Why the Unwinding of Medicaid Enrollment is Such a Big Deal

As many as 15 million individuals may be disenrolled from Medicaid this year.

The event is “The Medicaid Unwinding.” It starts on April 1. It is big news, not just for hospitals, but for physicians, group practices, community health centers, ambulatory healthcare facilities, and all entities and clinical professionals who are reimbursed by the Medicaid program. And of course, it is big news for up to 15 million people who may be disenrolled from the Medicaid program, according to the U.S. Department of Health and Human Services (HHS).

What is “The Unwinding”? Well, the word can mean different things in different situations.

This is not the kind of “unwinding” that many of us New Jerseyans do late on a weekday afternoon, which usually involves a dark room, a sleep mask, and earplugs. And it’s not the kind of “unwinding” that a man living in La Jolla might enjoy with an old-fashioned in one hand, a cigar in the other, and the Beach Boys playing softly in the background.

This “Unwinding” is a result of the COVID-19 Pandemic. During the pandemic, the Families First Coronavirus Response Act required states to provide continuous coverage of nearly all Medicaid enrollees. Until the end of the federal Public Health Emergency (PHE), states did not check to see if enrollees still qualified financially or categorically for Medicaid. This way, it was assured that families in need would continue to have healthcare coverage during the pandemic. This is how so many people “wound up” on Medicaid. Now, with the end of the PHE, it’s apparently time to “unwind.”

During the PHE, national Medicaid enrollment grew by over 25 percent: an increase of over 20 million. As of April 1, states must resume Medicaid re-enrollments. Some industry estimates predict that as many as 15 million people will be disenrolled. Unfortunately, this could include 7 million who will likely still be eligible. Notably, beneficiaries who have changed addresses may not receive their Medicaid renewal applications and other information about re-enrollment. 

States will have up to 12 months to catch up and return to their normal procedures for determining and maintaining Medicaid beneficiary enrollment. But, Medicaid being Medicaid, it is administered by the individual states. This almost ensures 50 different means of getting there. 

For instance, it is assumed that it will be harder for non-English speaking enrollees to get important information about the “Unwinding.”

When I looked at the California Medicaid website, I saw that they had translated their “Unwinding” information and toolkits into 18 languages.

When I looked at the Ohio Medicaid website, I couldn’t easily find any mention of the “Medicaid Unwinding” or instructions for re-enrollment in any language except English.

Managed Medicaid payors are also playing a major role in getting information to the Medicaid population. In most states, 75 percent of the Medicaid population is in a managed care plan. Because the managed care plan has more frequent and more recent contact with their members, they may have better contact information than the state Medicaid programs. Medicaid managed care payors, which receive capitated payments based on the number of Medicaid enrollees, are very motivated, and are reaching out to their members on Medicaid plans to tell them how to get re-enrolled in Medicaid and keep their continuous coverage. They are also providing updated enrollee contact information directly to the state Medicaid programs.

People who still do not qualify for Medicaid (they may have regained jobs lost during the pandemic) will be referred directly to Exchange insurance programs, where they will have the opportunity to enroll for low-cost, possibly high-deductible plans.

So, what is the best strategy for health systems and hospitals to take? 

How can hospitals reduce the number (remember, as many as 7 million) who would be cut from the Medicaid rolls even though they are still eligible? A hospital with $250 million in net revenue and a 15 percent mix of Medicaid patients is facing a potential $9 million hit in 2023 and 2024 if they were to lose 25 percent of their Medicaid reimbursement. Just what we don’t need now!

Hospitals see that taking on a proactive outreach program for their total Medicaid population could get very expensive. If it costs approximately $75 per Medicaid beneficiary (in labor or vendor costs) to message, contact, and assist in re-enrolling all of the Medicaid patients in an urban area served by a multi-hospital system, the total expenditure could easily exceed $1 million. This would be money spent regardless of how effective the hospital’s re-enrollment efforts were.

It appears that most health systems and hospitals are depending on a more reactive strategy to lessen the possible financial damage of the “Unwinding.” Providers will look to the states, the counties, and the Medicaid Managed Care payors to do the best they can with outreach efforts. We are confident that there are already multiple layers of organizations reaching out to the Medicaid population to warn them of the impending end of their families’ Medicaid coverage, and to get them re-enrolled. 

Hospitals can then act as a “safety net.” 

If all other efforts to contact Medicaid beneficiaries and to get them re-enrolled in Medicaid fail, hospitals must catch them at the door – at scheduling or registration. If hospitals can identify these “at-risk” families as they enter the care system, they can direct them to internal Medicaid screeners and enrollment specialists. And those who still do not qualify for Medicaid can be enrolled in Exchange plans, financing plans, or charity care.

I think that the hospital strategy for planning reactive measures instead of proactive measures for re-enrolling “Unwound” beneficiaries is like having a great goalie for your hockey team. You may have five all-stars, chasing the puck all over the rink. But you need to have a Vítek Vaněček back in goal to take care of the pucks that somehow make it through.

So, let’s root for the hospitals during the “Medicaid Unwinding.” (I’ll also be rooting for the New Jersey Devils during the NHL playoffs!)