CMS Issues Interim Final Rule for CMS Enforcement of State Compliance with Reporting and Federal Medicaid Renewal Requirements | King & Spalding

On December 4, 2023, CMS issued an interim final rule (the Interim Rule) (RIN 0938-AV26) to implement new enforcement authorities that CMS may use if states fail to comply with new reporting requirements or with federal Medicaid eligibility redetermination requirements following the end of the Medicaid continuous enrollment condition under the Families First Coronavirus Response Act (FFCRA). The new enforcement authorities include a .25 percentage point drop in federal matching funds each quarter reporting is not in compliance, required submissions of corrective active plans, suspending disenrollments from Medicaid for procedural reasons, and imposition of civil money penalties. The rule was effective December 6, 2023, and CMS is receiving comments through February 2.

Background on Medicaid Continuous Enrollment Condition

Under the FFCRA, the fifty states, the District of Columbia, and all 5 territories (the States) were able to claim a temporary 6.2% increase in their Federal Medical Assistance Percentage (FMAP) provided that they met several conditions, including that the states not disenroll persons enrolled in Medicaid as of or after March 18, 2020, until the end of the month in which the COVID-19 Public Health Emergency (PHE) ended. This condition is known as the Medicaid continuous enrollment condition.

All States claimed the increased FFCRA FMAP percentage, so the Medicaid continuous enrollment condition applied to all states until April 1, 2023, when the Consolidated Appropriations Act, 2023 (CAA 2023) amended the FFRCA to end the continuous Medicaid enrollment condition. Resultingly, States must conduct a full renewal of eligibility for each beneficiary (a process referred to as “unwinding”). CMS has previously provided guidance for States for unwinding from the continuous enrollment condition.

New Reporting Requirements

The CAA 2023 modified the Social Security Act (the Act) to include new reporting requirements that took effect after the continuous enrollment condition expired. The reporting requirements generally overlap with the States’ unwinding periods and pertain to the activities of the States relating to eligibility redeterminations during such period. However, CMS is interpreting certain reporting requirements to apply beyond information about a Medicaid or CHIP redetermination–for example, data on total call center volume, average wait times, and average abandonment rate–as it is impractical to limit the measures only to data related to eligibility determinations. The new reporting requirements are not wholly limited to the unwinding of the continuous enrollment condition.

Additional Enforcement Authorities

In addition to the new reporting requirements, the CAA 2023 included new enforcement authorities for CMS’s use if CMS determined a State to not be in compliance with the (1) new reporting requirements, (2) federal eligibility redetermination requirements, or (3) both. The Interim Rule provides CMS may take the following enforcement actions upon notice to the States:

  • Reduce the FMAP determined for the State by .25% for each fiscal quarter the State failed to satisfy reporting requirements.
  • Require a State to submit and implement a corrective action plan, or to revise and resubmit an already existing corrective action plan to address newly identified violations.
  • Require a State to suspend disenrollments from Medicaid that are for procedural reasons until the State takes appropriate corrective action.
  • Impose civil monetary penalties up to $100,000 for each day a State is not in compliance.

The Interim Rule provides that CMS interpret the additional enforcement authorities as giving CMS discretion to take into consideration certain mitigation circumstances related to States’ noncompliance when determining whether to utilize the aforementioned enforcement authorities. The mitigating circumstances include:

  • No harm or substantial risk of harm occurred by the noncompliance with the reporting and redetermination requirements; and
  • Extraordinary circumstances prevented the State’s compliance, for example, systems outages or disasters.

The Interim Final Rule is available here.

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