States encouraged to maintain health benefits for temporary census workers

The Acting Director of the Center for Medicaid and CHIP Services (CMCS) encouraged states, to the extent permitted under the law, to exclude temporary income from employment in the 2020 Decennial Census when determining eligibility for public benefit programs. A new bulletin provides guidance on existing flexibility under state plans for modified adjusted gross income (MAGI) based systems and non-MAGI based systems. This includes the option of submitting a state plan amendment (SPA) to CMS (CMCS Bulletin, July 3, 2019).

Census workers and health benefits

The Census provides low-income individuals with an opportunity for employment and skills training. Many of these workers are eligible for Medicaid or in a household with Medicaid or CHIP eligible individuals. One element of successful recruiting efforts by the Census Board is ensuring the continued availability for Medicaid and CHIP coverage for workers and their families. During previous censuses, state Medicaid and CHIP agencies have been encouraged to ensure that temporary census workers and their families do not lose eligibility due to temporary census income. Previously, states were able to disregard temporary census income for all Medicaid and CHIP eligibility groups, but a move to a MAGI-based methodology no longer permits the use of income disregards. The bulletin describes existing authorities that may be used to exclude or minimize the impact from temporary census employment.

Existing State Plan Options

Under section 1902(e)(14)(D) of the Social Security Act, for non-MAGI populations, states may disregard in whole or in part, temporary census income and many states have already elected to disregard temporary census income for multiple eligibility groups in their state plan. States wishing to apply disregards of temporary census income for the first time or wish to add or modify the non-MAGI groups affected must submit an SPA to CMS.

Under MAGI-based methodologies, temporary census income is taxable as employment income and Medicaid and CHIP regulations prohibits the use of income disregards and this prohibition cannot be waived. States may elect under 42 C.F.R. §435.603(h)(3) to use a reasonable method for determining a prorated portion of reasonably predictable changes (RPC) to income as they do for fluctuating income such as from seasonal work or self-employment. States with approved RPC methodology for seasonal work may include temporary census income within its scope such that a new SPA submission would not be necessary. States that do not have an existing state plan authority to implement an RPC methodology may elect to do so through an SPA, although the methodology cannot be limited only to temporary census income.

Parents and Other Caretaker Relatives may retain specific coverage protections due to increased earned income through Transitional Medical Assistance (TMA). TMA is a required eligibility protection that states must apply, even under increased earnings due to temporary census employment. If census employment income triggers a transition to TMA, the Medicaid agency would redetermine the individual’s eligibility when census employment ends.

CMS is offering technical assistance on the options and requirements included in the informational bulletin as well as assistance on submitting the required state plan amendments.

CMS updates Medicaid eligibility and payment oversight programs

CMS finalized changes to the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) programs designed to improve payment oversight and state eligibility determinations in the Medicaid program. The changes—contained in an advance release of a Final rule set to publish in the Federal Register on July 5, 2017—implement provisions of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The Final rule ends a pilot phase for the two programs and resumes the eligibility measurement component of the PERM program and the MEQC program for Fiscal Year (FY) 2019.

PERM

The PERM program measures improper payments in Medicaid and the Children’s Health Insurance Program (CHIP) based on reviews of the fee-for-service (FFS), managed care, and eligibility components of Medicaid and CHIP. Due to changes in Medicaid eligibility law—including expansion under the ACA—CMS did not conduct the eligibility measurement component of the PERM program for FYs 2015 through 2018 (see CMS proposes updates to Medicaid eligibility and payment oversight, June 21, 2016). During that time, CMS conducted a pilot program known as the Medicaid and CHIP Eligibility Review Pilots to maintain oversight of state eligibility determinations. In addition to reestablishing the eligibility measurement component of the PERM program for FY 2019, the Final rule makes several updates to program requirements. Changes to the program include:

  • eligibility reviews for payments made by states between July and June of a given year (a change from the previous October through September review period);
  • federal contractor review of determinations;
  • sampled reviews based upon FFS and managed care payments;
  • inclusion of federal improper payments when the federal share is incorrect, even if the total computed amount is accurate;
  • the development of a national sample size; and
  • payment reductions in cases where a state’s eligibility improper payment rate exceeds the 3 percent threshold and the state does not demonstrate a good faith effort to meet the threshold.

MEQC

The MEQC program requires states to report to HHS the ratio of erroneous excess medical assistance payments to total expenditures for medical assistance. Under Section 1903(u) of the Social Security Act (SSA), HHS is required to withhold payments in excess of a 3 percent threshold for eligibility-related improper payments. Like the PERM program, CMS did not operate the MEQC program for FY 2015 through 2018 so that CMS could make updates to the program to reflect changes in eligibility. The Final rule aims to restructure the MEQC program to better compliment the PERM program. The changes include:

  • state flexibility to design MEQC programs unless states have consecutive improper payment rates over the 3 percent threshold;
  • requirements to conduct reviews beyond the scope of the PERM program; and
  • corrective action submission requirement for identified errors.

Does Medicaid work with a work requirement?

Conditioning Medicaid eligibility on a work requirement could adversely affect beneficiaries from accessing needed health coverage in a manner that is contrary to the program’s purpose—providing health coverage. A Kaiser Family Foundation (KFF) issue brief examined the policy arguments related to Medicaid work requirements and the likely impacts of such requirements, in light of a March 14, 2017, CMS letter to state governors announcing that it will begin to use Section 1115 Medicaid expansion waivers to approve provisions related to “training, employment, and independence.”

Work requirements 

In the past several years, CMS has denied multiple requests to include work requirements as a condition of Medicaid eligibility. Those requests were made as part of states’ Section 1115 waiver requests to expand their Medicaid program under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The requests were denied on the premise that work requirements would not further program goals of promoting coverage and access. The March 14 letter signals a fundamental change in policy for CMS.

Policy

KFF opined that the reversion to work requirements in Medicaid turns the program into a cash welfare program instead of a program focused on health care coverage. Proponents of the work requirement argue that the expansion of the Medicaid program to able-bodied adults provides a disincentive for those adults to work. Some states have advocated the inclusion of work requirements to ensure that beneficiaries have “skin in the game.” Opponents of the work requirement note that good health is a precondition of work and often an inability to access care can serve, itself, as a barrier to obtaining work.

Statistics

The vast majority (80 percent) of Medicaid adults live in working families. Additionally, more than half (59 percent) of Medicaid adults are working themselves. Thus, KFF estimated that work requirements would have a narrow reach, impacting primarily those who are already at a disadvantage and not working due to disability or caregiver responsibilities.