Comments on Recertification Requirements

Thank you for the opportunity to comment on the proposed regulation contained in the above referenced register. In the cover memo, the Department indicates that it is changing the regulations to require Medicaid recipients to complete recertifications every six months. Additionally, the Department notes that it is deleting regulation NMAC 8.200.400.14 and NMAC 8.202.600.11, which currently allow families to continue to receive Medicaid for twelve continuous months irrespective of any changes in income and/or other circumstances. Additionally, although it is not listed in the cover memo, the Department appears to be removing the requirement that a caseworker send an advance adverse action notice prior to terminating Medicaid benefits.

The New Mexico Center on Law and Poverty vehemently opposes all these proposed changes. It is our contention that they are fiscally unwise, will decrease the number of qualified individuals who receive Medicaid, and are illegal.

Proposed Regulation NMAC 8.202.600.11: “A redetermination of eligibility will be made every six months.”

Currently, families receiving Medicaid are required to reestablish their eligibility annually. The Department is proposing to alter the regulation to require families to reestablish their eligibility every six months. It is not clear what this “redetermination” or “recertification” will entail. Will clients be required to submit a new application? Will they be required to re-verify all information or simply information that is subject to change? Can the recertification or redetermination process be completed by mail, or will clients be required to come in for a face-to-face interview? We request that the exact requirements be spelled out.

It is clear that by adopting this regulation, the Department hopes to “catch” individuals who no longer meet eligibility guidelines and thereby realize savings in the amount of 4.5 million.[1] It is doubtful that the Department will actually see such savings. Until 1996 the Department did require families to recertify every six months. In 1996 it moved to annual recertification. Significantly, in the last four years the Department has not reported any increased expenditures. Very few families are on the cusp of eligibility, and it is therefore very unlikely that modest income increases will make them ineligible. The Kaiser Commission on Medicaid and the Uninsured has researched this issue extensively and found that states performing only annual reviews did not have significantly more ineligible individuals on the rolls and in fact had increased the enrollment of eligible clients.[2]

In contrast, current data suggests that forcing clients to reestablish eligibility more frequently increases costs for the state agency.[3] More significantly, it clearly results in eligible people being dropped from the Medicaid rolls. A survey conducted by the National Academy of Health Safety Policy recently found that forty-four percent of families whose children’s coverage had lapsed indicated that reestablishing eligibility was difficult because of cumbersome verification procedures.[4] A separate study found that significant numbers of children were dropped from coverage due to administrative burdens they encountered when they attempted to renew their applications. However, up to a quarter of dissenrolled children returned to the program in two months, suggesting that changes in circumstances did not make them ineligible.

The aforementioned problems are likely to be exacerbated in New Mexico because of the way the Department plans to implement this program. It is my understanding that the Department plans to reprogram its computer system to have these cases automatically terminate in the sixth month unless the worker takes affirmative action to update and reestablish the client’s eligibility in the system. This process has not been incorporated into the proposed rules. Apparently, the Department contends that it does need to publish these regulations because the automatic closure represents an internal procedure which will not affect clients and, therefore, does not come within a purview of the rulemaking statute. See NMSA §9-8-6. This conclusion is dubious. In fact it is our contention that implementation of these automatic closures will have a definite deleterious effect on clients and therefore does come within the purview of NMSA §9-8-6.

By the Department’s own admission New Mexico workers are overburdened, and are carrying caseloads that are much higher than caseloads handled by workers in other states. At one point, the Department estimated that it needed to hire 350 workers to bring caseloads down to a manageable level. Clients are already being detrimentally impacted by the fact that workers are overextended. Clients who are on food assistance and TANF are already subjected to close- ended certifications. Legal aid organizations throughout the state report that each month they undertake representation of numerous individuals who report that they completed a timely recertification, submitted all necessary verification, attended an interview, and still had their cases closed. An investigation into these cases reveals that the workers simply did not enter data into the computer in a timely manner.

The latest statistical information provided by the Department shows that in March 2004 there were 17,256 families receiving TANF benefits in New Mexico.[5] Given the fact that workers cannot timely process this relatively small number of recertifications every six months it seems doubtful that they will be able to process the 107,727 Medicaid applications that will be affected by the six month automatic closure. The concern that clients will be affected by this change is therefore well founded. The computer program which facilitates the automatic closures is unable to distinguish between a worker’s inability to timely update information on the computer and the client’s failure to provide said information.

The Department also contends that it does not need to formulate and promulgate regulations establishing automatic closures because federal law already mandates that Medicaid cases close at the end of a certification period. We frankly disagree and assert that automatic closures at the end of a certification period may be illegal. According to federal regulation, an agency “must continue to furnish Medicaid regularly to all eligible individuals until they are found to be ineligible”.[6] Numerous courts have interpreted this regulation to require states to conduct an ex parte review to determine if a client qualifies for any type of assistance under any Medicaid category before terminating assistance.[7] The Department does not currently have, and apparently is not planning on promulgating, any new rules detailing how such reviews are to be conducted, or if they will be conducted before Medicaid eligibility is terminated. We feel the law requires that it develop such regulations.

Significantly, the case of Salazar v. District of Columbia, 954 F.Supp. 278 (1996) involved closed ended certification periods and automatic closures. In that case, Plaintiffs complained in part that the Defendant Human Services Department violated their civil rights by failing to timely process and update information. Because these actions were not taken, the clients’ Medicaid benefits automatically terminated. The court held that the process violated the clients’ rights to receive uninterrupted benefits until they were found to be ineligible for assistance. The Center on Law and Poverty firmly believes that the New Mexico Human Services Department may be guilty of similar violations if the automatic closure is implemented.

In summary Medicaid is still an entitlement under federal law. States therefore have an affirmative obligation to assure that qualifying individuals continue to receive Medicaid until they no longer qualify. Implementation of six month certifications would not be cost effective, would prevent eligible individuals from continuing to receive benefits, and would violate the clients’ rights to continued benefits. Accordingly, the Center on Law and Poverty urges the Department not to implement six month certifications and or automatic closures.

Previous Regulation: NMAC 8.200.400.14. “12 Month continuous eligibility for Children: Children eligible for Medicaid will remain eligible for a period of twelve months regardless of changes in income. This Provision applies even if the family income exceeds the applicable family guidelines. The twelve month continuance starts with the month of approval or redetermination and is separate from any months of presumptive or retroactive eligibility.”

Previous Regulation: NMAC 8.202.600.11. “Eligibility will continue for the twelve month certification period, regardless of changes in income, as long as the family retains New Mexico residency and continues to have a dependant child residing in the household. Twelve month continuous eligibility shall not be affected by the disposition of any other benefit(s) such as TANF, food stamps, etc.”

The Department is proposing to eliminate the above referenced regulations in their entirety. Again, we believe that this proposal will not be cost effective, and will result in eligible individuals being dropped from Medicaid coverage. Eliminating the regulations may also be illegal.

Evidence suggests that eliminating the twelve month continuous eligibility provisions will cost the state money. This was the main reason the Federal Government gave the states the option of invoking the twelve month continuous eligibility provision as part of the Balanced Budget Act of 1997. The Federal government realized that requiring families to report fluctuations in income increased workloads and caused families to endlessly cycle on and off of assistance. A study performed Mathematica Policy Research Foundation found that if states extended children’s coverage by invoking the 12 month continuous eligibility option they could reduce Medicaid administrative costs from two to twelve percent.[8] In hopes of realizing some of these savings, forty-one states besides New Mexico have adopted these regulations.

Maintaining the twelve month eligibility policy would also benefit Medicaid recipients by reducing burdensome paperwork and reporting requirements. The Kaiser Commission on Medicaid and the Uninsured cited these two facts as the main obstacles that prevented many eligible children from being able to retain Medicaid.[9] Nebraska rescinded the twelve month eligibility option and a mere quarter of a calendar year later, the number of individuals who lost Medicaid for “failure to comply with procedures” increased significantly.[10]

If the twelve month continuous eligibility policy is rescinded, a small percentage of families may report changes that render them ineligible for certain Medicaid categories. As mentioned previously, in such circumstances, the state has a legal obligation to investigate whether or not the clients qualify for assistance under other programs. The state needs to develop legal procedures to describe how this will be done.[11]

Proposed Regulation NMAC 8.202.600.11: All changes in eligibility must be reported within ten days of the date that the change took place. Changes in eligibility will be effective the first day of the following month

Federal regulations require that “[t]he state or local agency must mail a notice at least ten days before taking any action affecting a client’s eligibility.” Thus, on its face the above quoted regulation appears to violate federal law. As we read the sentence, the worker will process the change and assure the change in eligibility takes place the following month, regardless of whether the client reports a change on the first of the month or the thirtieth of the month. This is significant.

According to Federal Law Medicaid eligibility is determined on the first of each month. If the ten day notice expires after the first of any month, the client is entitled to benefits for that month. In other words, if a client is rendered ineligible for benefits based on income changes reported on April 30, 2004 his/her benefits would not terminate until May 30, 2004 because the ten day notice would expire on May 10, 2004 - after the first of May.

In addition to being illegal, removing the ten day adverse action notice is contra-indicated by sound public policy. Clearly clients who are being terminated from Medicaid coverage should be given sufficient time to secure alternative coverage and avoid any unnecessary lapse in coverage. This cannot happen if the client is not provided advance notice. We suggest that the department delete the sentence “[c]hanges in eligibility status will be effective the first of the following month” and replace it with “[c]hanges will take place in month following the month in which the adverse action notice expires.”

We thank you for the opportunity to comment on the proposed regulations and trust that you will give serious thoughts to these suggestions. If you have questions regarding any of the proposed changes, please do not hesitate to contact me at 255-2840. The Center on Law and Poverty respects the current budgetary crisis faced by Medicaid. We believe, however, that the cuts proposed here will not save significant money, but will have great human costs.

[1] I obtained this figure from information that the Department handed out at the NM Medicaid Oversight Committee Meeting on March 29, 2004.

[2] Donna Cohen Ross and Laura Cox, Enrolling Children and Families in Health Coverage: The Promise of Doing More, Center pm Budget and Policy Priorities for the Kaiser Commission on Medicaid and the Uninsured.

[3] Id.

[4] Donna Cohen Ross and Laura Cox, Preserving Recent Progress for Children and Families: New Tensions Emerge 2003. Center on Budget and Policy Priorities for the Kaiser Commission on Medicaid and the Uninsured.

[5] See Human Services Department March 2004 statistical report.

[6] 42 CFR §435.930(b)

[7] See Crippen v. Kheder, 741 F.2d 102 (1984) (State must make an ex-parte determination to determine if individual no longer qualifying for SSI qualified for other types of Medicaid; Stenson v. Blum, 476 F. Supp. 1331 (1979) (same); Massachusetts Association of Older Americans v. Commissioner of Public Welfare, 700 F.2d 749 (1983) (same); Gillman v. Helms, 606 F. Supp. 644 ( State must continue to provide medical assistance until a client is found to be ineligible; Rousseau v. Bordeleau, 624 F.Supp. 335 (1985) (same)

[8] Carol Irvin, D. Peikes , C. Trenholm and K. Khan, Discontinuous Coverage in Medicaid and the Implications 12 Continuous Coverage for Children, Mathematica Policy Research, Cambridge, MA, October 24, 2001

[9] See Donna Cohen Ross and Laura Ross, Preserving Recent Progress on Health Coverage for Children and Families: New Tensions Emerge, Center on Budget and Policy Priorities for Kaiser Commission on Medicaid and the Uninsured.

[10] Id at 12

[11] See previous discussion of the State’s legal obligation at pages 3-4.