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Streamlining Eligibility for Medicaid and Medicare Savings Programs

At the heart of proposed Medicaid regulations now under consideration at the federal level is the need to ease the cumbersome and confusing processes to both apply for program benefits and keep them. The changes would affect the millions of individuals already enrolled in Medicaid and Medicare Savings Programs (MSPs) as well as help more people qualify.

Recent data indicate that over 86 million individuals are enrolled in Medicaid and over 10 million are enrolled in MSPs. MSPs are Medicaid-run programs which help pay Medicare beneficiaries’ costs if they have limited income and savings. MSP enrollees may also qualify for full Medicaid benefits, enabling them to access services that their state Medicaid program covers in addition to their Medicare coverage.[1] States must reassess an individual’s eligibility for Medicaid and MSPs at least once every year.

The Centers for Medicare & Medicaid Services (CMS) recently proposed regulatory updates aimed at simplifying the eligibility determination process. These updates would include: requiring states to expand their use of available data to assess eligibility, extending some current streamlined processes to additional eligibility groups, making additional efforts to reach enrollees during the eligibility process, and offering a new pathway to eligibility for those living in the community. In addition to these proposed changes, CMS is strongly encouraging states to identify and implement other ways to make the application process easier. [3]

Getting and keeping people enrolled

The MSP with the highest enrollment[2] has a maximum income eligibility of $14,820 annually and likely saves individuals more than $2,000 a year in Medicare costs. Despite this substantial financial benefit, as many as half of those who are eligible are not enrolled in the program.

To help address this challenge, CMS’s proposed changes aim to make the process of enrolling in MSPs quicker and easier by requiring states to enroll applicants based on their own attestations that they meet asset requirements. States would then have the option of conducting further verification post-enrollment. This process could help reduce the information that states need to assess eligibility, such as verification of resources.

In addition, while the Affordable Care Act (ACA) already streamlined eligibility processes for some groups in Medicaid, these changes did not apply to everyone. For example, individuals who qualify for Medicaid due to age, blindness, or disability still face requirements in some states like going to in-person interviews and having their eligibility redetermined more frequently. CMS’s proposed changes would disallow states from requiring in-person interviews, and only permit states to reverify, or redetermine, enrollees’ Medicaid eligibility once every 12 months.

The proposed updates would also mitigate the number of enrollees who lose Medicaid during the redetermination process because of administrative issues, such as not receiving information requests or not completing the process correctly. The updates would address such issues by requiring states to take additional steps to reach enrollees if informational mail is returned as undeliverable (e.g., seeking an updated address or contacting the individual in other ways). The proposed regulations would also set standard timeframes for applicants to respond to requests for information.

Expanding ‘spenddown’ eligibility pathway

Some Medicaid enrollees have incomes that are technically too high to qualify for Medicaid but are allowed to meet income eligibility thresholds by subtracting the cost of predictable medical expenses from their income. Currently, this eligibility pathway, sometimes known as “spenddown,” can be used for expenses incurred in long-term care facilities because these costs are generally stable and easy to predict. However, at-home services, such as a home care aide, can also be a big expense. For those individuals who need daily in-home supports, the cost of these services can jeopardize their ability to remain at home.

CMS’ proposed regulatory changes would allow individuals to count costs paid for some home- and community-based services and certain prescription drug costs towards medical “spenddown,” easing their financial burden while allowing them to stay safely in their home. This change would support the preference of an overwhelming majority of older Americans who want to age in place.

What happens next

It is unclear when CMS’s proposed rule will be finalized and implemented. CMS is currently reviewing public comments, which were due in the fall of 2022, and may decide to make revisions. The agency also indicated interest in possibly staggering implementation of the new rules.

Nevertheless, states are already making changes. For example, some states have begun to improve their use of existing applicant data in the eligibility assessment process. This streamlining eases the burden on states and enrollees during the ongoing redetermination process and is particularly valuable given state staffing shortages and record-high Medicaid enrollment. With many states already reviewing and making improvements to their processes, CMS should consider shorter implementation timeframes for requirements.

[1] There are four MSP programs, each with different benefits and eligibility requirements. Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB), Qualified Individual (QI) and Qualified Disabled Working Individual (QDWI).
[2] The Qualified Medicare Beneficiary program.
[3] Though CMS cannot require it, states can go so far as to fully align their MSP eligibility requirements with those of the Medicare Part D Low Income Subsidy Program (LIS) and eliminate the state’s need to conduct any eligibility assessment, instead presuming eligibility for MSP based on an individual’s enrollment in the LIS program.

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