Medicaid Enrollment Crosscurrents

Tens of thousands of people who were dropped from Medicaid rolls after November 2020 could be reinstated.

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The Kaiser Family Foundation has estimated that between 5.3 million and
14.3 million people could lose Medicaid coverage this year as result of “the unwinding” of continuous enrollment that went into effect during the COVID-19 public health emergency. But on March 2, 2023, a U.S. District Court judge in Connecticut added an against-the-grain subplot to the narrative of the millions losing Medicaid this year. If the ruling is upheld, tens of thousands of people who were dropped from Medicaid rolls after November 2020 could be reinstated.

At issue in the court case is a CMS interim final rule on Nov. 6, 2020, that changed the federal government’s interpretation of a provision governing Medicaid benefits under the Families First Coronavirus Response Act (FFCRA) that became law on March 18, 2020. That change allowed states to drop Medicaid members from their Medicaid rolls, including poor adults and children; pregnant women; and those who are older, blind or disabled. They were shifted to what the plaintiffs said were the “very-limited-benefit Medicaid program known as the Medicare Savings Program.” In their lawsuit in the District Court, the five plaintiffs in the case — all Medicaid recipients — claimed that their benefits were significantly reduced as a result of the CMS rule.

U.S. District Judge Michael P. Shea ruled in favor of the plaintiffs on Jan. 31, 2023, but the lawyers representing CMS argued that Shea’s ruling was unclear. In his March ruling, Shea clarified that CMS must act immediately to reinstate Medicaid coverage nationwide quickly and automatically whenever possible. The legal reasoning behind Shea’s ruling was that when CMS issued the final interim rule, it violated the Administrative Procedure Act by failing to follow its notice and comment procedures.

Under Shea’s ruling, states may not end coverage for any member enrolled in Medicaid during the public health emergency effective March 18, 2020, the date the FFCRA was signed into law. Any states that do not follow the guidance as Shea outlined in both rulings risk losing the increased Medicaid payments they received under the FFCRA.

In an email to Managed Healthcare Executive, Harvey L. Reiter, J.D., an attorney for the plaintiffs and a partner in the firm of Stinson LLP in Washington, D.C., explained that Shea ruled CMS should tell state Medicaid agencies that all earlier guidance regarding restoration of coverage to Medicaid members was in effect.

One question that remains unanswered is how many Medicaid members the ruling affects. Some states, such as New York, did not disenroll Medicaid members under the interim final rule, according to Sheldon Toubman, an attorney representing Disability Rights Connecticut, a patient advocacy group.

“The number of people affected in some states, such as Pennsylvania, Connecticut and North Carolina, is in the tens of thousands,” he estimated. “In other states, the number is quite small.”

Joseph Burns is an independent journalist in Brewster, Massachusetts, who writes about health policy and health insurance.