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Medicaid Workaround Bypasses to Transmit Applicant Data

By Rebecca Adams, CQ HealthBeat Associate Editor

December 2, 2013 -- Federal Medicaid officials will allow states to enroll people without receiving the actual applications they complete through

The move is a tacit acknowledgement that in most cases the transfer of application information between the federal insurance exchange and the 36 states it serves will not be ready right away.

The workaround also will apply to enrollment in the Children's Health Insurance Program. "This process will ensure that coverage will begin on Jan. 1 for newly eligible enrollees," said Centers for Medicare and Medicaid Services spokeswoman Emma Sandoe.

States can obtain waivers from the federal government to enroll people in Medicaid using the workaround, Centers for Medicare and Medicaid Services (CMS) Deputy Administrator Cindy Mann said in a four-page letter to state officials that was posted online Nov. 30.

"It's indicative of how much work really is needed on all sides to get from where we are to where we need to be," said Matt Salo, executive director of the National Association of Medicaid Directors. is supposed to send complete application information electronically but federal officials have not completed a fix to make that happen.

However, they are eager to get people enrolled as quickly as possible. In most of the states that are expanding Medicaid under the health care law, benefits can start on Jan. 1. The law (PL 111-148, PL 111-152) allows states to expand Medicaid to people with income of up to 138 percent of the federal poverty level.

CMS has delayed the start of electronic transfer several times. The function, known as "account transfer," was initially supposed to begin when the federal website went live on Oct. 1.

But CMS officials notified states before the launch that those transfers would have to wait until Nov. 1 because the function was not ready. Then in a Nov. 1 phone call, Mann told officials she hoped testing of the system could start in coming weeks. State officials predicted the site would be able to transmit Medicaid application data back and forth in late November with some states. Testing of that process has now started in a few states.

In the meantime, federal officials have been sending basic demographic data in so-called "flat files." That information isn't as complete as the data in the applications. However, it provides state officials with names and other details so that they can contact applicants if needed, and estimate the number of applicants who appear to be eligible for Medicaid.

In the letter, Mann said the basic data would be expanded so that state officials will have enough details to be able to enroll applicants.

The expanded file will include an applicants' date of birth and Social Security number, and the category under which the applicant seems to qualify for Medicaid. Individuals could be eligible for Medicaid under a range of previously existing criteria, or under an expanded category for adults that is allowed under the health care law.

"The file will also identify the individuals that cannot be enrolled through this process because they have an income or residency verification inconsistency, or because they have been referred" on a basis that uses outdated income criteria, Mann said. Under the law, states are supposed to determine eligibility by using "Modified Adjusted Gross Income," a formula that states did not use until now.

Salo said he had not been told when the additional details would be provided, or when the files will be checked more closely to catch errors such as missing fields of information or incorrect data.

"The flat files have not to date provided enough information to enroll people," he said. "If I had to pick a day, I'd say tomorrow, but I don't know" for sure when the changes will be made.

The workaround requires more labor on the part of state employees. They will have to manually enter the information or spend money to try to develop an electronic conversion tool.

"Who's going to take that option—and how well will it work?" Salo asked.

CMS also advised state officials what they should do if they determine that someone does not qualify for Medicaid who at first appeared to be eligible.

The state would provide "appropriate advance notice" to the enrollee, wrote Mann. "Individuals would have an opportunity to appeal the determination to terminate coverage," she added. "States would have the option, but would not be required, to provide benefits pending the outcome of a fair hearing."

But Salo said CMS has not addressed details states would like to know. For example, if a state inappropriately enrolls or denies someone coverage, would the state be penalized?

"How are states going to be held accountable for making decisions in an imperfect environment?" asked Salo. "If someone is covered for three or six months, do we have to pay CMS back for that?"

A CMS spokeswoman said that states will not be at risk of losing federal funding if state officials follow the procedures that are provided in the letter to enroll people that the federal marketplace has said appear to qualify for Medicaid.

States will have authority to use the expanded flat file data to enroll people for up to 90 days. They may be able to extend coverage for an additional period based on state circumstances. When the full account transfer function is working at, states would be required to use that method instead of the temporary fix, wrote Mann.

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