Medicaid Retroactive Eligibility Waivers Will Leave Thousands Responsible For Coronavirus Treatment Costs
The coronavirus pandemic has led to record numbers of American workers being laid off or seeing their hours and paychecks dwindle. The economy is on the brink of a deep recession, and waves of coronavirus infections may continue for the foreseeable future. Medicaid will be a crucial piece of the puzzle that helps to ensure access to health care while protecting people from further financial ruin. Yet, one of Medicaid’s key provisions has been weakened by recently approved section 1115 “demonstration projects”, commonly referred to as waivers, that eliminate or reduce retroactive coverage. These waivers will diminish coverage for thousands of people seeking testing and treatment for COVID-19 and other medical care.
Medicaid, the federal-state health insurance program that focuses on low-income populations, contains core benefits and protections that guarantee coverage for medical care. This includes specific eligibility rules, a standard package of benefits, affordability requirements, and due process protections. Medicaid’s special eligibility rules include retroactive coverage, a provision that is particularly important during an economic recession, when need for Medicaid coverage rises as individual and state budgets tighten.
Retroactive eligibility is a long-standing feature of Medicaid that covers health care expenses for three months prior to the application date, provided that the beneficiary would have been eligible during that period. Before the Affordable Care Act (ACA), a handful of states imposed narrow restrictions on retroactive eligibility, but these limitations were paired with expansions of eligibility and had exemptions for vulnerable groups. Recently, however, many states—including Arizona, Arkansas, Florida, Indiana, Iowa, Kentucky, and New Hampshire—have gained Department of Health and Human Services (HHS) approval for 1115 waivers that drastically limit or completely eliminate retroactive eligibility, though four have been stayed by courts or halted by states as part of litigation challenging the legality of those waivers that include work requirements (Arkansas, Kentucky, Indiana, and New Hampshire).
These waivers disproportionately affect populations that are, or would be, Medicaid-eligible due to ACA Medicaid expansion. For example, Arizona and Florida have limited retroactive coverage to the month of application for all adults except pregnant women. Arkansas’ waiver (blocked by an appellate court) would limit retroactive coverage to 30 days prior to the application date for expansion enrollees. In Iowa, only pregnant women, children under the age of one, and nursing home residents maintain three-month retroactive eligibility, while other beneficiaries are covered as of the first day of the month that they applied. Kentucky and Indiana wanted to limit retroactive eligibility for everyone eligible under the ACA’s Medicaid expansion, except for pregnant women and certain vulnerable groups, limiting coverage to the first of the month in which the first premium payment was made. Kentucky’s new governor, Andy Beshear, withdrew that state’s waiver. In Indiana, the Family and Social Services Administration halted implementation of the waiver, and a federal judge stayed litigation during the pandemic.
Those who lose employer-sponsored insurance and then shift to Medicaid may not be exposed to as much financial risk under these waivers, assuming they enroll quickly. But those who were employed and uninsured because they couldn’t afford coverage or their employer didn’t offer it could be exposed to the financial risk of health care costs related to COVID-19 and any other medical needs before they enroll in Medicaid. In a non-expansion state, like Florida, it might take all workers in a household losing their jobs before becoming Medicaid-eligible, at which point, one or more might have already needed medical care. Presumptive eligibility, in which hospitals and other entities can temporarily approve patients for Medicaid pending a complete application, is one way to avoid this problem. The ACA extended this authority nationwide, and 30 states are using it for pregnant women, but fewer than ten states are using it to cover other adults.
Many of the millions of people who are losing their jobs in the current economic downturn are also losing health insurance coverage, or they may not have had it in the first place. Treatment for COVID-19 can cost tens of thousands of dollars even without severe complications that require a stay in intensive care, which can push bills into the six figures. A recent report illustrated the problem: an uninsured woman about to move and start a new job felt short of breath. Doctors assumed pneumonia, but after several emergency department visits she tested positive for coronavirus. Now she has recovered, but she was billed $34,927.43. She has “applied for Medicaid and is hoping the program will retroactively cover her bills.”
Restrictions on retroactive eligibility were questioned long before this crisis, but now rise to a decidedly greater level of concern. In March alone, more than half a million new unemployment claims (541,442) were filed in just three states with broad retroactive eligibility restrictions—Arizona, Iowa, and Florida—that haven’t been stayed by courts. For many middle and low-income individuals, employment and income are changing on a week-by-week, if not day-by-day, basis. Last month’s income, often used for documenting Medicaid eligibility, is quickly outdated, and producing proof of a change in circumstances is difficult when an employer has ceased operations. Administrative burdens for obtaining public insurance are frustrating enough during “normal” times, and the COVID-19 pandemic stands to make this even worse.
We have already seen social service agencies’ systems and staff struggle to keep up with the surge in unemployment claims, and it isn’t hard to imagine the same occurring with Medicaid. “Shelter in place” orders will prevent people from sitting down with a caseworker to deal with any application issues in addition to making a job search nearly impossible until the pandemic passes. Many low income Americans and those living in rural areas don’t own smartphones or lack adequate internet access, which can make applying for Medicaid and other public programs that much harder when going to an office is no longer a safe option, or an option at all. All of these barriers increase the importance of retroactive Medicaid coverage.
Congress created a $100 billion fund for hospitals, which will help to cover uncompensated care for uninsured patients affected by COVID-19. HHS has announced that the first $30 billion will be allocated based on Medicare reimbursements. This choice prompted a response from the Medicaid and CHIP Payment and Access Commission (MACPAC) expressing concerns that this approach insufficiently prioritizes the “nation’s poorest and most vulnerable people.” HHS Secretary Alex Azar responded that hospitals accepting funds won’t be able to send bills to uninsured patients. This is certainly better than no coverage, but it is unclear how uninsured people seeking care would be covered for treatment outside of hospitals. The newly uninsured will also need health care besides coronavirus testing and treatment, and nothing in this fund or the larger federal policy efforts thus far will address those needs.
A core purpose of Medicaid is supporting people when they need help, which is why Medicaid has continual open enrollment and retroactive eligibility to cover the cost of care when those who are eligible aren’t already enrolled before a crisis. States should restore full retroactive eligibility immediately to protect thousands of newly-unemployed workers from even greater health and economic suffering.
