CMS releases interim final rule on Medicaid unwinding, enforcing requirements for states

Key Takeaways

On December 6, the Department of Health and Human Services (HHS), through the Centers for Medicare and Medicaid Services (CMS), released an interim final rule that enforces state and local requirements for post-COVID-19 Public Health Emergency (PHE) Medicaid eligibility redeterminations and disenrollment, also known as “Medicaid unwinding.” The rule is open for public comment until February 2, 2024, but became effective upon its release on December 6, 2023.

Background

During the COVID-19 Public Health Emergency (PHE), the Families First Coronavirus Response Act (P.L. 116-127) provided additional federal support to Medicaid programs, allowing all Medicaid beneficiaries to be continuously enrolled in Medicaid during the PHE, regardless of their eligibility status. The Medicaid unwinding process began in April, prior to the end of the federal PHE, due to the passage of the 2023 Consolidated Appropriations Act (P.L. 117-328), which outlined specific requirements for this process. 

The recently released interim final rule codifies state level reporting requirements and enforcement authorities outlined in the 2023 Consolidated Appropriations Act. Under these authorities, CMS has the power to take the following enforcement actions for states who do not comply with the outlined guidelines:  

• Require state Medicaid programs to submit a corrective action plan,
• Suspend the state’s disenrollment process and
• Impose civil money penalties.

States are allotted time to get in compliance; however, if states fail to meet reporting requirements, CMS may apply a reduction to the State-specific Federal Medical Assistance Percentage (FMAP).

Impact on Counties

Counties in nine states, including California, Colorado, Minnesota, North Carolina, North Dakota, Ohio, South Carolina, and Virginia, have sole responsibility for the Medicaid eligibility and renewal process in their states, and are responsible for state compliance of CMS requirements.

The interim final rule aims to protect eligible county Medicaid beneficiaries from unnecessary disenrollment during unwinding and helps ensure that CMS is able to collect state data necessary to monitor the unwinding process and its effect on population disenrollment in Medicaid. However, if states fail to meet reporting requirements, counties may experience adverse consequences as a reduction in a state’s FMAP will impact county Medicaid reimbursements.      

Learn More

Interim Final Rule Learn about the county role in Medicaid Additional Medicaid Unwinding Resources