Medicaid Eligibility Changes Set to Hit Hospitals, Insurers, States

Eligibility reviews for people who get Medicaid coverage were paused during the Covid-19 pandemic. The resumption of those reviews and disenrollment of people, technically starting Saturday, has industry working with federal regulators, patient advocacy groups and state Medicaid offices to urgently inform beneficiaries. All of them are working to tell enrollees what steps they can take to avoid losing coverage or how to secure other types of health insurance if they earn too much for the program.

Data shows many enrollees remain unaware the eligibility checks are looming, and federal regulators estimate as many as eight million people could be ousted from Medicaid for procedural reasons, such as not having updated contact information on file even though they are financially eligible for the program. 

“It’s a hugely important issue to us and all stakeholders are working together,” said Molly Smith, vice president for policy at the American Hospital Association. “The risk is really high. Hospitals are already in a really precarious state.”

The disenrollments come as attention shifts away from the pandemic and the public health emergency is set to end officially in May. That will mean the end of free, at-home Covid-19 test kits for Medicare beneficiaries, less flexibility around telehealth and the eventual wind down of free Covid-19 vaccines procured and provided by the federal government.  

Medicaid enrollment during the pandemic swelled about 30%—by 20 million enrollees—from February 2020 to November 2022, according to the Kaiser Family Foundation. Almost 92 million people are now enrolled in the program.

But eligibility determinations are set to begin again under a $1.65 trillion federal spending bill approved in December by Congress. Arizona, Arkansas, Idaho, New Hampshire and South Dakota will be the first five states to begin disenrolling people, according to the Centers for Medicare and Medicaid Services. Most disenrollments are likely to occur nationwide between June and July.

Hospital leaders worry they will be left covering the costs of more uninsured patients as millions of people lose Medicaid coverage. Since 2000, hospitals have provided almost $745 billion in uncompensated care that wasn’t covered by patients or insurers, according to the AHA. 

Hospitals have felt financially squeezed because of the pandemic, higher labor costs and rising drug prices. About half finished last year with a negative margin, according to Kaufman Hall, a provider of healthcare management consulting. 

To help stave off losses, hospitals have been focused on informing enrollees about the eligibility reviews and on helping steer them into other types of coverage such as Affordable Care Act health plans, which could wind up financially benefiting hospitals because commercial insurers typically provide higher reimbursement rates than Medicaid.

Insurers also are worried. Many states contract with private insurance companies known as managed care organizations to provide Medicaid benefits, and they pay the companies a set amount each month. More than 70% of people enrolled in Medicaid are in managed care organizations.

The pandemic and pause on disenrollments meant robust growth for the five national companies with the largest Medicaid managed care business. Enrollment grew by 38.3%, to 41.6 million, from March 31, 2020, to June 30, 2022, according to a report last year by the Georgetown University Health Policy Institute. 

For the three companies for which information is available—

Centene Corp.

,

Molina Healthcare Inc.,

and

UnitedHealth Group Inc.

—Medicaid revenues increased by 40%, from $31.8 billion to $44.4 billion over that time.

Centene has projected it will lose about 2.2 million enrollees, but a review by Capstone LLC, a Washington-based firm that advises investors and companies on regulatory and legislative issues, estimates the insurer will lose about 2.9 million enrollees, or about 14% of its Medicaid beneficiaries. Centene didn’t return an email seeking comment.

“This will be a material problem for a Medicaid insurer,” said Grace Totman, an analyst at Capstone. “There’s universal consensus that this is a big deal and there are concerns.”

Insurers are working to alert enrollees to avoid any unnecessary eligibility losses, such as from lack of updated contact information, or to help them obtain alternative coverage, said

Matt Eyles,

president and chief executive officer at AHIP, a trade group for the insurance industry.

“We want to do whatever we can to stay at the low rate of uninsured,” Mr. Eyles said. “None of us have lived through this before. It’s an unprecedented effort.”

Write to Stephanie Armour at Stephanie.Armour@wsj.com

Eligibility reviews for people who get Medicaid coverage were paused during the Covid-19 pandemic. The resumption of those reviews and disenrollment of people, technically starting Saturday, has industry working with federal regulators, patient advocacy groups and state Medicaid offices to urgently inform beneficiaries. All of them are working to tell enrollees what steps they can take to avoid losing coverage or how to secure other types of health insurance if they earn too much for the program.

Data shows many enrollees remain unaware the eligibility checks are looming, and federal regulators estimate as many as eight million people could be ousted from Medicaid for procedural reasons, such as not having updated contact information on file even though they are financially eligible for the program. 

“It’s a hugely important issue to us and all stakeholders are working together,” said Molly Smith, vice president for policy at the American Hospital Association. “The risk is really high. Hospitals are already in a really precarious state.”

The disenrollments come as attention shifts away from the pandemic and the public health emergency is set to end officially in May. That will mean the end of free, at-home Covid-19 test kits for Medicare beneficiaries, less flexibility around telehealth and the eventual wind down of free Covid-19 vaccines procured and provided by the federal government.  

Medicaid enrollment during the pandemic swelled about 30%—by 20 million enrollees—from February 2020 to November 2022, according to the Kaiser Family Foundation. Almost 92 million people are now enrolled in the program.

But eligibility determinations are set to begin again under a $1.65 trillion federal spending bill approved in December by Congress. Arizona, Arkansas, Idaho, New Hampshire and South Dakota will be the first five states to begin disenrolling people, according to the Centers for Medicare and Medicaid Services. Most disenrollments are likely to occur nationwide between June and July.

Hospital leaders worry they will be left covering the costs of more uninsured patients as millions of people lose Medicaid coverage. Since 2000, hospitals have provided almost $745 billion in uncompensated care that wasn’t covered by patients or insurers, according to the AHA. 

Hospitals have felt financially squeezed because of the pandemic, higher labor costs and rising drug prices. About half finished last year with a negative margin, according to Kaufman Hall, a provider of healthcare management consulting. 

To help stave off losses, hospitals have been focused on informing enrollees about the eligibility reviews and on helping steer them into other types of coverage such as Affordable Care Act health plans, which could wind up financially benefiting hospitals because commercial insurers typically provide higher reimbursement rates than Medicaid.

Insurers also are worried. Many states contract with private insurance companies known as managed care organizations to provide Medicaid benefits, and they pay the companies a set amount each month. More than 70% of people enrolled in Medicaid are in managed care organizations.

The pandemic and pause on disenrollments meant robust growth for the five national companies with the largest Medicaid managed care business. Enrollment grew by 38.3%, to 41.6 million, from March 31, 2020, to June 30, 2022, according to a report last year by the Georgetown University Health Policy Institute. 

For the three companies for which information is available—

Centene Corp.

,

Molina Healthcare Inc.,

and

UnitedHealth Group Inc.

—Medicaid revenues increased by 40%, from $31.8 billion to $44.4 billion over that time.

Centene has projected it will lose about 2.2 million enrollees, but a review by Capstone LLC, a Washington-based firm that advises investors and companies on regulatory and legislative issues, estimates the insurer will lose about 2.9 million enrollees, or about 14% of its Medicaid beneficiaries. Centene didn’t return an email seeking comment.

“This will be a material problem for a Medicaid insurer,” said Grace Totman, an analyst at Capstone. “There’s universal consensus that this is a big deal and there are concerns.”

Insurers are working to alert enrollees to avoid any unnecessary eligibility losses, such as from lack of updated contact information, or to help them obtain alternative coverage, said

Matt Eyles,

president and chief executive officer at AHIP, a trade group for the insurance industry.

“We want to do whatever we can to stay at the low rate of uninsured,” Mr. Eyles said. “None of us have lived through this before. It’s an unprecedented effort.”

Write to Stephanie Armour at Stephanie.Armour@wsj.com