States grapple with plans for end to coronavirus public health emergency

The result will mean more work, less money for states' Medicaid health coverage programs

A bustling hallway is seen in the emergency department at a New York hospital in April. State officials are dreading an end to the COVID-19 public health emergency because it will mean more work and less money for their Medicaid health coverage programs.  (Jeffrey Basinger/Newsday via Getty Images)
A bustling hallway is seen in the emergency department at a New York hospital in April. State officials are dreading an end to the COVID-19 public health emergency because it will mean more work and less money for their Medicaid health coverage programs.  (Jeffrey Basinger/Newsday via Getty Images)
Posted December 3, 2020 at 5:30am

An end to the COVID-19 public health emergency would seem like good news for states. But state officials are dreading the end of that official designation because it will mean more work and less money for their Medicaid health coverage programs. 

States have benefited from increased federal funding from the first COVID-19 relief law this year, and individuals who enrolled cannot be booted from coverage mid-pandemic. But both of these safeguards will not be in place after the public health emergency, or PHE, ends.

State officials are asking the federal government for more information to help them prepare for an eventual end to the emergency. Experts say planning is key to ensuring a smooth transition, and that will require steps from both federal regulators and Congress.

The health emergency is set to expire Jan. 20 but will almost certainly be extended by the next administration. The question is how states will transition to normal operations.

States are calling for additional Centers for Medicare and Medicaid Services guidance.

“The issue and the challenge is that CMS, I am sure, doesn’t want to send states a signal that the public health emergency is ending, given where we are. But on the other hand, states feel like they need some indications of what to do and when to do it,” said Allison Orris, counsel with Manatt Health and a former federal health policy official. “I think that there’s an understandable question from the HHS perspective of when do we say that for states and we don't want to freak out states right now.”

A CMS spokesperson pointed to existing guidance to states saying that the enhanced federal funding for Medicaid — of 6.2 percentage points being added to states' Federal Medical Assistance Percentage rates — will stop at the end of the quarter when the public health emergency ends.

The spokesperson said it’s too early to speculate on potential status changes for the health emergency, and CMS remains in constant contact with states.

The agency confirmed it is developing additional guidance, which it intends to release in the near future.

Medicaid, which primarily provides insurance coverage for the nation’s poorest individuals, saw an enrollment increase of almost 5 million people between February and July this year, to a total of nearly 69 million, with that number likely to grow.

When the health emergency ends, states will need to determine the eligibility of enrollees to see if they still qualify for coverage. Some experts say this could require increased staffing and resources — at the same time that the federal funding will drop. 

There’s no guarantee that the health emergency’s end will coincide with the end of economic challenges and job losses. States may continue to see high demand for Medicaid coverage from people who aren’t working and may face financial strains as tax revenues remain low. 

“States are looking for what kind of flexibilities they can have to work through that workload in a manner that is reasonable,” said Orris, who emphasized that states can’t turn on a switch and instantly redetermine everybody’s eligibility. “They will have to work through that and that might mean keeping people on the rolls longer so that you don’t have coverage displacements while the state is doing the work that it needs to do.”

Looking ahead

At an October Medicaid and CHIP Payment and Access Commission meeting, Jennifer Wagner, director of Medicaid eligibility and enrollment at the Center on Budget and Policy Priorities, raised the issue of planning for the end of the health emergency.

“Unfortunately, all good things must come to an end. When the public health emergency ends, states will have to resume acting on renewals and changes. How they approach this could lead to two starkly different outcomes for enrollees,” she said.

If a state cuts coverage based on outdated information without adequate staff to handle a large number of coverage renewals, it could be overwhelmed and eligible individuals could go without coverage.

However, if a state is able to communicate with Medicaid enrollees about the renewal process and spread out this process, there would be limited coverage loss for enrollees.

“States need lead time and guidance from CMS to effectively plan for the resumption of regular operations,” Wagner said.

Manatt’s Orris also suggested keeping funding steady will be essential.

Congress should step in with additional fiscal relief, she said, which will be important for states to continue coverage and to free up some state money to cover administrative costs. Groups like the National Governors Association have similarly called for an additional federal matching rate increase of at least 5.8 percentage points retroactive to Jan. 1, and remaining until Sept. 30, 2021, as well as a 12 percent matching rate increase after that until unemployment falls below 5 percent.

“There’s nothing that CMS can do without the congressional authorization to increase the FMAP,” she said.

Orris says it would be helpful for CMS to start thinking through how officials will require states to communicate with beneficiaries, given that many people’s living circumstances may have changed during the pandemic. 

She suggests that states be vigilant in trying to contact beneficiaries before terminating coverage, and that CMS reduce penalties on error rates as an incentive to limit disenrolling eligible individuals.

In late October, CMS issued an interim final rule that experts say provided some additional information about Medicaid coverage requirements but still leaves questions for states.

This rule would reinterpret the continuous coverage requirement from the first COVID-19 law to allow disenrolling individuals who were enrolled due to an administrative error, and would clarify that states can offer different tiers of coverage and continue receiving enhanced federal funding.

States' requests

Multiple states said they are communicating with CMS but need more guidance.

“There has been limited guidance to date, but CMS is saying this is a top priority. Our Medicaid team has indicated the need to incorporate an appropriate wind-down period with federal officials for all policies tied to the pandemic. We have also conveyed the need for continued financial support — through the enhanced Federal Medical Assistance Percentage (FMAP) — until we can work through the huge eligibility/redetermination backlog,” Bob Wheaton, a Michigan Department of Health and Human Services public information officer, said in an email.

René Mollow, deputy director for health care benefits and eligibility at the California Department of Health Care Services, recently estimated it will take her state six months to a year to determine all beneficiaries’ eligibility once the health emergency ends.

“We would like to see federal guidance issued three to six months in advance of the public health emergency ending,” she told MACPAC commissioners.

Lee Guice, director of policy and operations for the Department for Medicaid Services in Kentucky, echoed those requests for lead time and a grace period.

“You know, it would be great if we had that guidance and we had that guidance in place three to six months before the end of any public health [emergency],” Guice said. “I realize it takes three to six months for CMS to sometimes issue guidance given their heavy bureaucratic structure. I understand that. I work inside of one myself.”

State budgets are already stretched due to decreased revenue and higher costs tied to the pandemic.

“Ending that FMAP right away will be devastating. We’ve had to cut administrative costs, and when you cut administrative costs in Medicaid, that means cutting staff,” said Guice, adding that it is impossible to ramp up renewals with fewer staff.

Other states have expressed similar sentiments.

“CMS is making every effort to be responsive to state questions,” said Kolbi Young, public information officer for the Utah Department of Health Division of Medicaid and Health Financing. “States do have questions regarding how to handle eligibility immediately after the end of the PHE.”

North Dakota is also seeking additional guidance.

“Specifically, we would like guidance on expectations around reviewing eligibility at the end of the PHE, timeliness of reviews, and how potential eligibility errors will be addressed. We are concerned with the amount of time and funding that it will take to make the needed eligibility system changes,” said LuWanna Lawrence, public information officer for the North Dakota Department of Human Services’ Medical Services Division.

The state also wants guidance on whether the federal Office of Civil Rights will continue to allow audio-only telehealth services and other telehealth platforms, such as FaceTime, that don’t comply with privacy laws.

South Dakota Department of Social Services Cabinet Secretary Laurie Gill, in a statement to CQ Roll Call, said the state was told additional guidance is forthcoming. 

“Advanced notice regarding whether the PHE will be extended or end in January would be beneficial for states and allow states to take necessary steps in a timely manner,” she said.