, executive director of the National Association of Medicaid Directors
, said that many states have been struggling with this process.
"This is one (of many) of the time-tested public policy debates in Medicaid," Salo said. "The desire to make enrollment/reenrollment as easy as possible for the beneficiary versus the desire to ensure program integrity, and that no public dollars are being spent unnecessarily. Every state struggles with finding the right balance between the two, and going too far towards either pole leads quickly to serious problems."
At this point, with almost 50,000 terminations of coverage — many or most of them impacting Medicaid-eligible beneficiaries — it's hard not to conclude that Arkansas swung over-zealously to one pole. Which leads quickly to serious problems, indeed.
We have a little more information now than we had a week ago; let's take a look at just what happened.
By design, the income verification system flags beneficiaries who are in fact Medicaid eligible
DHS officials previously told the media and stated publicly
that any beneficiary who had a change in income of 10 percent, up or down, was flagged for the income verification letters (and for the record, they initially confirmed precisely
that, explicitly and in detail, in an extensive conversation with me last week). On Friday, they issued a clarification
and said their previous statements had been "too general" — their system was more targeted than that. However, it is still the case that many, and probably most, of the targeted beneficiaries were eligible for Medicaid according to the very Department of Workforce Services
data that flagged them for a letter in the first place. And it turns out that the system targets beneficiaries who make no income at all.
According to the new information from DHS, there are three categories of beneficiaries who are flagged:
1) People who show zero income
during the previous quarter according to the Workforce Services data. These people are flagged regardless of what their previous income was in the file.
2) Low-income parents of dependent children whose income went up or
down by at least 10 percent AND
that change in income appeared to move them from one category of Medicaid eligibility to another. If parents make less than 17 percent of the federal poverty line (a little more than $4,000 for a family of four), they qualify for the old traditional Medicaid program; Medicaid eligible parents who make more than that qualify for the new private option program. Either way, these folks are eligible
, just in different categories — but if the wage data suggested that they moved above or below that line, they were flagged for income verification.
3) People whose wage data suggested that their incomes changed by 10 percent and moved above
the line for income eligibility in Medicaid/private option: 138 percent of the federal poverty level (that's around $16,000 for an individual or about $33,000 for a family of four). These are the actual targets for potentially transitioning out of Medicaid — though of course, even some of these folks are actually still eligible since many beneficiaries have fluctuations in income during the year.
The important thing to remember about this story is that the folks in the situations described by #1 and #2 above are eligible for Medicaid according to the Department of Workforce Services data
. DHS officials told me that there is no way to tell at this point how many of the 47,000 facing termination fall into each category, but DHS Director John Selig
acknowledged that a large portion of them are likely beneficiaries who showed no income at all via the Workforce Services data (including beneficiaries who also
had zero income according to the original file, which had been verified previously by DHS due diligence). Given the volume of flagged beneficiaries and the fact that approximately 40 percent of private option beneficiaries have previously attested to no income, it's reasonable to surmise that many or most of those who have been terminated showed no income. Of course, if someone legitimately has no income, they are Medicaid eligible.
It is worth noting that back when DHS was offering the old, "too general" explanation, they never mentioned that people with no income were being flagged. As far as I can tell, they only clarified this in response to our reporting. This is troubling since there's a decent chance that represents the bulk of the folks terminated, and almost all of them are probably eligible. Indeed, it appears that Gov. Asa Hutchinson
himself was unaware of this flag — he told reporters last week that there was only "anecdotal information" that some people had received verification letters even though they were eligible. In fact, the system guarantees that result.
To be clear: Selig and other DHS officials maintain that they are required
to do the checks described as #1 and #2 by federal regulations. Other experts have suggested a different interpretation
of the federal regs and say that in fact, while the state was allowed
to do these particular additional checks beyond the Workforce Services data, that was ultimately a policy choice rather than a requirement. Well, that's a question for lawyers to haggle over. However, whether Hutchinson realized this last week or not, the fact remains that the system in place will flag people who appear to be eligible according to the Workforce Services data. That's a factor that might have influenced something that was undoubtedly a policy choice: mandating that beneficiaries respond within 10 days.
The 10-day window was not enough time for beneficiaries to respond.
This is the crux of the criticism over the eligibility verification mess. The state maintains that 10 days — and the window was a bit longer than that before actual cancellation notices were sent out — is the minimum federal requirement for response time to these letters (more on that in a moment). However, it's also a policy choice
— the state could choose to give beneficiaries 30 days, 45 days, 90 days, or longer.
Keep in mind that beneficiaries often have to get paperwork that may be hard to immediately come by (for example, multiple pay stubs from the previous month). Many may have been out of town during the summer. Many may not immediately realize what this poorly marked letter even was in the first place. And of course the date on the letter is when it was first generated; it takes 2-3 days for it to arrive by mail.
These are tens of thousands of beneficiaries of a brand new program. These are, of course, low-income people. Many have never had health insurance before in years, or in their adult lives. They have never been through the renewal process. The private option itself has many complex rules; in my own reporting over the last few years I have heard countless stories from beneficiaries about confusing communications from DHS and from insurance companies, and general confusion about enrollment and eligibility. And the state has banned
the federally funded Obamacare guides who might help folks navigate this new and sometimes confusing process.
Ultimately, of course, beneficiaries need to communicate with state agencies regarding income verification. But under these circumstances, imposing a 10-day deadline is just asking for large failure to respond in time. Frankly, I myself have never in my life responded to a form letter requesting paperwork within 10 days. Presumably it is for this reason that private companies typically give consumers at least 30 days to respond (one DHS official making the case to me for the responsibility of beneficiaries to respond talked about his own obligations regarding car insurance or life insurance...but he admitted that these companies gave 30 days to him to respond).
To be clear: the cancellation isn't sent exactly 10 days after the letter is generated. The state built extra days of wiggle room, so in practice, cancellation notices were only sent if DHS didn't receive a response within 15 days
of the date the verification letter was generated. Eventually, DHS extended that wiggle room further, and now the cancellation letter doesn't go out until 20 days
after the verification letter is generated. That's a good thing! Meanwhile, the actual termination of coverage
doesn't go through until 10 days after the cancellation notice, and doesn't become official until the first of the month. The governor's office and DHS officials have argued that this means that beneficiaries have a de facto response window longer than 10 days, which is fair enough. The problem is that sending out cancellation letters
is precisely the sort of thing that creates confusion among beneficiaries and additional administrative hassle for DHS. That's the sort of chaos that threatens access to care. Why not simply give beneficiaries a reasonable amount of time to respond to begin with?
The 10-day window was not enough time for DHS and other stakeholders to reach out to beneficiaries
This is really the more important point. When I've spoken with DHS officials, they often stress that ultimately it is the responsibility of beneficiaries to respond if they want to stay in the program. Okay, so I'm a liberal squish who is personally slow about checking and responding to form letters. Maybe I'm wrong about how much time is reasonable to respond.
But in retrospect, it seems indisputable that this was not enough time to conduct any sort of outreach to a population that everyone knew would be hard to reach and that everyone knew might be confused about a renewal process for a brand new health insurance program. Experience in other states suggests that best practices include multiple
verification letters, not just one (with clear labeling increasing in urgency). It's basically impossible to send a followup letter in a 10-day window. In some cases, followup might be possible with available phone numbers or other contacts. Attempts might be made to track down folks with bad addresses. This just isn't possible for DHS caseworkers — or for other stakeholders or community organizations that might help — in 10 days. Thus began a process that was doomed to end in confusion and cancellation notices.
The insurance companies — who are highly motivated to find their clients and continue coverage — were only brought in late last month, after the 10-day clock had begun for the first round of beneficiaries. Multiple sources have told the Times
that insurance and brokers expressed concern about the challenges of communicating with beneficiaries and getting a response so quickly.
Internal data form the insurance companies suggested that 25 percent of the addresses DHS had on file were no longer good. Selig acknowledged that insurance companies told DHS officials this during meetings as the process began, but said that the actual percentage of bad addresses was much lower. In any case, it was clearly a major problem. In just one of the coverage regions, Selig said, they had 6,000 pieces of mail returned undeliverable.
Again, the state banned federal funding for Obamacare guides, who might have been able to help in this situation. But that was a known challenge heading in to this process. Community organizations, insurance companies, brokers, and others might have been able to pitch in, but that sort of outreach process would have taken more than 10 days.
DHS officials have said they were caught by surprise by how many beneficiaries did not respond in time. They often cite the fact that SNAP (food stamp) beneficiaries have 10 days to respond to income verification requests. However, they also acknowledge that SNAP is a long-standing program and beneficiaries are used to the system. Again, given the fact that we're talking about almost 50,000 cancellations — a number presumably set to rise when Hutchinson lifts the moratorium — it seems clear in retrospect that more time was warranted for a brand new program doing renewals for the very first time for tens of thousands of beneficiaries who likely had no idea this was coming.
To beat a dead horse — the latest evidence suggested that many of these beneficiaries were indeed eligible. Under the circumstances, one would hope that state officials would show an abundance of caution before sending out cancellation notices and then terminating coverage. One would hope that every effort would be made to conduct a robust outreach program to contact hard-to-reach folks and explain exactly what was going on. The state, after all, promised that the private option would create smoother continuity of coverage
than other Medicaid programs. Instead, the state sent a letter with a 10-day deadline.
Federal regulations require a 30-day response period for Medicaid renewals
The federal regs are clear
that states must do an annual renewal process and they must give 30 days to beneficiaries to respond to the renewal requests. Meanwhile, states can choose
to troll the rolls and look for income changes, then require income verification from those beneficiaries. And DHS officials are absolutely right about this much: federal regulations establish a minimum 10-day response window for income verification letters
Here's where Arkansas is on at least somewhat shaky ground though: the state is doing this verification letter in lieu of the required renewal process
(DHS officials acknowledge as much). Indeed, this is a mitigation strategy of sorts because the state doesn't yet have the required renewal system in place. This is
the renewal process. Under the circumstances, the regs seem to suggest that 30 days is the minimum, not 10.
Again, this is one for lawyers to squabble over. Ultimately, this comes down to how the federal Center for Medicaid and Medicare Services
(CMS) interprets the regs. Multiple sources have told the Times
that CMS is communicating with Arkansas about a "compliance issue." However, when I asked Selig, he said that they are in frequent communication with the feds about this process to ensure that it's kosher, and have gotten no complaints from CMS.
The legal question aside, federal regulations establish a process of at least 30 days response time for renewals for a reason. It's unfortunate that Arkansas didn't follow the spirit of this rule.
The process did not go well.
"We've said it's not working smoothly," Selig said, noting that the governor has given them more staffing positions and overtime and the agency is putting additional resources toward answering calls and processing responses. "That’s on DHS. Yes, we’ve been overwhelmed."
As for the volume of cancellations, Selig said, "We thought more people would respond and we’re trying to get better at getting them to respond. That’s why we reached out to carriers and others. You can certainly make the case that we could have done a better job on the process. I’m not going to argue with that. Our agency could have done a better job on the process."
DHS officials have acknowledged that some people did in fact respond in time but were sent cancellation notices because DHS failed to process their responses in time. However, Selig said the evidence for this was anecdotal and there was no data available on how common this situation was; he said that officials from DHS county offices have told him that the number of beneficiaries in this situation is relatively small.
One improvement: the letters initially weren't clearly marked and might have been mistaken for junk mail. New letters going out now have the DHS logo and warnings that the they are urgent.
In retrospect, it's clear that DHS was not prepared for the volume and did not have a clear mitigation strategy in place to avoid automatic cancellations once they became overwhelmed.
Mistakes happen. These are the kinds of kinks that can be worked out over a longer response window, as state agencies identify problems in real time and make adjustments. It is unfortunate that DHS chose to operate under the shortest window allowable as they attempted to roll out this massive renewal process — with coverage for tens of thousands of Medicaid-eligible beneficiaries at stake.
The governor won't budge on the 10-day deadline.
Selig took pains to explain to me that the governor simply inherited the 10-day deadline and that DHS officials based their decision on what the agency did for income verification in other programs. I take him at his word.
The question is what to do now
. Hutchinson could extend the response window to however long he wants to. The governor's moratorium will help DHS catch up with the backlog, but it doesn't change the dynamics that got us in this mess in the first place. We are talking about tens of thousands of eligible beneficiaries losing coverage. The state should be as motivated to do extensive outreach as it is to catch up on paperwork.
Selig disputed that a longer response window would have significantly altered the outcome.
"I’m not sure doing more than 10 days would have made a big difference," Selig said. "I’m not saying going from 10 to 30 wouldn’t help some, but when we looked at what would help us the most, it was not the 10 days, it was getting some additional bodies in here to answer the phone and process cases. If I thought 30 days would make a big difference, I would have recommended that to the governor. I’ve not made that recommendation to him. What I’ve said is we really need help getting these positions unfrozen and being able to use extra help and overtime. When I asked him, he immediately said yes, do all of the above." Selig also noted that even after coverage termination, beneficiaries have 90 days
to send income verification documents in and be reinstated to the program without having to re-apply.
Selig and I had a long conversation about the merits of the 10-day window, and I think it's fair to say we agreed to disagree. Clearly, Selig and others at DHS, as well as the governor, want people to respond. They don't want anyone who is eligible for Medicaid to have an interruption in coverage. Ultimately, it's unknowable whether a longer response window — both to give beneficiaries more time to respond and to give DHS caseworkers and other stakeholders more time to do outreach and communicate with beneficiaries — would have avoided or reduced the mess we're in now.
What is troubling is that Hutchinson is still holding so tightly to the 10-day deadline after everything that has happened in the last several weeks. Obviously, there is pressure to hustle from many in the legislature after DHS was already late to begin the renewal and verification process to begin with. But the state is initiating a process that leads to cancellation notices and loss of coverage for beneficiaries who appear to be eligible according to the state's own data. Clearly DHS wasn't quite ready to handle the case load. Clearly efforts to communicate with beneficiaries about what's going on and what they need to do haven't been as successful as we would hope.
Republicans often ask what a private company would do. Imagine a private company in a storm like this. Would it refuse to bend on a 10-day deadline that led to this level of outrage and chaos? After this many consumers were lost in the shuffle? Again, all states have to struggle with finding the right balance between protecting beneficiaries and program integrity. In this current mess, a prudent leader might decide that it's time to slow down. That it's time to proceed with caution.
Whatever one's take on the decision to go with a 10-day deadline in the first place, insisting on keeping it in place now is a policy choice. Given the stakes, given the risks, given the mess we're in — it's a hard choice to understand.
This is cold comfort for those who've lost coverage and for state officials trying to clean up the mess, but Arkansas is not alone in facing difficulties implementing systems for renewal and eligibility verification in the wake of Medicaid expansion.