The Centers for Medicare and Medicaid Services (CMS) on October 28 issued an interim final rule allowing states to terminate coverage for certain individuals who were not “validly enrolled” in Medicaid, reclassify coverage into tiers, and eliminate optional Medicaid benefits while still receiving the 6.2% increase in Federal Medical Assistance Percentage (FMAP), otherwise referred to as federal matching funds, under the Families First Coronavirus Response Act (FFCRA). Contradicting its previous guidance to states, CMS is reinterpreting FFCRA provisions aimed at protecting individuals enrolled in Medicaid during the COVID-19 Public Health Emergency period. 

What does the recent reinterpretation of FFCRA provisions entail?  

Following the passage of the FFCRA, CMS issued guidance in April and June of 2020 stating that “In order to receive the temporary FMAP increase…states must maintain the eligibility, and benefits, of all individuals who are enrolled or determined to be eligible for Medicaid as of March 18, 2020, through the end of the month in which the public health emergency ends” and that states may move individuals “to another eligibility group which provides additional benefits” but may not “reduce benefits for any beneficiary.” 

In reinterpreting the maintenance of effort (MOE) provisions of the FFCRA, the interim final rule reverses this earlier guidance, requiring states to maintain enrollment only for “validly enrolled beneficiaries,” while allowing states to shift individuals to more limited categories of coverage. In addition, the rule allows states to reduce or eliminate optional Medicaid benefits. 

In addition to creating confusion and uncertainty for states, this rule could result in disenrollment and loss of access to critical services for many people who currently have Medicaid coverage. 

How will this reinterpretation affect Medicaid eligibility?  

CMS has now deemed that someone is not “validly enrolled” in Medicaid if: 

  • There was an agency error that incorrectly determined someone was eligible for Medicaid 

  • A Medicaid agency determines that someone has submitted fraudulent information as proof of eligibility 

  • An individual received coverage during a presumptive eligibility period   

Furthermore, CMS’s new guidance establishes three tiers of coverage as a way for states to maintain their temporary FMAP increase: 

  1. Minimum Essential Coverage (MEC): considered to be the most robust coverage among the three tiers. New CMS guidance gives states the option to move beneficiaries between categories of coverage that qualify for MEC under 26 C.F.R. 1.5000A-2 and maintain the tier 1 classification. This can be interpreted to mean that beneficiaries could potentially lose benefits due to a transition to a more restrictive option. In the example provided by CMS, individuals who are newly eligible for Medicare and continue to meet the income requirements for Medicaid, could be moved from coverage under Medicaid expansion to coverage under a Medicare Savings Program (MSP). Prior to this reinterpretation, if a person had coverage under both an MSP and Medicaid Medicaid, under a person’s MSP coverage, would pay a person’s Medicare Part B premiums and Medicare cost-sharing, while a person’s Medicaid coverage provided access to Medicaid benefits not covered by Medicare. Notably, these Medicaid benefits are often elective health benefits such as vision, dental, and long-term services and supports (LTSS).  

  1. Non-MEC with coverage of COVID-19 testing and treatment (including vaccines and specialized equipment). This tier is designed for states who have pursued coverage for COVID-19 testing and treatment under an 1115 waiver or for pregnancy-related Medicaid with coverage restricted to pregnancy-related services. In their original guidance, CMS explained that pregnant and postpartum people were among the beneficiaries that could maintain benefits until the end of the public health emergency. This meant that postpartum people were able to access pregnancy-related benefits for a longer period of time. New mothers could, therefore, have coverage during a critical time when they are vulnerable to a host of medical conditions, such as complications from childbirth, pain, depression or anxiety, which may be further exacerbated by the stress of the current pandemic. This revised guidance suggests that some states could choose to downgrade pregnant and postpartum people’s benefits to only cover testing services and treatments related to COVID-19 after the 60-day postpartum period expires. As people are continuing to deal with the mental health stressors of the social distancing recommendations and the pandemic, itself, prolonged pregnancy-related coverage may prove to be instrumental to the health of new mothers.  

  1. Non-MEC with limited benefits: considered to be the least robust coverage among the three tiers. Beneficiaries in this tier will likely need to transfer to tiers 1 or 2 in order to receive care outside of the limited range of benefits. CMS provided examples of family planning or tuberculosis-related services as the limited benefit coverage that may fall under this tier.  

While CMS has clarified that a beneficiary cannot be transitioned to a tier with less robust coverage (i.e., from tier 1 to tier 2) during the public health emergency period, this reinterpretation could strip away access to critical services and likely cause administrative complications as both states and beneficiaries struggle to understand which tier a beneficiary is eligible for and the benefits associated with each tier.  

How will this reinterpretation affect what Medicaid covers? 

In addition to allowing states to shift people to more restrictive coverage tiers, the interim final rule now allows states to cut optional Medicaid benefits like adult dental and prescription drugs, which was prohibited under earlier guidance. Such benefits are often a target for short-term cost savings when state Medicaid budgets are squeezed. However, as Community Catalyst has previously highlighted, eliminating or reducing access to these essential services is shortsighted and could cost states more in the long run as serious health and oral health conditions go unaddressed. For example, individuals with diabetes who suddenly lose dental coverage will be at higher risk given the association between gum disease and diabetes outcomes. 

In fact, CMS seems to recognize the inherent risk of this new rule, stating that many people at risk of losing certain coverage under this reinterpretation “would no longer have access to the benefits needed to manage their chronic conditions” which “could also undermine states’ COVID-19 response efforts during the public health emergency.”  
While states are not permitted to cut benefits for children and adolescents, this rule could still have a significant impact on both children and adults. We know that children are more likely to get the care they need when parents and caregivers have robust and stable Medicaid coverage. Cutting benefits and eligibility for adults enrolled in Medicaid would almost certainly harm children at a time when CMS itself is sounding the alarm around precipitous declines in children’s access to vaccinations, well-child visits, behavioral health, and dental care. 

We know that a person’s ability to maintain good health and oral health affects every aspect of well-being, including employment. As millions of people across the US weather the COVID-19 pandemic and its economic fallout, there could not be a worse time to reverse course and undermine the promise Congress made in the FFCRA to protect people’s access to health care. On the contrary, it has never been more important to expand access to care in Medicaid. If allowed to stand, this rule will undoubtedly affect individuals and communities who have been hardest hit by COVID-19 and who have long faced inequitable access to health and dental care. 

While this interim final rule goes into effect immediately, advocates will have 60 days to submit comments once it is published in the Federal Register.