Feds say Minnesota must restore Medicaid coverage, pause disenrollments

The federal government is requiring Minnesota and 28 other states to restart coverage for a large subset of Medicaid enrollees who may have mistakenly lost benefits this summer through a procedural glitch.

The U.S. Department of Health and Human Service (HHS) announced the requirement Thursday. These states, the agency says, need to improve an auto-renewal process that lets some beneficiaries maintain coverage without additional documentation.

Federal regulators say some still-eligible beneficiaries may have wrongly lost coverage in Minnesota and other states due to auto-renewal problems.

States this year have been resuming coverage redeterminations in Medicaid, the state-federal program providing health insurance coverage for about 1.5 million lower-income and disabled state residents in Minnesota.

The renewals, where the government checks to make sure people are still eligible for benefits, were suspended during the COVID-19 public health emergency. As they've resumed, the federal government says nearly 500,000 children and other individuals have been improperly disenrolled from coverage nationally.

State officials say they're still working to identify Minnesotans who may be affected by this change and the timeline for restoring coverage.

"Nearly half a million individuals, including children, will have their coverage reinstated, and many more will be protected going forward," Xavier Becerra, the HHS Secretary, said in a news release. "We will continue to work with states for as long as needed to help prevent anyone eligible for Medicaid … from being disenrolled."

The problem is that Minnesota, other states and the District of Columbia have been doing auto-renewals across entire households, rather than for individuals within households. That's an issue since many kids might still qualify for coverage when parents don't.

In cases where household auto-renewals don't clearly show coverage should continue, Minnesota has been requiring beneficiaries fill out paperwork to prove their eligibility. The federal government says an improved auto-renewal process could spare many people from having to take this step.

In late August, the federal government notified states that it was concerned too many children were losing coverage due to the procedural glitch with auto-renewals. Nonetheless, the larger push for coverage redeterminations — the so-called "unwinding" of Medicaid — is ongoing.

"This highlights how difficult and confusing the unwinding process has been for Minnesotans," Ralonda Mason, an attorney with Mid-Minnesota Legal Aid, said in an e-mail.

"We know that way too many eligible people have lost coverage because of errors and lack of understanding about the process," Mason said. "Getting and keeping health care coverage should not be this complicated."

Medicaid officials sometimes refer to auto-renewals as "ex parte" renewals.

"We have long feared that large numbers of children were losing Medicaid during the unwinding, essentially by mistake, and the 'ex parte' debacle underscores the fact that this is indeed happening," Joan Alker, executive director of the Georgetown University Center for Children and Families, said in a statement.

The government's action Thursday applies to what are known as "procedural disenrollments," where the states haven't received information from beneficiaries who must show they still qualify for continuing coverage. It's not clear exactly why states aren't receiving information from so many people, but Medicaid officials say there are likely multiple factors.

"Some portion of enrollees will likely remain eligible for coverage and meet all of the requirements to keep it, but will lose their coverage due to barriers in the renewal process, including failure to receive notices or return paperwork, paperwork getting lost and other issues unrelated to their actual eligibility status," the Minnesota Department of Human Services (DHS) says in background materials. "DHS wants zero eligible enrollees losing coverage and aims to minimize administrative barriers to lessen their impact."

In addition to restoring coverage, Minnesota and other states must pause these disenrollments, the federal government says, until systems for auto-renewals are improved.

In Minnesota, Medicaid enrollment during the COVID-19 public health emergency grew by more than 360,000 people. Estimates have suggested that anywhere from 255,000 to 375,000 state residents could lose coverage in roughly a year's time with the resumption of Medicaid renewals.

Earlier this month, DHS told the Star Tribune that about 68,000 state residents have lost coverage through procedural disenrollments.

In addition, the renewals process has identified more than 9,000 people who no longer qualify for Medicaid benefits and have been referred to the MNsure exchange to explore private health insurance options. An additional 4,000 people have been found ineligible for other reasons such as moving out of state.

DHS Commissioner Jodi Harpstead told the Star Tribune in an interview earlier this month that Minnesota is quickly developing a new plan for renewals that mitigates the procedural glitch highlighted on Thursday.

"Minnesota has been set up for years to do household determinations," Harpstead said. "Our plan will include a way to get around household determinations at the individual level, because there are some families where the adults may be ineligible and the children eligible. So, that's one of the things we're looking to improve."