Medicaid Maintenance of Eligibility (MOE) Requirements: Issues to Watch

Key Takeaways

To help support states and promote stability of coverage amidst the COVID-19 pandemic, the Families First Coronavirus Response Act (FFCRA) provides a 6.2 percentage point increase in the federal share of certain Medicaid spending with requirements to meet certain maintenance of eligibility (MOE) requirements that include ensuring continuous coverage for current enrollees. Under a new Interim Final Rule (IFR), The Centers for Medicare and Medicaid Services (CMS) has reinterpreted the MOE to allow states to decrease benefits, increase cost-sharing, and in some cases, terminate enrollment for people considered not “validly enrolled” or change eligibility groups while still receiving increased federal matching funds. The MOE requirements are tied to the Public Health Emergency (PHE) period, but specific requirements expire at different times. This brief provides an overview of these MOE requirements, examines what happens when the MOE expires, and discusses key issues to consider looking ahead. Key findings include the following:

• Under the IFR, as of November 2, 2020, states are now allowed to increase cost-sharing and eliminate optional benefits and still be in compliance with MOE requirements. In addition, states are required to transition most enrollees determined ineligible for their current coverage to different coverage pathways for which they are eligible if such a transition is in the same tier of coverage (though it may cover fewer benefits or have higher patient cost-sharing).
• CMS has also released an informational bulletin for states affirming current eligibility renewal and redetermination rules but has not yet provided additional guidance on policies for the end of the PHE. Clear guidance with sufficient lead time will be key for helping states establish policies and processes to clear renewal backlogs when the MOE requirements end.
• The change in Presidential administration will have implications for MOE requirements, states and beneficiaries. The new Biden Administration will face decisions around continuing to extend the PHE, revising the current MOE rules and about guidance for renewals post PHE. The incoming administration could also work with Congress to pass legislation to extend the amount and duration of the fiscal relief and MOE.

What are the MOE requirements for states?

The FFCRA provides a 6.2 percentage point increase in the federal share of Medicaid spending with requirements to maintain eligibility. The increase does not apply to Affordable Care Act (ACA) Medicaid expansion adults, for whom states continue to receive a 90% federal matching rate. The Federal Medical Assistance Percentage (FMAP) increase was retroactive to January 1, 2020, and is in place until the end of the quarter in which the PHE ends.

The law requires states to meet certain MOE requirements as a condition of receiving the enhanced funding. States must apply Medicaid eligibility standards, methodologies, and procedures that are no more restrictive than those in effect on January 1, 2020. States cannot increase Medicaid premiums above those in effect on January 1, 2020.^1,2,3 States must cover coronavirus testing and COVID-19 treatment services, including vaccines, without cost-sharing. States cannot increase political subdivisions’ contributions to the non-federal share of Medicaid costs beyond what was required on March 1, 2020.⁴

The MOE requirements also provide continuous coverage for current enrollees. Specifically, states must provide continuous eligibility through the end of the month in which the PHE ends for those enrolled as of March 18, 2020, or at any time thereafter during the PHE period. In guidance to states through FAQs, CMS originally interpreted the MOE to allow states to act on changes in circumstances to move individuals into eligibility categories that provide additional benefits but prohibited states from moving individuals into eligibility categories with fewer benefits.⁵ The original guidance further prohibited states from increasing cost-sharing or restricting benefits.

CMS released an IFR updating (and in some instances reversing) its interpretation of the MOE continuous coverage requirements effective November 2, 2020.⁶ While most enrollees may not be disenrolled until the end of the month in which the PHE ends, this rule reverses prior guidance and requires states to follow regular program rules on changes in circumstances by moving beneficiaries to an eligibility category with coverage within the same “tier” or into a category with more comprehensive coverage (but not to a lower tier of coverage) if they are determined ineligible for their current coverage.⁷ This could result in some changes in benefit packages or cost-sharing which were not permitted under the original guidance.⁸ The rule defines three “tiers” of coverage: minimum essential coverage (MEC);⁹ coverage that is not MEC but includes COVID-19 testing and treatment services, and more limited benefit packages that do not include COVID-19 testing and treatment (e.g., family planning). If an enrollee is determined no longer eligible for Medicaid under any eligibility pathway, states must maintain the same coverage through the end of the month in which the PHE ends. ¹⁰ States also cannot disenroll individuals for procedural reasons such as failure to respond to notices requesting additional information. Table 1 provides selected examples of eligibility, benefits, and cost-sharing changes under the interim final rule.

Table 1: Selected Examples of Medicaid Eligibility Changes Under the FMAP MOE
Circumstances	Under Old CMS FAQ	Under Interim Final Rule as of 11/2/20
Child turns 19	Remain enrolled in low-income child group	If eligible, move to adult group, even if different benefit package and/or higher cost-sharing (must provide Early Periodic Screening Diagnosis and Treatment (EPSDT) until age 21). If ineligible for another full-benefit group, remain in low-income child group.
Young adult turns 21	Continue providing EPSDT	Stop providing EPSDT
ACA expansion adult turns 65	Remain enrolled in expansion group. Add Medicare Savings Program (MSP) group if eligible for Medicare cost-sharing assistance	Terminate expansion group enrollment and enroll in another full-benefit Medicaid group if eligible. Also enroll in MSP group if eligible. If ineligible for another full-benefit Medicaid group or MSP, continue expansion group enrollment (even if receiving Medicare).
Woman reaches end of 60 day post-partum period	Remain enrolled in pregnant woman group	If eligible for another full benefit group, such as ACA expansion, and benefit package for new group is the same or more generous than pregnant woman benefit package, move to new group. If pregnant women benefit package is not MEC but does include COVID testing and treatment, and person is ineligible for any full benefit group, remain enrolled in pregnant woman group.
Nursing home resident has increased income	Do not increase patient liability (cost-sharing)	Increase patient liability (cost-sharing)
Person receiving LTSS moves from community to nursing home	Do not decrease personal needs allowance (do not increase cost-sharing)	Decrease personal needs allowance (resulting in increased cost-sharing)
Child or pregnant woman loses qualifying immigration status in states that opt to waive 5-year bar	Move from full benefit group to emergency Medicaid only	Same outcome as under prior guidance.
Person loses eligibility for family planning group or another limited benefit package that is not MEC and does not cover COVID testing and treatment	Remain enrolled in limited benefit package unless eligible for a full benefit group	Remain enrolled in limited benefit group, unless eligible for group with MEC or COVID testing and treatment (do not move to another limited benefit package group).
Person fails to respond to state request for additional information (such as follow up to quarterly wage data check)	Remain enrolled in current group (do not terminate eligibility on a procedural basis).	Same outcome as under prior guidance.
SOURCES: 42 C.F.R. § 433.400; 85 Fed. Reg. 71142-71205 (Nov. 6, 2020); CMS All State Calls (Oct. 29, Nov. 5, Nov. 17, and Nov. 24, 2020); CMS, Families First Coronavirus Response Act, Coronavirus Aid, Relief, and Economic Security Act Frequently Asked Questions, (posted 4/13/20); CMS, Families First Coronavirus Response Act – Increased FMAP FAQs, (updated 4/13/2020).

The rule allows states to terminate Medicaid coverage during the PHE for those not “validly enrolled.” CMS describes the rule as a presumption that most people are “validly enrolled” with limited exceptions¹¹ but also allows states to terminate coverage for individuals not “validly enrolled,” defined as those who have been convicted of fraud or have a formal finding of abuse that is material to the eligibility determination or by agency error. These rules apply to all initial eligibility determinations as well as to redeterminations and renewals that were completed prior to March 18, 2020. The rule also confirms that individuals determined presumptively eligible but who have not yet received a final eligibility determination are not “validly enrolled.” Prior to terminating coverage of anyone not “validly enrolled,” states must follow regular Medicaid rules, including reviewing all other potential bases of eligibility and providing advance notice and the opportunity for a fair hearing. States are also allowed to terminate coverage for those who are no longer residents under limited circumstances¹² as well as anyone who is deceased.

The IFR reverses earlier guidance by allowing states to make benefit and cost-sharing changes and continue to receive the FMAP bump. States may eliminate optional benefits as well as change the scope of benefits, such as service authorization criteria. States may also establish or increase cost-sharing and increase the patient liability amount for those receiving long-term services and supports (LTSS) under post-eligibility treatment of income rules.

By drawing down the enhanced federal funds, states are indicating to CMS that they will comply with the MOE conditions.¹³ CMS will not require a separate demonstration of compliance from states but will allow states to passively attest by drawing down the funds. If CMS later determines that the state does not satisfy all of the conditions, the state must return the enhanced funds.¹⁴ CMS has stated it is not aware of any states not taking enhanced federal funds.¹⁵

Beyond the MOE requirements, states can streamline eligibility and enrollment processes to help connect people to coverage more quickly, and many are doing so through emergency authorities. Nearly all (47) states are making changes to streamline eligibility and/or enrollment through State Plan Amendments (SPAs) or other administrative authority beyond what is required to access the enhanced federal funding. States can make changes through a regular SPA or Disaster-Relief SPA as well as other authorities. States have flexibility to expand eligibility or modify eligibility rules, eliminate or waive premiums, and streamline application and enrollment processes. Specific actions states are taking include expanding Medicaid coverage to optional groups, allowing increased used of self-attestation to expedite enrollment, eliminating premiums, as well as expanded use of presumptive eligibility.

What happens when MOE requirements end?

The MOE requirements are tied to the COVID-19 PHE period, but specific requirements expire at different times (Appendix Table 1). The PHE ends when the Secretary declares that the emergency no longer exists, or after 90 days, whichever happens first, although the Secretary can renew the PHE declaration for subsequent periods.¹⁶ The most recent declaration extended the PHE until January 20, 2021. The Department of Health and Human Services (HHS) has not specified if the PHE will be renewed again, but if not already extended, the incoming Biden Administration is expected to extend the PHE in response to increasing coronavirus cases across the country. The requirement for states to provide continuous eligibility to enrollees expires the last day of the month in which the PHE ends (“continuous eligibility period”). The other four MOE requirements and the enhanced FMAP funding last through the end of the quarter in which the PHE ends (“MOE period”). State policy changes to streamline eligibility and enrollment through Disaster-Relief SPAs will also expire at the end of the PHE. As such, states may consider whether to continue those changes through regular SPA authority or revert to pre-pandemic policies. Changes that states have made to verification processes through a verification plan disaster addendum, such as accepting self-attestation for eligibility criteria, are also tied to the emergency period, but the exact end date varies based on state option.

After the end of the PHE, states must resume renewals and redeterminations in accordance with current Medicaid rules. These rules differ somewhat for enrollees whose eligibility is based on modified adjusted gross income (MAGI groups, including pregnant women, low-income parents, and low-income children) and non-MAGI enrollees (groups where eligibility is based on old age or disability).

• States must first conduct an ex parte (passive) renewal based on available data sources. If a passive renewal is unsuccessful, states must send a prepopulated form that requests any needed information to MAGI enrollees while states can choose to send a prepopulated form to non-MAGI enrollees.
• If eligibility is terminated due to failure to timely respond to a renewal request, states must provide a 90 day reconsideration window where individuals in MAGI groups can provide the necessary information to re-establish eligibility without completing a new application; the 90-day reconsideration period is optional for non-MAGI groups. ¹⁷
• For MAGI populations, states may only renew eligibility once every 12 months unless the state receives information from the beneficiary or through data sources indicating a change in circumstances that may affect eligibility. Eligibility for non-MAGI groups must be renewed at least once every 12 months, and more frequently at state option.
• All enrollees must report changes in circumstances that may affect eligibility in a timely manner, and states must promptly address any changes by redetermining eligibility.¹⁸ Federal rules also generally require states to use current income and determine eligibility on “all bases” before determining an enrollee ineligible.¹⁹ States must provide beneficiaries with advance written notice of the termination at least 10 days in advance and inform the individual of their right to a fair hearing.²⁰

CMS issued an informational bulletin on December 4, 2020, that reiterates these current renewal and redetermination rules for states but does not address processes at the end of the PHE. CMS is encouraging states to conduct renewals and redeterminations to the extent possible during the PHE and plans to issue more specific guidance later about the end of the PHE.²¹ This guidance could include more specific instructions to states about policies and processes for addressing redetermination and renewal backlogs that may have accumulated during the PHE, when data matches for income must be conducted, when to determine current income (for example, when states must conduct another updated eligibility determination to check for subsequent changes in circumstances for individuals who maintained eligibility only due to the MOE), and what notices will be required when the PHE ends. Prior to the PHE, CMS had encouraged states to enhance verification processes and conduct periodic data checks, which may have contributed to enrollment declines.

What are the key questions looking ahead?

How will states implement requirements and options in the new IFR? It is unclear how many individuals will be transitioned to alternative eligibility pathways within the same coverage tier, how enrollees will be notified of such a change, and how administratively challenging such transitions will be for states. The recent CMS bulletin also affirms current rules that if an individual is determined eligible following a change in circumstances, states can start a new 12-month renewal period if all other eligibility criteria can be verified. While few states have used this option, more states may use this option to help stagger renewals following the end of the PHE. In addition, it will be important to watch if states restrict benefits or increase cost-sharing, particularly as Governors develop budgets for the upcoming fiscal year and states continue to face economic pressures and reduced revenues.

Will the PHE be extended and for how long? The current PHE declaration expires on January 20, 2021, and it is expected it will be extended either by the current Administration or under by the Biden Administration for at least another 90 days. If the PHE is not extended, continuous coverage requirements will end on January 31, 2021, and the enhanced FMAP and other MOE requirements will expire on March 31, 2021. State eligibility and enrollment flexibilities through Disaster-Relief SPAs during the PHE will also expire. Providing more transparency or clarity on how long the PHE is likely to remain in place will be helpful to states as they prepare for when continuous coverage and other MOE requirements end.

Will CMS issue additional guidance to help states manage backlogs and establish redetermination policies and processes when the MOE requirements expire? States will have a backlog of renewals and redeterminations for individuals whose renewal date fell during the continuous eligibility period when MOE requirements end. The Medicaid and CHIP Payment Advisory Commission (MACPAC) sent a letter to HHS requesting that states be provided with at least 90 days’ notice prior to the end of the PHE to plan for the end of enhanced federal match rate. The letter also requests clear guidance for states for returning to normal in a “manner that best protects and minimizes disruption for Medicaid beneficiaries, providers, plans, and states.” Although federal rules specify certain requirements related to renewals and periodic eligibility verifications, states will be looking for additional guidance from CMS about rules related to processing renewals and redeterminations when the PHE ends. For example, when the ACA went into effect and states faced an influx of enrollment and new MAGI rules, CMS provided states the option to delay renewals.^22,23

Are there things states can do to prepare for the end of the PHE? States can alleviate potential backlogs at the end of the PHE by continuing to process ex parte renewals and extend eligibility for an additional 12 months or start new 12-month coverage periods following a change in circumstance. To streamline these determinations, states may use electronic data from other benefit programs, such as SNAP, to verify income.²⁴ States can also proactively work to update addresses through the U.S. Postal Service National Change of Address Database as well as work with managed care plans to update address information and minimize disruptions for enrollees after the PHE ends. As of January 2020, only ten states reported proactively updating addresses.²⁵ In addition, states may encourage the use of online accounts to maintain up to date enrollee information, allow enrollees to view notices online and to reduce administrative workload.²⁶

Will there be changes to the amount and duration of the fiscal relief and MOE requirements?

President-elect Biden has indicated support for further increasing the FMAP and may try to work with Congress to enact legislation, though Republican leaders have generally been opposed to substantial increases in state and local assistance during the pandemic and economic crisis. The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed by the House in May and then updated and passed again in October would increase the enhanced FMAP to 14% effective through September 2021 to support states as the COVID-19 pandemic continues. Congress could also consider alternative options to target the relief to states experiencing higher enrollment increases. However, it remains unclear if Congress will provide additional relief through the FMAP or if they will revisit the MOE requirements as part of another coronavirus relief package.