The Department of Human Services had to push pause on its troubled income-verification system for Medicaid back in August after the federal government told the state that its 10-day response deadline violated federal regulations. Starting last night, the process has begun again — only now DHS has adjusted its procedures, both to comply with federal regulations and also to avoid flagging so many eligible beneficiaries for additional verification. If the state had taken these more reasonable approaches in the first place, it could have avoided kicking tens of thousands of eligible beneficiaries off of their health insurance. 

More than 3,000 beneficiaries were determined eligible and renewed via the new process last night, said DHS Deputy Director Mark White in testimony today before the Health Reform Legislative Task Force

If the system is not able to verify someone’s eligibility based on existing data, an income-verification letter will be sent out, only this time beneficiaries will have 30 days to respond — in compliance with the federal rules on Medicaid renewals. In addition to the longer response window, White said that the state has instituted two other changes to the verification system.

First, if beneficiaries have already been deemed eligible for SNAP (food stamps) in the last six months, they will be automatically renewed for Medicaid. SNAP has a more intensive eligibility determination process than Medicaid, and any beneficiary eligible for SNAP also meets the requirements for Medicaid. This is a common-sense mechanism to streamline the process, giving the state another tool — in addition to wage data from the state’s Department of Workforce Services — to identify beneficiaries who are eligible and can be renewed automatically. 

The second change under the new system: people who have no income at all according to the Workforce Services data will be deemed eligible and automatically renewed. Previously, the state was flagging beneficiaries without any income to send them eligibility verification letters. You may remember us shouting about this on the blog. It seemed crazy. People with no income are Medicaid eligible! The state was identifying these folks and then booting tens of thousands of them off of their health insurance when they didn’t respond in time to vague, confusing income-verification letters with an unreasonable 10-day deadline. The policy decision to target people with zero income proved to be a massive disaster, and it is welcome news that it has been reversed. 

The frustrating part: lots of people, including your humble bloggers at the Times, were asking state officials last summer why they didn’t pursue the above two strategies. We were asking, at the time, why the state had designed a system that all but guaranteed that the Medicaid rolls would be purged of eligible beneficiaries. We were asking, at the time, whether the state should give beneficiaries a more reasonable response time given the stakes. But even as the trainwreck unfolded, Gov. Asa Hutchinson and state officials insisted that nothing whatsoever was wrong with the system in place. They kept right on insisting that until the feds forced their hands. In fact, in addition to arguing that it was good policy, DHS officials erroneously claimed that flagging beneficiaries with no income was required by the federal government. Of course, they were also insisting that the 10-day deadline was allowed. 

Almost 60,000 Medicaid beneficiaries, many of them eligible for the program according to the state’s own data, were kicked off of coverage under the old system. Almost 16,000 of them have since been reinstated because they provided the necessary information to DHS and it turns out they were eligible (they faced gaps in coverage in the mean time, and the state faced administrative headaches in getting them re-enrolled). Thousands more are likely eligible but have not yet gone through the process of getting reinstated (the state has no idea how many of the remaining coverage terminations impacted eligible beneficiaries).  

Although the feds mandated that Arkansas follow the federal rules going forward back in August, they didn’t force the state to give coverage back to the beneficiaries purged under the old system. The reinstatement process is ongoing. Hutchinson has claimed that the old system was working and that “the reason thousands…were stricken from the Medicaid rolls is that they were in fact not eligible.” The fact that at least 16,000 Arkansans lost their health insurance even though they are eligible for the program exposes that Hutchinson’s claim is a lie. And the fact that the state has now made common-sense adjustments to its policy after the bureaucratic fiasco of last summer (“it’s been a learning process,” said White) exposes that the Hutchinson administration spent the summer stubbornly defending a broken system. 

Rep. David Meeks, questioning White today, hammered home the key point of this Medicaid mess.

“Why they were terminated in the first place?” he asked. “15,000 seems like an awful lot to have gotten wrong, to have to go through the motions, go through the cost of having to put them back on.” 

White responded: “Yes sir, and that goes to those changes we’ve introduced. We think if these changes had been in place this summer, certainly a good number of those individuals probably would have been verified without any outside action, and they would not have been terminated in the first place.”