As Medicaid Unwinding Ends, MCOs Are Left With Lessons, Pressures

With nearly all states having completed the Medicaid “unwinding process” that shed millions of people from the rolls, a new analysis finds that total Medicaid and Children’s Health Insurance Program (CHIP) enrollment is actually higher than it was before the COVID-19 pandemic. One expert tells AIS Health that private insurers helped conduct crucial outreach to ensure people losing coverage could get insured elsewhere — although Medicaid managed care organizations (MCOs) still are grappling with the financial consequences of the unwinding. The unwinding process began in April 2023 after the end of the continuous enrollment provision in the Families First Coronavirus Response Act. This provision was enacted due to the COVID-19 public health emergency to ensure that no one covered by Medicaid lost their insurance — even if a change in income rendered individuals ineligible. Enrollment had reached an all-time high of 94 million when unwinding began, up from 71 million in February 2020. Although 25 million people were disenrolled during the unwinding process, coverage rates remain 13% higher than before the pandemic, according to KFF’s final Medicaid unwinding analysis. And 69% of disenrollments were due to administrative and paperwork issues rather than ineligibility. According to an earlier KFF survey, about 47% of those who were disenrolled later regained Medicaid coverage. Still, some insurers are feeling financial pressure from this membership churn, as those who need more medical services — and thus are costlier to insure — were most likely to renew their coverage during redeterminations. At the Sept. 4 Wells Fargo Healthcare Conference, Centene Corp. Chief Financial Officer Drew Asher noted that 30% of the company’s Medicaid members who lost coverage due to procedural issues later rejoined. “That time period where there’s a gap in coverage continues to sort of widen a little bit,” Asher explained. And that’s pushing up Centene’s Medicaid medical loss ratio because it’s “a time period where we’re not getting premium, and then obviously the member is finding their way back into the Medicaid health care system, typically because they’ve got an event they want to get covered or they have a script to fill.” Asher and other Centene executives noted that some states have been slow to adjust their Medicaid reimbursement rates to account for higher acuity patients. Other MCOs have described similar reimbursement and utilization headwinds. “Medicaid remains pressured on higher acuity with plans waiting for state rate updates, but higher core utilization has not been discussed, except by Elevance [Health, Inc.],” Wolfe Research analyst Justin Lake stated in a Sept. 23 research note. Not All ‘Unwinding’ Outcomes Are Bad There are some positive takeaways from the unwinding process for MCOs, says Bradley Corallo, senior policy analyst and co-author of KFF’s most recent enrollment analysis. One major takeaway is that MCOs were effective partners for states when it came to outreach and ensuring eligible people remained enrolled. Although paperwork-related disenrollment was high, MCOs were instrumental in encouraging enrollees to update their contact information and complete the required forms. They also helped people deemed ineligible to seek coverage elsewhere, such as the Affordable Care Act marketplace. States shared information with MCOs, including data on whether people were likely to be procedurally disenrolled, allowing MCOs to conduct more targeted outreach, Corallo tells AIS Health, a division of MMIT. “State coordination with health plans, provider groups, and other community-based organizations was an essential part of unwinding responsibly, particularly with getting the word out to enrollees and getting them to update their contact information, which was instrumental in reducing procedural terminations,” Corallo says. In addition to outreach, MCOs worked with the government to streamline the renewal process. Procedural disenrollments were at 74% during the first month of unwinding. “By the last month, that was down to around 68%,” Corallo says. “There were some improvements, although it remained pretty elevated.” There was also an improvement in ex parte, or automated, renewals. Sixty-one percent of renewals were conducted ex parte, reducing the paperwork burden on everyone. One factor in the overall growth in Medicaid enrollment compared to pre-COVID times was the pandemic itself, which spurred many previously eligible people to enroll, KFF noted in its analysis. More people also became eligible when several states expanded their Medicaid programs. In all, 10 million more people are enrolled in Medicaid now than in February 2020. ‘Disenrolled’ Doesn’t Necessarily Mean ‘Uninsured’ Only a small subset of the 25 million people who lost Medicaid coverage will remain completely uninsured, Corallo notes. In addition to the 47% who regained Medicaid, 30% obtained coverage through other means, including employer plans, Medicare and the ACA marketplace. Around 23% remained uninsured at the time of the KFF survey in April 2024. More people will transition to these coverage options in the coming months, Corallo says. “Hopefully, states will continue engaging MCOs going forward to help keep Medicaid retention high for those who are still eligible,” Corallo says. by Jill Drachenberg