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Reports Find Medicaid Citizenship Regulations Causing Coverage Disruptions, Higher Costs

By Mary Agnes Carey, CQ HealthBeat Associate Editor

July 24, 2007 – New Medicaid citizenship documentation requirements have caused a drop in Medicaid coverage nationwide for eligible individuals—including U.S. citizens—and have increased the program's administrative costs rather than saving money, according to two reports released Tuesday.

A report from the Government Accountability Office (GAO) found that 22 of 44 states surveyed reported a decline in Medicaid enrollment because of the requirements, and that a majority of those states attributed the lowered enrollment to delays in, or losses of, Medicaid coverage for individuals who appeared to be eligible citizens. Two major burdens of the new requirements are that the documents required must be originals and the list of acceptable documents is complex and does not allow for exceptions, states reported to GAO.

While the Centers for Medicare and Medicaid Services (CMS) has estimated the documentation requirements would result in savings of $50 million for the federal government and $40 million for states in fiscal year 2008 as a result of ineligible noncitizens being removed from the program, state responses to GAO indicated that those estimates may be overstated because they did not account for increases in administrative expenditures that states incurred. "The intended effect of the requirement—to prevent ineligible noncitizens from receiving Medicaid benefits—may be less prevalent than CMS expected," GAO said. Only one state reported potential savings as a result of individuals being denied, or their coverage terminated, who were determined ineligible because of their citizenship status, GAO found.

Provisions of a budget savings bill (PL 109-171) President Bush signed into law last year require Medicaid beneficiaries to produce documents such as a birth certificate or passport to prove they are U.S. citizens. Some lawmakers, consumer and patient groups have said the new requirements could cause millions of Medicaid beneficiaries to lose their eligibility because they will not be able to produce such documents.

In its response to the GAO report, CMS expressed concern that it overstated the significance of states' reports of the decline in enrollment because of the requirement and the challenges that states and individuals faced in complying with the new documentation requirements. CMS also expressed concern that states did not submit data to back up their survey responses.

A separate analysis released Tuesday by the majority staff of the House Committee on Oversight and Government Reform found that for six states, for every $100 spent by federal taxpayers to administer the documentation requirements, the federal government saved just 14 cents. For those six states, the federal government spent an additional $8.3 million to identify eight undocumented immigrants among approximately 3.6 million Medicaid enrollees, for a total federal savings of $11,048.

While the analysis may not be representative of all states' experience, "the lopsided ratio of high administrative costs to minimal savings reported by the states indicates that the documentation requirements are likely to cost federal taxpayers significantly more than they generate in savings," the staff report concluded.

Mary Kahn, a spokeswoman for CMS, said the agency had not yet reviewed the committee's findings but added that the agency is "absolutely committed to assuring access to Medicaid for all American citizens who are otherwise entitled" and will assist states with any technical difficulties they have in administering the new law.

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