Sylvia Classic says she first became aware that her family had lost health insurance when she received a call from her pharmacist last week. Classic, 35, is a resident of Conway and a computer science major at the University of Central Arkansas. She suffers from severe Crohn’s disease, a chronic autoimmune disorder that has required a portion of her intestine to be surgically removed. To control the condition, she’s prescribed an injectable medicine that her doctor hopes will prevent further surgery and complications. She takes two shots a month, which cost $3,000 each. Classic’s son also takes an expensive medication for attention deficit disorder.
Last year, Classic and her husband made a combined income of $18,907. That made them both eligible for insurance through the Affordable Care Act’s expansion of Medicaid to cover low-income adults, which in Arkansas is commonly called the private option. Eligibility under the private option is limited to people who make less than 138 percent of the federal poverty level, which for a family of three is about $20,000 annually. Classic’s son was covered by a separate Medicaid program for children, ARKids, which existed before the ACA and has different income eligibility standards.
Since then, her husband lost his job, and the family’s year-to-date income for 2015 is effectively zero, not counting some nonwage income from Classic’s student loans and financial aid. Nonetheless, all three members of the household were among almost 36,000 Arkansans who were kicked off of their health coverage on July 31. Insurance for another 13,000 people across the state will terminate at the end of this month. The cancellations are the result of a statewide sweep of Medicaid performed by the Arkansas Department of Human Services in an attempt to weed out those beneficiaries whose incomes are too high.
Yet Classic’s income clearly qualifies her for Medicaid. Like tens of thousands of other people who’ve recently lost coverage (or soon will), DHS terminated her insurance not because it actually determined she was ineligible, but simply because it flagged her account as needing additional information. The agency says it sent letters to each of these beneficiaries, giving them a 10-day deadline to provide documents verifying their income, and beneficiaries failed to respond in time. But the Times has spoken with many people who say they have repeatedly attempted to respond to DHS’ request and have been unable to make contact. Some say they were told by a DHS worker over the phone that the letters were received in error and that they should do nothing. Others, like Classic, claim they never received the letter in the first place.
It’s not surprising that the verification process for a major new program has been messy and complicated. What is surprising is that the state has made that process much more difficult by insisting on a rule that has greatly amplified the bureaucratic headaches: instituting the 10-day window, which is the shortest amount of response time the state could give before it terminates insurance benefits. Giving beneficiaries only 10 days to respond to a confusing piece of mail — which they never expected to receive in the first place — has led to bottlenecks at DHS and an unnecessary loss in coverage for tens of thousands of people whose income makes them eligible for Medicaid, many of whom depend on their insurance for essential medicines.
Classic and others who have lost their coverage can likely get it back after jumping through the necessary hoops. Beneficiaries who were terminated for failure to respond have 90 days to send in the requested information, in which case DHS says they’ll be re-enrolled without starting the application process over from scratch. Classic is attempting to do that now. But it’s unclear how long it will take to actually reinstate coverage, and in the meantime she’s watching her supply of medication dwindle.
On Aug. 4, Republican Gov. Asa Hutchinson ordered a two-week grace period on sending new termination notices, acknowledging DHS was struggling to deal with a backlog of responses from beneficiaries. However, the governor refuses to budge on the issue of the 10-day window itself.
“The challenge is not the 10-day notice requirement,” he said at a press conference last week. “The challenge is processing the information. … The federal government determined that it should be a minimum of a 10-day notice. … I believe they determined it was adequate.”
Whether federal Medicaid regulations allow such a short window is actually a matter of some dispute, since federal rules demand a 30-day response window for Medicaid renewal. “It is clear that the 10 days is in violation of federal Medicaid regulation,” said Tricia Brooks, a senior fellow at the Center for Children and Families at Georgetown University and an expert on Medicaid eligibility and enrollment practices.
DHS interprets the law differently. What’s certain is that the 10-day window is a policy choice: It could be longer if the governor wanted it to be.
Brooks said she was unaware of any other state that has imposed a 10-day response period during the renewal process in the way that Arkansas has.
“The thing you have to appreciate here — many of these people have moved into coverage for the very first time,” she said. “And then they get this confusing letter and they have no idea what they’re supposed to be doing. What’s distressing is that I don’t think Arkansas has been paying attention to the lessons learned in the other states for the renewal process and picked up some of the strategies that we know soften the blow when all of this hits.”
Who’s being flagged
Ironically enough, the turmoil coincided with yet another piece of news highlighting the virtues of Medicaid expansion.
On Monday, the polling organization Gallup announced that Arkansas had made greater gains in insuring its citizens than any other state over the past two years. In 2013, the rate of uninsured adults in the state was 22.5 percent. In 2015, that figure is now 9.1 percent.
The dramatic progress has been the direct result of the private option, a controversial policy compromise over Medicaid expansion struck between former Democratic Gov. Mike Beebe and Republicans in the legislature in 2013. Under the private option, Arkansas uses federal Medicaid money to purchase private insurance plans for adults whose household incomes fall below 138 percent of the federal poverty line. In Arkansas, that’s a lot of families: Before DHS began removing people from its rolls, almost 250,000 individuals had gained private option coverage since enrollment first began in January 2014. Now, almost 50,000 Arkansans, most of them private option beneficiaries, have either lost coverage or are scheduled to lose it at the end of August.
To be clear, the state has a responsibility to ensure the integrity of its programs by enforcing eligibility standards. And there’s no doubt some people who qualified for the private option in 2014 now make more money and need to transition off the program (many of those people are likely eligible for ACA subsidies to help purchase a plan on the Arkansas Health Insurance Marketplace, something they’ll never receive information about from DHS if their coverage is terminated via the 10-day process).
To handle the immense task of vetting the income of hundreds of thousands of new beneficiaries, DHS rolled out a new automated verification system that flags people whose income has increased. But by design, the verification system also flags large numbers of beneficiaries who are in fact Medicaid eligible, according to the state’s own data.
DHS is relying on wage information from the Arkansas Department of Workforce Services to determine whose income situation needs a closer look. One obvious category of people is those who experienced an income change that suggests they moved significantly above the line for income eligibility. However, it turns out that DHS also flags others beneficiaries who would appear to be eligible for the program based on the wage data. Some parents with very low incomes who had changes in income up or down were flagged because even though they are clearly eligible, they may have moved from one category within Medicaid to another. And the DHS system also flags any beneficiary who makes zero income, such as Classic. (Although Classic supports herself in part from student loans, this income doesn’t generate a pay stub and therefore wouldn’t show up in Workforce Services data.)
“I think it’s reasonable to assume that a significant number [of people who’ve lost their insurance] are probably still Medicaid eligible,” DHS director John Selig said. “I think frankly a large number are zero [income].”
Selig said DHS is required under federal rules to check on any situation in which a DHS beneficiary shows no workforce data, although Brooks, the Medicaid expert, disagreed with this interpretation of federal requirements.
Selig also acknowledged that approximately 40 percent of private option beneficiaries have previously attested to no income at all when they originally applied for coverage (and it should be noted that those applications were verified previously by DHS due diligence). Given that, it’s reasonable to surmise that many or most of those who have just been terminated are people who showed no income. If someone legitimately has no income, they are Medicaid eligible. It’s unclear whether the governor knew the extent of these details last week when he said there was merely “anecdotal evidence” that some people whose coverage was terminated were Medicaid eligible.
That’s not all. Some beneficiaries who were flagged for a significant increase in income may actually be eligible as well, because Workforce Services data — measured during the most recent quarter — doesn’t distinguish between pay that is temporary and pay that is regular.
Greg and Erica Lemons of Hot Springs say that’s what happened to them. Although Greg hasn’t been able to find full-time work since he was laid off from his bank job in 2014, his wife found a short-term job grading tests for Pearson, a testing company, this spring. The couple has only made about $6,000 so far this year between the two of them, but the $2,279 that Erica Lemons made during a single month of temporary work flagged them both for income verification.
To some extent, such mistakes are to be expected in the rollout of a major new program such as this one. It is not unreasonable that some people who are eligible have been flagged. But because DHS requires a response from beneficiaries within 10 days, and because the system itself was woefully underprepared to handle a massive volume of verification responses within such a short span of time, chaos ensued.
A needlessly narrow window
Despite the federal 30-day rule for the renewal process, Gov. Hutchinson and DHS Director Selig maintain that 10 days is the minimum federal requirement for response time to these verification letters. However, it’s also clearly a policy choice — the state could choose to give beneficiaries 30 days, 45 days, 90 days or even longer to respond. The longer one thinks about the logistics of a 10-day window, the less sense it makes.
First, consider that the private option is a new program governed by rules so complex that state and federal authorities sometimes disagree on their interpretation. Many of its beneficiaries haven’t had health insurance in years, or ever in their adult lives. They’re more likely to have fragmentary income and more likely to move between residences more frequently.
Moreover, beneficiaries were asked to provide paperwork that may be hard to immediately come by (such as multiple pay stubs from the previous month). Most people were likely never informed beforehand that they’d have to submit financial information at a moment’s notice. And many people of all income levels leave town for part of the summer. It’s for all these reasons and more that private insurance companies typically give consumers at least 30 days to respond to important notices.
DHS argues that the 10 days aren’t as firm as they seem. The state built extra days of wiggle room into the process; so, in practice, cancellation notices might be sent out 15 or 20 days after the original letters go out. Meanwhile, the actual termination of coverage doesn’t become official until the end of that month. The governor’s office and DHS officials have argued that this means beneficiaries have a de facto response window longer than 10 days.
The biggest problem with the 10-day window is that it made it impossible to do the kind of sustained outreach necessary to communicate with a hard-to-reach population about a confusing new process. It left very little time to bring in other stakeholders or community organizations to lend DHS caseworkers a hand in tracking people down and guiding them through the process.
The insurance companies that actually provide these policies — and therefore are highly motivated to contact their clients and continue coverage — were only brought in in late July, after the 10-day clock had begun for the first round of beneficiaries. Multiple sources have told the Times that insurance carriers and brokers expressed concern about the challenges of communicating with beneficiaries and getting a response so quickly.
Internal data from the insurance companies suggested that 25 percent of the addresses DHS had on file were no longer good. Selig acknowledged that insurance companies told DHS officials this during meetings as the process began, but said that the actual percentage of bad addresses was much lower. In any case, it was clearly a major problem. In just one of the state’s seven coverage regions, Selig said, they had 6,000 pieces of mail returned undeliverable.
Then there are the letters themselves, which were undeniably confusing. They contained a phone number, but callers were unable to get through to a live person, according to several beneficiaries. They reference a 30-day “appeals process,” while not telling beneficiaries that they actually have a 90-day period to send in their information and get insurance reinstated. The first round of letters sent out in June demanded payroll verification but provided no instructions for unemployed people to verify their income was zero. (DHS later began attaching an FAQ clarifying that the unemployed should write and sign a letter stating that they do, indeed, have no income.)
One Times reader who narrowly avoided losing coverage wrote, “The envelopes containing the notice of income verification were plain and nondescript with no indication that they contained a very important document with a time limit for response. The return address was the Access Arkansas Processing Center in Batesville (rather than the Arkansas Department of Human Services, which would have gotten my attention) and that did not make any impression on me whatsoever since I have worked only with Ambetter of Arkansas since we got our insurance. I was only on the Access Arkansas web site one time to get to and complete the application for the Affordable Care Act two years ago and have not been on that site since. The envelopes looked like junk mail and I honestly thought they were a solicitation from some television cable outfit.”
DHS has now changed the look of the envelopes to make it clear the enclosure is about Medicaid benefits.
Experience in other states suggests that best practices include multiple verification letters, not just one (with clear labeling communicating urgency). Follow-up attempts by phone or other contacts would also help — something that’s not possible to do in a 10-day window, especially without help from insurers or other organizations. Thus began a process that was doomed to end in confusion and cancellation notices.
Finally, it’s not just beneficiaries who’ve struggled with the 10-day window. It’s also DHS. Multiple beneficiaries have told the Times that local DHS offices were themselves unprepared to field questions about the confusing letters. Since termination notices began arriving, the agency has been inundated with such a high volume of calls and letters that Gov. Hutchinson — although he still won’t extend the 10 days — lifted a hiring freeze on some DHS positions and authorized overtime pay for workers to process the backlog.
It may be cold comfort for those who’ve lost coverage — and for state officials trying to clean up the mess — but Arkansas is not alone in facing difficulties implementing systems for renewal and eligibility verification in the wake of Medicaid expansion. Matt Salo, executive director of the National Association of Medicaid Directors, said that many states have been struggling with this process.
“This is one (of many) of the time-tested public policy debates in Medicaid: The desire to make enrollment/reenrollment as easy as possible for the beneficiary versus the desire to ensure program integrity, and that no public dollars are being spent unnecessarily,” Salo wrote in an email to the Times. “Every state struggles with finding the right balance between the two, and going too far towards either pole leads quickly to serious problems.”
At this point, with almost 50,000 terminations of coverage — many or most of them impacting Medicaid-eligible beneficiaries — it’s hard not to conclude that Arkansas swung overzealously to one pole. This led quickly to serious problems, indeed.
What to do if your Medicaid coverage has been terminated and you believe you are still income-eligible:
Collect documents that verify your income. This may include paycheck stubs, or a tax return if you are self-employed.
If you are unemployed, state this in a signed letter.
Contact your local DHS county office for guidance.
You have 90 days after your coverage termination date to be reinstated, if you are actually eligible and provide the information requested
Be aware that the 90-day period is not the same as the appeals process established by DHS. Most people whose insurance ended and who are still eligible should be able to get their coverage back without filing an appeal