9 letters that federal officials want to review their enrollment processes to find out the causes and extent of the problems before the next steps are determined.

At least 2.9 million people nationwide were waiting for Medicaid officials to process their applications, according to a CQ Roll Call count published on June 3. Some of the people who applied had given up on their original applications and sent in new forms directly to state Medicaid offices in the hope that the duplicate applications would be processed sooner.

In addition to the formal letters sent to 12 states, CMS officials have been having direct phone calls with state officials to inquire about Medicaid backlogs.

"States are working to get through their backlogs," said Matt Salo, executive director of the National Association of Medicaid Directors. "It's going to take some time."
The states that received June 27 CMS letters demanding that they take corrective steps were Alaska, California, Kansas, Michigan, Missouri and Tennessee. The states that were asked to provide more details included Arkansas, Georgia, Illinois, Indiana, North Carolina, Virginia and Wyoming.

The slow processing times are due to several factors, including the volume of people applying, technical difficulties and state resources.

California officials answered questions from CMS about major issues that will affect the huge backlog there. State officials estimated that the number of people waiting had fallen from 900,000 to 600,000 by late June.

About 2.2 million additional people enrolled in Medicaid from Oct. 1 through the end of June, bringing the state's total Medicaid population to 10.9 million people, said California Department of Health Care Services officials in their July 14 letter.

Technical problems remain a big factor in the California enrollment difficulties.

"Additional work is still needed to improve and complete certain system functionality," wrote Medicaid Director Toby Douglas in the letter. The state is trying to update its computer systems as quickly as possible and use workarounds for technical problems.

The state will soon send letters to consumers to tell consumers how to expedite their enrollment. State computer systems will add automated process to identify and get rid of duplicate applications, and self-service portals that consumers use to enroll will be updated to catch errors, said state officials.

Other states that responded to CMS spelled out their plans to fix the issues. Alaska, Kansas, and Michigan received letters because they were not yet able to receive applications from, the federal website that handles enrollment in 36 states.

Alaska officials said there are about 4,000 applications still stuck at the federal marketplace website but some of the people who tried to enroll have signed up through other ways. A new portal is supposed to go live this month.

Kansas officials said they will start implementing a contingency plan, based on techniques used in Iowa and Ohio, that will allow them to start getting applications from as early as July 25.

"Michigan has already begun accepting the full backlog of records and we will continue to work closely with CMS in meeting this final success factor so that we can complete the processing of these files," said Medicaid agency spokeswoman Angela Minicuci in an email.

In the states that used, technical problems prevented the transferring of applications for months. The ability for the federal marketplace to send states applications and for states to receive them was supposed to go live Oct. 1, 2013. But initially the federal website had problems transferring the files and later some states continued to struggle with technical problems in receiving them. Those so-called "account transfer" problems led to at least temporary backlogs in many states.

"The receiving state agencies were all being built independently and from different starting points so it shouldn't be surprising that the 'ear' hearing that message, so to speak, will be different in each state. So the problems that one state might have would legitimately be different than in other states," said Salo.

One state official that received a letter, the Medicaid director in Tennessee, has argued that CMS is unfairly targeting the state. In the June 27 letter to Tennessee, the agency said that the state has resisted calls to create a mitigation plan and increase the level of state resources needed to work on applications that are sent in directly to the state instead of through the federal website.

But Medicaid director Darin Gordon said in an op-ed published in The Tennesseean newspaper that the state has done its best.

"To make this second outlet in Tennessee available to all applicants, an entirely new eligibility system is required," he wrote. The health care law "dramatically changed the eligibility determination process, but the lead time states were given to develop their new eligibility systems was extremely short. This was further complicated by constantly changing federal requirements. As a result of these factors, as well as other challenges encountered by our systems vendor, Tennessee's new eligibility system is behind schedule."

Gordon argued that the delay "has not prevented Tennesseans from enrolling." He said that record numbers, more than 125,000 individuals since Jan. 1, have been able to enroll in Medicaid.

CMS officials have checked in to verify that applications are being processed more quickly in states that say that their backlogs have declined precipitously in recent months.

"In our calls we have kept them apprised of our experience with the account transfer problems, which was the source of our backlog," said Monica Coury, assistant director of the Office of Intergovernmental Relations for the Arizona Medicaid agency. "So as we whittled that down, there has been less to talk about."

A CMS spokeswoman said that the agency did not have any information on whether additional letters would be sent.

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