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Documentation rule hurts Medicaid-eligible citizens: Report from the GAO
According to a Government Accountability Office (GAO) report, U.S. citizens who appear to be eligible for Medicaid have faced significant access problems due to the new citizenship documentation rule, which was intended to weed out illegal aliens and not to punish U.S. citizens. In a separate report, the Virginia Health Care Foundation said there has been a large drop in Medicaid enrollment since the rule was implemented, while enrollment in SCHIP, which does not use the rule, has continued to grow.
GAO was asked by Reps. John Dingell (D-MI), chairman of the House Energy and Commerce Committee, and Henry Waxman (D-CA), chairman of the House Oversight and Government Reform Committee, to examine how the requirement, which was approved as part of the Deficit Reduction Act of 2005, has affected individuals' access to Medicaid benefits and to assess the administrative and fiscal effects of implementing the requirement.
GAO surveyed Medicaid offices in the 50 states and the District of Columbia about their perspectives on access issues and the requirement's administrative and fiscal effects. Complete responses were obtained from 44 states (71% of national Medicaid enrollment in FY 2004). GAO also reviewed federal laws and regulations and guidance to states issued by the Centers for Medicare & Medicaid Services (CMS).
The Deficit Reduction Act provision in question requires states to obtain satisfactory documentary evidence of U.S. citizenship or nationality for nearly 40 million nonexempt Medicaid beneficiaries within one year of the provision's July 1, 2006, effective date, as well as for new applicants to the program, who constitute an estimated 10 million people annually.
GAO reports that while U.S. citizenship or satisfactory immigration status has long been a requirement for Medicaid eligibility, individuals in most states could previously attest to their citizenship status in writing under penalty of perjury. But self-attestation of citizenship is no longer acceptable. Instead, the Deficit Reduction Act requires that states implement an effective process for documenting citizenship to obtain federal Medicaid matching funds. CMS issued an interim final rule outlining a prescriptive process states must follow to obtain satisfactory documentation of citizenship for Medicaid applicants and existing beneficiaries and identifying a list of acceptable documentation.
Several concerns raised
States and advocacy organizations have raised concerns about the requirement, saying the need for it has not been established, that efforts to comply with it will result in eligible citizens losing access to Medicaid coverage, and that it will be costly for states and individuals.
GAO said states reported the requirement resulted in barriers to access to Medicaid, such as delayed or lost coverage for some eligible individuals. Some 22 of the 44 states reported declines in Medicaid enrollment due to the requirement, and a majority of these states attributed the enrollment declines to delays in or losses of Medicaid coverage for individuals who appeared to be eligible citizens. Of the remaining states, 12 reported the requirement had no effect on enrollment, while 10 reported that they did not know the requirement's effect on enrollment.
Though states often cited a combination of reasons for the decline in Medicaid enrollment, when asked the primary reason, 12 of the 22 reported that enrollment declined because applicants who appeared to be eligible citizens experienced delays in receiving coverage. In addition, five of the 22 states identified the primary reason for the enrollment declines as current beneficiaries losing coverage, with four of the five states saying the individuals appeared to be eligible. Two states said declines were largely driven by denials in coverage for individuals who did not prove their citizenship. GAO said it was unclear from survey results whether these individuals were determined ineligible because in fact they were not citizens or because they did not provide the required documents within the timeframes allowed by the states. Two of the remaining three states reported that the primary reason for the decline was that individuals were discouraged from applying because of the requirement or were not responding to states' requests for documentation of citizenship.
Not all of the 22 states reporting enrollment declines as a result of the requirement could quantify the decline; however, one that had begun tracking the effect identified 18,000 individuals in the first seven months of implementing the requirement whose applications were denied or who had coverage terminated due to the inability to provide the necessary documentation, although the state generally believed them to be eligible citizens. While not explicitly tracking the effect of the requirement on enrollment, 10 other states that attributed enrollment declines at least in part to applicants who were delayed or denied coverage also reported increases in monthly denials ranging from 1% to 14% after implementing the requirement.
Will enrollment decline continue?
States reporting an enrollment decline varied in their impressions of the requirement's effects on enrollment beyond the first year of implementation, GAO said. Of the 22 states that reported an enrollment decline, 17 said they expected the downward trend to continue, while five said the declines would level off within about one year of implementation. Ten of the 17 states said they were unsure how long enrollment declines would continue or generally expected the trend to continue indefinitely. A few of these states noted concern about the ongoing effect on new applicants who will be unfamiliar with the requirement and may be denied enrollment or discouraged from applying. The remaining five of 22 states said they did not expect the decline to continue.
The requirement's effect on individuals' access to Medicaid could have been influenced by state enrollment policies and whether an individual was an applicant or an existing beneficiary. For example, the report said, states that relied primarily on mail-in applications before implementing the requirement were more likely to report enrollment declines than were states where individuals most frequently applied in person. Also, the requirement may affect Medicaid applicants more adversely than beneficiaries because applicants in some states were given less time to comply and were not eligible for Medicaid benefits until they documented their citizenship.
Although states have invested resources to implement the requirement, potential fiscal benefits for the federal government and states are uncertain, according to GAO. All 44 states reported taking a number of administrative measures, such as training eligibility workers and hiring additional staff, to implement the requirement and help individuals comply.
Also, 10 states reported that a total of $28 million was appropriated for the requirement in state FY 2007, and 15 states budgeted funds for state FY 2008. But despite these measures, states reported that the requirement resulted in the state spending more time completing applications and redeterminations and individuals needing more assistance in person during the process.
Two particular problems
States said that two aspects of the requirement in particular increased its burden on individuals and states: 1) documents must be originals; and 2) the list of acceptable documents is complex and does not provide for exceptions. For example, states reported that individuals who previously would have applied for Medicaid through the mail will not part with original documents such as drivers' licenses, and instead are presenting them in person, which increases the workload of state eligibility workers.
Of the 35 states that reported increases in processing time, most said the requirement added five or more minutes per case to the processing time for applications and redeterminations. While only one of the 35 states expected an increase of less than five minutes per case, nine states estimated an additional five to 15 minutes per case, and 16 states expected the requirement to add more than 15 minutes of processing time per application or redetermination, well above the CMS estimate of five minutes per case.
One state reported processing an average of more than 150,000 applications per month in the eight months following implementation. In that state, GAO said, assuming an increase in processing time of a minimum of 16 minutes per application, implementing the requirement would have added at least 40,000 hours of staff time per month.
Other states emphasized that the effect of the requirement on workload goes beyond the amount of time needed to complete applications and redeterminations. Thus, one state reported a 60% increase in phone calls, a tenfold increase in voice messages, and an 11% increase in the amount of time spent on each call.
CMS reported it has taken a number of steps to minimize the administrative burden, including substantially expanding the list of acceptable documents.
While CMS estimated the requirement would result in savings of $50 million for the federal government and $40 million for states in FY 2008 as a result of terminations of eligibility for noncitizens inappropriately receiving Medicaid benefits, states said the CMS estimate may be overstated because it did not account for increases in administrative expenditures reported by states and the intended effect of the requirement—to prevent ineligible noncitizens from receiving Medicaid benefits—may be less prevalent than CMS expected.
In reviewing the GAO report, CMS said it did not disagree with the study's approach, but said it had several concerns about the sufficiency of the underlying data for, and certain aspects of, the GAO findings.
In particular, CMS characterized the report's conclusions as overstating the effect of the requirement on enrollment, and stated it had concerns about the fact that the states did not submit data to substantiate their responses to the survey questions on which the GAO findings were based. CMS also expressed concerns that the draft report it was shown appeared to draw broad conclusions about the effect of the requirement from data provided by just one state.
GAO defended its work, saying the goal was to report on the initial effects of the requirement, and noting that while not all states could quantify the requirement's effect on enrollment, 22 states reported that the requirement resulted in decreases in enrollment, 12 reported it had no effect on enrollment, and 10 said they did not know the effect.
"Absent national CMS data on the effects and because state Medicaid offices were largely responsible for implementing the requirement, we determined they were the best source for this information," GAO said. "…We disagree with CMS' assertion that the draft report drew broad conclusions about the effect of the requirement on enrollment from one state's data. The report clearly indicates that these data are from a single state and further notes that the extent of the decline in Medicaid enrollment due to the requirement in some individual states and nationally is unknown."
In response to the finding that two aspects of the requirement—that documents be originals and that the list of acceptable documents is complex and does not allow for exceptions—presents challenges to states and individuals, CMS said the agency has attempted to provide as much flexibility as possible, and noted that other federal agencies require original documentation.
"Nevertheless," GAO said, "our survey results clearly indicated that these two aspects of the requirement are viewed by most states as posing barriers to access. In particular, 42 of 44 states reported that having to provide original documentation posed a barrier to eligible citizens meeting the requirement, and 34 states reported that an individual's inability to provide documents other than those defined under federal regulations by CMS created a barrier to compliance. Further, while the report explains that CMS modeled its regulations after the Social Security Administration's policy for documenting citizenship when individuals apply for a Social Security number, the report also notes that, unlike CMS, the Social Security Administration provides for flexibility in special cases."
Savings figures in question
CMS said it agreed that its estimate of potential savings in FY 2008 did not account for administrative costs incurred by states to implement the requirement, but added that any such costs would decrease after the first year of implementation. GAO said its report describes that some states reported not having budgeted funds for the requirement in future years and explains that one reason for this may be that the burden of the requirement may decrease after the first year of implementation. However, it added, the ongoing costs of assisting applicants in complying with the requirement may continue to be significant in some states, especially those states that had to substantially modify their enrollment procedures.
CMS commented it was not surprised that states reported facing challenges, GAO said, given that the report's findings were based on states' experiences after less than one year of implementing the requirement. The agency said the initial challenges have diminished and will continue to do so.
But GAO responded that based on the survey results, state do not share CMS' optimism that the challenges are diminishing. "In addition to describing the initial effects of the requirement, which in states' perspectives have included enrollment declines and increased administrative burdens," GAO said, "our report includes additional indicators that the effects states experienced in the first year will continue at least to some extent in the future. For example, 17 of 22 states that reported a decline in enrollment due to the requirement reported that they expected the downward trend in enrollment to continue, with some expecting the decline to continue indefinitely. In addition, 15 states reported already having budgeted funds for the requirement in state fiscal year 2008."
Meanwhile, the Virginia Health Care Foundation says the new requirement has had a much broader impact in that state than anticipated, adversely affecting thousands of citizen children since its July 2006 implementation. In a report, the foundation says unintended consequences include: 1) a significant decrease in the number of children enrolled in Medicaid in Virginia; 2) delays of four to six months in obtaining Medicaid coverage for Virginia children; 3) inability of citizen children to obtain medical care; and 4) a dramatic increase in emergency department (ED) use by families caught up in lengthy eligibility determinations. And the foundation says the requirement also has increased costs and administrative burdens to state and local government agencies, which have required additional tax dollars.
Drop in Medicaid children
After years of steady growth and an average net increase of 1,000 children per month in the 12 months immediately preceding implementation of the new requirement, there has been a dramatic decline in the number of children enrolled in Virginia's Medicaid program, the foundation says. Specifically, there was a net decrease of 11,108 children enrolled in Medicaid in the first nine months of implementation of the documentation requirement.
To demonstrate that the documentation requirement appears to be the culprit, the foundation says that in the same time period the monthly net enrollment of children in Virginia's SCHIP program continued to increase. (SCHIP does not require original documents to prove citizenship and identity.)
"Given the similarities in the two programs, and the continuous growth in SCHIP, it is reasonable to conclude that enrollment in Virginia's Medicaid program would have continued increasing as well, in the absence of the new requirement," the foundation says. "In fact, at the pre-regulation rate of monthly net increase (1,000), an additional 9,000 children would now be enrolled in Medicaid. When the impact of decreased Medicaid enrollment (11,108) and the elimination of monthly growth (9,000) are combined, more than 20,000 Virginia citizen children have been adversely affected and unintentionally affected during the first nine months of the new requirement." Foundation deputy director Judith Cash tells State Health Watch no one has challenged the report's indication that the documentation requirement is the cause of Medicaid declines while SCHIP continues to enroll more people.
The foundation commissioned a telephone survey of 800 adults who applied for Medicaid for their citizen children after the requirement was implemented and says the survey "documents a variety of troubling and unintended consequences."
First, the survey found that more than half of the children who were not yet enrolled at the time they were surveyed had been waiting for four months or more for their applications to be processed. For those who were enrolled at the time of the survey, the report says, 72% required more than the allowable 45 days to process, with 21% taking more than 76 days. The foundation says such delays are atypical for Virginia's Central Processing Unit, which needed an average of 16 days to process a child's Medicaid application in the six months before the documentation requirement was implemented.
ED use increasing
While waiting for the enrollment to be approved, 90% of those surveyed said they had no other health care coverage for their child and of that 90%, 65% said they needed some type of health care during the waiting period. Some 41% of the children who needed care were not able to get all of the care they needed. The reason parents most often gave for being unable to obtain health care for their children was that they couldn't afford it (72%).
In addition, the foundation found, there was a significant increase in use of hospital EDs for primary care by parents who said they do not normally use the ED as their usual source of care.
The foundation also documented the impact of the requirement on state and local agencies administering the program. At the state level, the Central Processing Unit's "pending cases" file (those awaiting further documentation) went from about 50 a month before the new requirement was implemented to 4,000 in January 2007. To address the backlog, the Central Processing Unit hired seven additional staff and provided accompanying space, phones, and computers at a first-year additional cost of more than $144,000. Virginia officials also are paying $25-$50 each to obtain out-of-state birth certificates. The foundation reports that in the first six weeks of the new requirement, local departments of social services received 900 requests for assistance in obtaining out-of-state birth certificates.
Ms. Cash tells SHW the foundation has shared the information it developed with the state congressional delegation and with CMS. She notes the issue came up as the Senate discussed SCHIP reauthorization and actually included a provision that would make use of Social Security numbers to document citizenship and would leave it to the states to decide how to use the numbers. She said the foundation was "pleased" with that proposal, noting that the ultimate goal of the survey and other efforts has always been to have the documentation requirement eliminated. (As this issue of SHW was being prepared, it was not known whether that provision would survive in the final version of the bill and whether the president would veto any SCHIP legislation.)
Virginia's Medicaid agency also has been in touch with the state's congressional delegation and CMS to discuss the drop in enrollment, Ms. Cash tells SHW.
She says the organizations will now "continue to wait and watch and see what happens with enrollment. We've shared some possible strategies with eligibility workers and we'll see how they work out. We hope the GAO report will give additional emphasis to the issue and people will pay more attention to it."
Download the GAO report at www.gao.gov/cgi-bin/getrpt?GAO-07-889. Access the Virginia Health Care Foundation report at www.vhcf.org. More information on the Virginia report is available from the foundation's Judith Cash at (804) 828-5804 and from the Virginia Department of Medical Assistance Services' Cindi Jones at (804) 786-4626.