You knew they would be unable to resist. The little pot of money - $10-20B or so - created by terminating the Medicaid Maintenance of Effort before the Congressional Budget Office's guestimate of July 2023.
And you were right.
The Omnibus, assuming it passes both houses before Friday, does indeed create an off-ramp for ending the enhanced FMAP percentage used to encourage states to pause eligibility determinations during the public health emergency. Instead of the 6.2% add-on match terminating with the PHE, it will be phased out as follows:
- 1Q 2023 = 6.2%
- 2Q 2023 = 5.0%
- 3Q 2023 = 2.5%
- 4Q 2023 = 1.5%
- 1Q 2024 = 0.0%
As a condition for receiving the additional FMAP, states must agree to maintain up-to-date information on beneficiaries. States must make a good-faith effort to locate a beneficiary and not rely on returned mail alone. All other federal requirements for enrollment and eligibility determinations will apply.
States are not required to accept the additional FMAP and nothing in the Omnibus compels them to maintain their rolls at pandemic highs. However, the FMAP is a nice incentive, at least for 1Q and 2Q. Further, most states have reserved against a sudden end to the FMAP monies so freeing those up with relieve the inevitable budget pressure in FY 2024.
That said, most states are not going to want their Medicaid rolls to increase forever. Historically, enrollment follows the unemployment rate (ignoring data collection issues in 2017) which means today, many people - we estimate about 1/3 of the 15 million people that are estimated to be subject to disenrollment - are getting health insurance coverage through work. In those cases, states are not so much paying for medical care as they are MCOs an unnecessary per diem.
At what point do states decide to begin disenrolling? Probably in Q1. The process is long and expensive so states are going to want to use any and all federal support to buffer them against those costs. Any material change to enrollment and per diem payments should begin to appear in 2Q 2023 reporting.
There was talk of limiting the number of people that can be disenrolled but it appears the compromise might have been a continuous coverage requirement for children and regular reporting on progress.
Let me know if you have any questions.
Emily Evans
Managing Director – Health Policy
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