Feds Threaten to Withhold Medicaid Funds Over Slow Eligibility Approvals

This week, several media outlets, including KXAN, have reported on U.S. Rep. Lloyd Doggett‘s release of correspondence from the Centers for Medicaid and CHIP Services (CMS) to Texas regarding significant delays and backlogs in processing Medicaid program eligibility. These delays could result in Texas losing federal funding.

Federal law mandates that the Texas Health and Human Services Commission (HHSC) determine Medicaid eligibility within 45 days. As of January, 40% of applications exceeded this timeframe, placing Texas out of compliance, according to a letter from CMS to State Medicaid Director Emily Zalkovsky.

“Many individuals have lost coverage for procedural and administrative reasons even though they may otherwise meet Medicaid or CHIP eligibility criteria. As these individuals reapply for Medicaid or CHIP, taking meaningful steps to facilitate their enrollment will be essential to support their access to coverage,” CMS wrote.

CMS now requires HHSC to share data on applications, staffing, and workflow for review. These materials are due 30 days after May 22, with a deadline of June 21, or CMS warns of “formal compliance action.”

According to the latest End of Continuous Medicaid Coverage Dashboard published by Texas HHS for April 2024, 984,986 children have lost Medicaid coverage due to procedural problems, not ineligibility.

Possible Effect on Providers

The potential loss of federal Medicaid dollars could severely impact providers in several ways:

  • Delayed Reimbursements: Providers may experience delays in receiving payments for services rendered to Medicaid patients. This can strain their cash flow, making it difficult to cover operational costs and pay staff.
  • Uncompensated Care: Providers might deliver care to patients who are awaiting Medicaid approval but are unable to pay. This increases the burden of uncompensated care on providers, particularly those serving a high volume of low-income patients.
  • Increased Administrative Burden: Providers may face increased administrative work as they assist patients with navigating the application process and verifying their eligibility. This can divert resources away from direct patient care.
  • Uncertainty in Patient Coverage: Providers may struggle with uncertainty regarding patient coverage status, making it challenging to manage appointments, treatment plans, and billing processes.

It’s as if providers didn’t have it bad enough already.

Actions by Texas HHS

In response, Texas HHS has taken action by training more than a thousand staff to process applications and hiring over 2,100 eligibility workers. Additionally, due to increased allocation from the legislature last session, they hired more than 600 temporary staff to assist with the Medicaid unwinding.

KXAN reported that HHSC Deputy Chief Press Officer Tiffany Young stated, “The Texas Health and Human Services Commission is taking all possible actions to provide benefits to eligible Texans as quickly as possible. HHSC meets with CMS on a regular basis and we will continue to discuss strategies to best serve our clients. HHSC is also working with our federal partners to implement immediate strategies to reduce the number of SNAP and Medicaid applications in the queue and ensure that the redetermination process operates as smoothly as possible. HHSC reports on application timeliness to CMS monthly.”

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