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Arkansas DHS Director Cindy Gillespie, Governor Asa Hutchinson and CMS Administrator Seema Verma.
CHANGES: (from left) Arkansas DHS Director Cindy Gillespie, Governor Asa Hutchinson and CMS Administrator Seema Verma (file photo). BENJAMIN HARDY

As the COVID-19 crisis unfolds, the Arkansas Department of Human Services is relaxing certain policies that have led to the removal of tens of thousands of people from the state’s Medicaid rolls in recent years. Around 11,000 beneficiaries whose coverage was terminated at the end of last month have now been reinstated. Many more will be reinstated as the state works to implement guidance from the federal government.

“The goal is to ensure that people keep their Medicaid health care coverage during this public health emergency,” said DHS spokesperson Amy Webb. “We are the safety net agency, and we know that this coverage is critically important at this time.”

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Before the pandemic, the state has typically terminated beneficiaries’ coverage if department mailings are returned due to a bad address. The DHS requires beneficiaries to notify the agency of any address change within 10 days of a move. If mail sent to a beneficiary is returned to the DHS and the agency is unable to determine a new in-state address, that person’s case would be closed. This approach, a more aggressive tactic than many other states have taken, has likely been one factor leading to a significant culling of beneficiaries from the state’s Medicaid rolls in recent years.

On March 19, the DHS made the decision to temporarily suspend this policy, and other rules that would normally lead to coverage terminations. During the pandemic, the agency will no longer close cases due to an inability to locate a beneficiary, a beneficiary’s failure to provide requested information such as updated income status, or a beneficiary’s failure to cooperate with child support enforcement.

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The state’s electronic eligibility system automatically closed around 11,000 such cases at the end of March, because of casework that had already been input before the decision to suspend those cancellations. Those people were reinstated to the program this week. A smaller group of beneficiaries, around 200, had their cases automatically closed in a separate, older eligibility system. Those will have to be reinstated manually, one by one. “That process has already started, and we hope to get that done as quickly as possible,” Webb said.

Those who are reinstated will have their coverage back-dated to March, so there will be no interruption in coverage.

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The state will continue to close cases if the DHS receives returned mail and has clear evidence that the beneficiary has moved out of state, has been incarcerated, or has died.

The DHS has also automatically extended renewals of Medicaid eligibility through May 31. Typically, beneficiaries need to go through an eligibility verification process annually, with the DHS confirming that they still meet income or other eligibility requirements. These renewals take place on the anniversary of the month that beneficiaries originally enrolled. Beneficiaries that would normally have had their required renewal process take place in March, April or May will now have coverage remain in place through the end of May. The renewal process will then be tentatively slated to take place for that group the following month, along with those scheduled for June. The agency may extend renewals further depending on how the pandemic crisis plays out in the coming months.

The state will scale back Medicaid terminations even further as it works to implement guidance issued on March 24 by the federal Center for Medicare and Medicaid Services. That guidance explained the requirements for the state to receive additional Medicaid funding as part of the federal Families First Coronavirus Response Act, signed into law by President Trump on March 18. In order to receive the additional funds, states must maintain Medicaid coverage for the duration of the COVID-19 emergency for all beneficiaries who were enrolled in the program as of March 18 — even if a change in the beneficiary’s circumstances would normally lead to a termination — and should make efforts to reinstate any beneficiary whose coverage was terminated after that date. The only exceptions are for beneficiaries who voluntarily leave the program, move out of state, die, or are incarcerated. That means that even if the DHS determined that a beneficiary was no longer eligible for the program due to reasons such as a change in income, those cases will now be reinstated as well if their coverage was terminated after March 18. Webb said this new round of reinstatements will take place “as soon as we can operationalize it.” She was not able to provide an estimate of the number of beneficiaries this will impact.

Before the pandemic, the state’s procedures around Medicaid eligibility and enrollment under the Hutchinson administration have often faced criticism from advocates for beneficiaries.

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In 2015, the state purged more than 50,000 people from the rolls after conducting a troubled income-verification check, even though many were eligible for the program according to the state’s own data. These beneficiaries were culled for failing to respond to eligibility verification letters within a 10-day deadline. The federal government later ruled that the 10-day deadline violated federal regulations, forcing the state to scrap it. Those who lost coverage under that policy, however, were not automatically reinstated.

More recently, the state has seen a steady decline in the Medicaid rolls. During the three-year period from December 2016 through November 2019 (the most recent date when updated data is available from the federal government), the state’s total Medicaid enrollment fell by more than 9 percent, one of the highest declines among states that expanded Medicaid to cover low-income adults. The Arkansas Works program — the state’s unique version of Medicaid expansion, which uses Medicaid funds to purchase private health insurance for adults who make less than 138 percent of the federal poverty level — has been the main driver in these declines. Enrollment in Arkansas Works peaked in January of 2017 at around 330,000. By Feb. 1, 2020, it had fallen to 250,476 — a 24 percent drop from the peak. (In January and February of 2019, according to the most recent data provided by the DHS, just over half of the Arkansas Works terminations were due to inability to locate a beneficiary or a beneficiary failing to provide requested information in time.)

Governor Hutchinson has credited an improving economy with the drop in enrollment, and relatively low unemployment during the last several years was clearly a contributing factor, as some people transitioned from Medicaid to employer-sponsored health insurance. But an investigation by the Arkansas Nonprofit News Network in summer 2018 found that the state’s approach to returned mail was likely also a factor. The population of low-income adults covered by Arkansas Works tend to have frequent address changes, and social-safety-net programs have long had challenges maintaining communication. It is not uncommon for a certain number of Medicaid recipients in all states to lose coverage at the annual renewal process, when some beneficiaries may be required to provide updated information. In Arkansas, however, any returned mail — not just during the renewal process — triggers a closure unless the beneficiary has provided a new address. The DHS will attempt to communicate with the beneficiary if the returned mail provides a new in-state address and attempt to call if the agency has a phone number on file. If those efforts are not successful, the state does not otherwise take proactive steps to find the beneficiary, and the case is closed.

Webb acknowledged that this means a certain number of eligible, in-state beneficiaries lose coverage due to this policy, precisely the outcome that the agency is now taking extra steps to avoid during the pandemic. However, she said, the policy was necessary during normal times.

“It’s critically important for us to have their addresses and ways to contact them,” she said. “We need to give them information, or tell them about changes. We need to be able to communicate with them. That is our policy. We try every way we can to communicate with them and to keep them on if they’re eligible.” She added that in cases when eligible beneficiaries lose coverage due to a bad address or failure to respond to requested information, they can then re-apply and regain coverage. “They can come back to us, and they do, and we get them back on,” she said.

Rich Huddleston, executive director of Arkansas Advocates for Children and Families, applauded the DHS on its policy shifts in response to the pandemic, but argued that the emergency changes expose that the state’s aggressive posture on coverage terminations needs reform even after the pandemic subsidies.

“Their recent policy decision … will allow thousands of vulnerable Arkansas families to maintain essential health care coverage at a time when their health is at greater risk and when their economic well-being is threatened because of the economic downturn and job layoffs,” Huddleston said. “While this is a  positive step, it points to a more long-term structural problem for Medicaid coverage for vulnerable families. Even in normal times, far too many Medicaid cases are closed when DHS receives ‘returned mail’ after sending families a request for information that they did not receive and return.”

“This policy is problematic at best, especially outside of the annual case review process,” Huddleston said. “Low-income families are much more likely to move during the year for a number of reasons including evictions, job loss, etc. And as a result, families may not be able to respond to a DHS request for information. If Arkansas is truly committed about ensuring that our most vulnerable families have access to health care coverage when they need it most, we need to suspend the policy permanently after the current pandemic ends.”

Monthly Medicaid terminations before the agency’s COVID-19 policy changes have ranged from around 20,000 to 29,000 per month over the past year (including 8,000 to 15,000 children per month). Suspending or reversing most terminations that would normally occur will likely reverse the state’s recent downward trend in Medicaid enrollment. But an even bigger enrollment swell is coming, state officials expect. With unemployment skyrocketing in the wake of the COVID-19 crisis, a large number of people are likely to be newly income-eligible for the program in the coming months.

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Another major driver of Medicaid terminations in the state was halted last year when a federal judge blocked the state’s work requirement for certain beneficiaries. More than 18,000 beneficiaries had coverage terminated over the course of five months in 2018 for failure to report the required 80 hours of “work activities” (some education, job search and volunteer hours count) to the state. The policy, pushed by Governor Hutchinson and approved by the Trump administration, was the first Medicaid work requirement in the nation to be implemented. A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit last month unanimously upheld a March 2019 lower court decision that struck down the work requirements. The Trump administration has not yet indicated whether it will attempt to appeal the ruling to the Supreme Court.

If the work requirements were still in place in Arkansas this year, they would likely run afoul of the CMS guidance on maintaining coverage during the COVID-19 emergency. The governor’s office did not respond to queries asking whether Hutchinson would have suspended the work requirements during the pandemic if they were currently in place, or whether the current spike in unemployment had caused him to reconsider his stated desire to enact work requirements as soon as possible.

Arkansas Advocates for Children and Families has provided grant funding to the Arkansas Nonprofit News Network.

This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans.