CMS Warns: Stop Using Federal Marketplace to Process all Medicaid Applications

Tennessee’s Medicaid agency (TennCare) essentially stopped processing Medicaid applications for children and nondisabled adults when the modified adjusted gross income (MAGI) eligibility standards became effective. Nine months after open enrollment began for the newly eligible adult group, TennCare cannot take or process applications under the standards required by law. It has relied on the Federally Facilitated Marketplace (FFM) to perform these functions for all MAGI-based Medicaid applications since the requirements of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) became effective on October 1, 2013. On June 27, 2014, CMS sent a letter to Darin Gordon, director of TennCare, the state’s program, giving the state ten business days to submit a plan to comply with the law.

The State’s Obligations

Under Soc. Sec. Act sec. 1943, all states were required to streamline their Medicaid eligibility determination systems to share information with the Health Insurance Exchange and to enroll individuals whom the Exchange identified as eligible. The statute and related regulations set seven requirements for state eligibility determination systems. Specifically, the state system must be able to:

  • Accept a single, streamlined application;
  • Convert the 2013 income eligibility standards to the modified adjusted gross income; (MAGI) rules required by Soc. Sec. Act sec. 1902(e)(14);
  • Communicate the state’s eligibility standards to the FFM as needed;
  • Process applications based on the MAGI rules;
  • Transfer application files to and from the FFM as needed;
  • Respond to inquiries from the FFM on current coverage through Medicaid and the children’s health insurance plan (CHIP); and
  • Verify eligibility information using electronic sources.

According to the letter, Tennessee has met only one of those requirements, the ability to transfer application files.

Temporary Mitigations

States were required to use the MAGI standards for children and their parents beginning October 1, 2013. Many states were not able to update their systems by that deadline, and CMS required them to develop mitigation strategies to be used until the updates were complete. Tennessee was permitted to rely on the FFM,, for these purposes through December 31, 2013, but it remains in place. The state also placed kiosks in its Medicaid offices so that residents could apply for Medicaid at those locations. However, it has not provided any help to applicants who are using the kiosks.

Effects on Tennessee Residents

The Tennessean reports that at least one woman could not access prenatal care because of delays and mistaken determinations of ineligibility. Her baby was born six weeks early and spent time in neonatal intensive care. Eventually, she was found eligible, and Medicaid paid the bill.

Presumptive Eligibility Problem

The ACA also required states to allow hospitals to make presumptive determinations of Medicaid eligibility. Tennessee has not met that requirement, either. The CMS letter mentioned that compliance with this requirement also could serve as a mitigation strategy until the system updates were complete.

The Agency’s Statements

According to the Tennessean, Darin Gordon, the TennCare director, said that the agency has enrolled 95,000 individuals in Medicaid since January 1, 2014, the highest number since the program started. He attributed some of the delays to the changes in the federal requirements for the project and others to its contractor, Northrup Grumman. Gordon said that the company has not achieved most of the deliverables under its $35 million contract, so it has been paid only $5 million so far. He also said that the agency was becoming “skeptical” about the contractor’s ability to predict when it could meet benchmarks, and that the agency was hiring another contractor to audit Northrup Grumman’s performance and project delivery dates.