‘Too-short’ timeline for Medicaid colliding with strained state eligibility systems, report claims

As states prepare to implement new Medicaid work requirements under last year’s budget reconciliation law, a report published Monday by the Center on Budget and Policy Priorities, a Washington think tank, suggests policy may be arriving faster than state systems can handle.

The report finds that states face a tight timeline to comply with complex eligibility, reporting and verification processes before the requirements take effect Jan. 1. Under the law, many Medicaid expansion enrollees must document at least 80 hours per month of work or similar activities, meet an income threshold or qualify for an exemption to keep coverage.

The Congressional Budget Office estimates that millions of people could lose coverage, not because they fail to meet requirements, but because they struggle to navigate reporting systems or encounter administrative barriers. Without more time and clearer federal guidance, the report argues, states risk deploying aging or overburdened systems that are not fully ready.

“If data sources aren’t fully integrated into the eligibility determination process, individuals will have to submit more paperwork (and eligibility workers will have to process more paperwork), leading to mistakes and eligible people falling through the cracks,” the report notes.

State Medicaid agencies are dealing with staffing shortages, application backlogs and long call center wait times, the report continues. Adding in new compliance requirements could strain systems further and increase the risk of eligible people losing coverage due to administrative errors rather than ineligibility.

States are also racing to modernize the digital backbones that support Medicaid eligibility, such as “ex parte” systems, which automatically renew coverage using data like tax records or wage databases. These systems are designed to reduce paperwork and administrative burden by verifying eligibility behind the scenes. But some observers have said that scaling them up to meet new federal requirements is no small task.

“What’s conceptually easiest is just build something new and layer it on top, but it comes with a lot of liabilities from a worker and system perspective,” Danny Mintz, director of safety net policy at the civic tech nonprofit Code for America, told this publication last month.

The CBPP report outlines the kinds of system changes required, including new client portals for reporting work hours, document upload tools, data matching across programs, eligibility rules engines and analytics systems to track compliance. But such upgrades often require integrating multiple data sources, including employment records and other benefit programs, into systems that were not designed with those datasets in mind.

“A lot of those factors have to do with how is the data integrated into their system [and] what are the specific worker processes for working through the data that’s available,” Mintz said.

While Medicaid agencies are updating systems to handle increased renewal volume, not all are planning major tech overhauls or adopting newer tools, like artificial intelligence software. Neither Arizona nor Minnesota, two states with high rates of Medicaid enrollment, for instance, are planning to use new IT tools to support operations. Instead they’re optimizing their existing infrastructure.

Even without adopting new technology, the report argues, states need more time.

“The best option is for Congress to repeal the harmful work requirement mandate from H.R. 1.,” the report reads. “But short of that, states need more time to ensure their policies, systems, and staffing plans are in place to minimize the number of eligible people whose health care is taken away because of the harsh work requirement and more frequent eligibility renewals implemented under a too-short timeline.”