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Children getting wrongly dropped from Medicaid because of automation ‘glitch’

The federal Centers for Medicare and Medicaid Services is asking all states to review their computer-automated processes to make sure that children are evaluated separately from their parents

Financial services department at a hospital
A sign points visitors toward the financial services department at a hospital, in 2014.David Goldman (AP)

Children in many states are being wrongly cut off from Medicaid because of a “glitch” in the automated systems being used in a massive eligibility review for the government-run health care program, a top Medicaid official said Wednesday.

The federal Centers for Medicare and Medicaid Services is asking all states to review their computer-automated processes to make sure that children are evaluated separately from their parents — and aren’t losing coverage merely because of their parents’ ineligibility or inaction.

Though federal officials remained vague about the scope of the problem, it likely involves at least half the states and potentially affects millions of children, said Joan Alker, executive director of Georgetown University Center for Children and Families.

“I think it’s a very significant problem,” said Alker, whose center is tracking the Medicaid renewal process in each state.

In most states, children can qualify for Medicaid at household incomes that are several times higher than allowed for adults.

Yet in many states, “eligible kids are not being successfully renewed, and that is a violation of federal requirements,” said Daniel Tsai, director of the CMS Center for Medicaid and Children’s Health Insurance Program Services.

All states are in the midst of an enormous eligibility review for Medicaid. A pandemic-era prohibition on removing people from Medicaid ended in the spring, triggering the resumption of annual eligibility determinations. While the freeze was in effect, Medicaid enrollment swelled by nearly one-third, from 71 million people in February 2020 to 94 million in April 2023.

States are encouraged to automatically renew people for Medicaid by using computer programs to review income and household information submitted for other social services, such as food aid or unemployment benefits. When that doesn’t work, states are to send notices to homes asking people to verify their eligibility information. When people fail to respond, they are dropped from Medicaid — a move described as a “procedural termination” by Medicaid officials.

Tsai said a “systems glitch” in some states is flagging entire households for further information — and dropping all family members when there’s no response — instead of reviewing each individual separately and automatically renewing children who remain eligible.

A top Medicaid official in Maryland confirmed it’s one of the states with that problem.

“Maryland has responded immediately and is working closely with CMS to resolve this issue in a way that helps keep eligible individuals, particularly children, covered on Medicaid,” said Ryan Moran, the state’s Medicaid director and deputy secretary of health care financing.

He said Maryland is pausing all procedural terminations in August, retroactively reinstating coverage for children who weren’t renewed in the automated process and working to fix its system as quickly as possible.

Moran said the state has identified 3,153 children who were potentially affected — a little less than 5% of the state’s total procedural terminations to date. Some of those children still could eventually be determined to be ineligible.

CMS sent letters Wednesday to states, giving them until Sept. 13 to report whether their automated renewal systems have similar problems. Those that do are instructed to pause procedural terminations for affected individuals, reinstate coverage for those already dropped, and devise a way to prevent further wrongful cutoffs until their automated systems can be fixed.

Some states already have taken steps to prevent such situations. Missouri’s computer system cannot automatically renew coverage when a child is eligible, but a parent’s eligibility is in question. So staff are handling those cases manually, often causing the process to extend into another month, said Caitlin Whaley, a spokesperson for the Missouri Department of Social Services.

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