How the Pandemic Continues to Shape Medicaid Priorities: Results from an Annual Medicaid Budget Survey for State Fiscal Years 2022 and 2023

Future Outlook: Key Opportunities, Challenges, and Priorities in FY 2023 and Beyond and Conclusion

The COVID-19 pandemic public health emergency, in place for more than two and half years at the time of this report, has had profound impacts on the ongoing operations and priorities of state Medicaid programs, including accelerating some priorities but delaying others. One director noted that while the pandemic did not fundamentally change program priorities, it did give the state a new lens to view many longstanding issues (e.g., equity, behavioral health, telehealth). Another state official observed that there have been at least three pandemic phases that presented differing challenges:

  1. The initial shutdown phase when states took urgent steps to shore up providers and preserve access by implementing emergency authorities and flexibility measures,
  2. A second phase where states worked with providers and stakeholders to implement policies and initiatives to promote COVID-19 vaccinations, and
  3. A third phase requiring states to prepare and plan for the eventual unwinding of PHE emergency authorities, with some unwinding efforts already completed or underway.

The progression from each of these phases to the next has not been linear due to waves of new COVID-19 variants. States are now anticipating a fourth pandemic phase – an “endemic reality” – requiring states to consider how to operate going forward with a continued emphasis on vaccine access, but also recognizing the significant pandemic-related impacts on members’ health and wellbeing and on health care providers and the health care workforce.

COVID-19 Opportunities and Challenges

During survey interviews and in their written responses, state Medicaid officials identified lessons learned from the pandemic as opportunities. One director commented that the pandemic had pushed the state “in ways that did not seem possible before.” COVID-19 opportunities identified include expanded access for enrollees via telehealth, improved relationships with providers and other stakeholders, and data collection improvements:

  • Telehealth. States commented on the pandemic-related expansion of telehealth, referred to as the “silver lining of the pandemic” by one official. Others reported that the pandemic had demonstrated the value of telehealth, overcoming, in some cases, prior cost and quality concerns. Looking ahead, states are weighing the expanded access that telehealth brings—especially for behavioral health services and in rural areas—against quality and other concerns.
  • Coordination and Collaboration. States noted that the pandemic had demonstrated the capacity of state Medicaid programs to be “nimble,” rapidly responding to urgent needs. Several states commented on improved relationships and engagement with enrollees, providers, plans, and/or other state and federal agencies that had resulted from response efforts initiated during the pandemic.
  • Data Improvements. A handful of states mentioned that the pandemic had highlighted the importance of obtaining better and more timely data and using data analytics to inform decision making, including data related to COVID-19 and other public health data. States also highlighted that improved data collection and stratification would help to identify and address health disparities by race/ethnicity and/or other factors.

States also commented on challenges related to planning and preparing for the COVID-19 PHE unwinding and associated with entering the “endemic reality” phase of the pandemic:

  • Unwinding Challenges. States identified the resumption of redeterminations at the end of the PHE as an enormous upcoming challenge that will require a “surge” of administrative resources for states and county agencies including staff as well as training and systems changes. A number of states commented on their goals to minimize coverage losses when the PHE ends, including one state that expressed concerns about poor health outcomes if individuals needing mental health services or postpartum care were to lose coverage. Officials noted they were focused on efforts to communicate with members about the need to update contact information as well as on efforts to coordinate with a range of partners (e.g., MCOs, providers, etc.) to help enrollees navigate renewals and prevent coverage loss for procedural reasons. Some states also commented on efforts to coordinate with state-based Marketplaces to promote other coverage for persons determined no longer eligible for Medicaid. Several states noted that the uncertain timing of the PHE end has made it very difficult to plan and communicate with members and other partners. Finally, several states noted that the end of the Families First Coronavirus Response Act (FFCRA) enhanced federal Medicaid match before all redeterminations are completed would be challenging.
  • Expiration of Emergency Authorities. Several states commented on challenges related to the expiration of HCBS waiver emergency authorities including, for example, emergency waivers related to HCBS reimbursement policies, payments to family caregivers, and service setting requirements. A few states commented on challenges related to provider impacts such as the end of emergency credentialing and provider enrollment authorities and the reinstitution of prior authorization and concurrent review requirements. Identifying and “noticing” all impacted providers regarding the end of Medicaid flexibilities will require significant administrative capacity. For example, one state referenced preparations for unwinding over 40 administrative programmatic flexibilities while another state referenced over 100 authorities that have been granted during the PHE. Emergency flexibilities adopted during the PHE will need to be part of unwinding or transitioned to permanent authority (which will require coordination with CMS).
  • Lasting Focus on COVID-19. Even after unwinding emergency authorities and resuming normal eligibility operations, the effects of COVID-19 will continue. For example, states remain focused on COVID-19 vaccinations and are also wrestling with program implications and challenges associated with long-COVID as well as decreased utilization of preventive care services. Responding to the COVID-19 pandemic has also highlighted the importance of additional efforts to ensure future emergency preparedness.

Future Priorities Shaped by COVID-19 and Beyond

Many states noted that the COVID-19 pandemic has shaped their Medicaid priorities. States also reported a renewed focus on priorities in place prior to the pandemic.

  • Health Equity. States are focused on addressing health inequities and disparities that the pandemic exposed and often exacerbated. Several states noted that while health equity had been a priority before, the pandemic helped to “move the needle” and allow for difficult conversations to take place. States described aims to embed health equity throughout policies and programs, including as part of Section 1115 demonstration waivers or as a central focus of new managed care contracts or managed care procurement efforts. States are also helping to advance equity in more targeted ways including, for example, one state that commented on using morbidity and mortality disparity data to inform its nursing facility rate reform efforts.
  • Specific Populations or Service Categories. States identified access and outcomes for a number of specific populations or service categories as top priorities:
    • Behavioral Health. In light of the pandemic’s adverse effects on behavioral health conditions, states are developing new initiatives in this area and accelerating attention to initiatives already underway. For example, states are focusing on integrating care, working with justice-involved populations, incorporating behavioral health into managed care contracts, and expanding crisis response capacity and mobile crisis services. Given that children’s mental health challenges were on the rise even before COVID-19 and may have worsened during the pandemic, many states are targeting children’s behavioral health care, such as by expanding school-based mental health care. In general, some Medicaid behavioral health initiatives are part of comprehensive statewide behavioral health transformations, which may include but extend beyond Medicaid programs.
    • Long-term Services and Supports (LTSS). The disproportionate share of COVID-19 deaths in nursing facilities and enhanced HCBS funding made available in the 2021 American Rescue Plan Act (ARPA) catalyzed state efforts to improve HCBS access. In addition to using ARPA funds to improve HCBS direct care worker pay, states employed a variety of emergency authorities designed to expand HCBS, maintain eligibility, and secure financing for LTSS providers. Several states mentioned ongoing initiatives to redesign HCBS waivers, sometimes citing specific attention to rates, quality, or infrastructure. Other states mentioned LTSS priorities related to nursing facility rate reform, implementation of LTSS managed care, and expanding HCBS enrollment, including through nursing facility diversion or deinstitutionalization efforts.
    • Maternal and Child Health. A number of states identified maternal and child health initiatives as key ongoing priorities. Many states have newly adopted and implemented the ARPA 12-month postpartum coverage option but are also expanding services for pregnant women, such as coverage of doulas. Some of these initiatives are directly tied to addressing disparities in maternal health. In the wake of the Supreme Court decision to overturn Roe vs. Wade, one state mentioned “identifying and acting on opportunities to support reproductive rights” as a priority. States also report plans to focus on pandemic-related impacts on preventive care for children, especially efforts to improve childhood immunization rates that declined during the pandemic.
  • Workforce. States are prioritizing addressing health care workforce challenges that were created or exacerbated by the pandemic, especially related to behavioral health and HCBS providers. In many cases, these challenges are driving states to reconsider provider rate-setting policies and implement initiatives (often ARPA-funded) to meet the demand for behavioral health and HCBS, including for example, through rate increases, recruitment and retention bonuses, and training and career development initiatives. A number of states also pointed to specific initiatives to improve access through the use of community health workers and doulas or by modifying provider qualification requirements. While there has been a focus on the pandemic’s impact on the health care workforce, many officials noted that state agency staff have also been strained, fatigued, and burned out from constantly shifting gears and operating in “emergency response” mode.
  • Payment and Delivery System Initiatives and Operations. Although the pandemic may have delayed value-based purchasing initiatives in some states, several states reported working to reinitiate or advance these priorities. In addition, some states are focused on payment system reform including reviews and restructuring of payment rates and methods. Many states that contract with managed care plans point to MCO procurements as a major upcoming priority. Managed care contracts are often extensive and sophisticated and represent very large dollar value contracts for states. Some states are focused on integration of services under managed care contracts (e.g., carving in behavioral health services) while other states are taking action to carve out certain services from managed care contracts (e.g., pharmacy benefits). North Carolina and Oklahoma are transitioning to managed care amid competing pandemic-related priorities.
  • IT System Modernization. Nearly one-third of responding states reported prioritizing IT systems projects, predominately reprocurements, implementations, or modernizations of Medicaid Enterprise Systems. These vital systems are used for claims and encounter processing, but also support other program objectives related to delivery system reform and value-based purchasing, quality improvement, provider and MCO monitoring, and cost control strategies.
  • Addressing SDOH to Improve Health Outcomes. States recognize that social determinants of health are major contributors to overall health and drivers of health equity. States are therefore working to leverage Medicaid to help address these needs, including housing, through demonstration waivers, MCO contracts, and other state-driven initiatives.

Conclusion

States completed this survey in mid-summer of 2022, as COVID-19 deaths were rising after a low in April 2022, due to the highly transmissible Omicron variant, waning vaccine immunity, and relatively low booster uptake. States were continuing to respond to ongoing and emerging pandemic-related health concerns such as the need to improve utilization of preventive care services in addition to the ongoing need to focus on vaccines and boosters. At the same time, states are preparing for the challenges tied to the end of the PHE including the unwinding of continuous coverage and emergency authorities. As states anticipate a new “endemic reality” phase of the pandemic, they report that COVID-19 has presented both new opportunities and challenges and has also shifted and shaped ongoing Medicaid priorities. Looking ahead, states remain focused on developing and evaluating telehealth policy, addressing health equity, improving access and outcomes for specific populations and service categories, addressing workforce shortages, and improving data and IT systems to inform all these efforts. In many states, Medicaid policy may be informed by the outcome of gubernatorial elections in November 2022. The Biden Administration may also shape Medicaid policy, including by promoting Section 1115 demonstration waivers that align with administrative priorities and through administrative rulemaking. Even as pandemic, economic, and political landscapes shift, Medicaid has and will continue to serve a large share of Americans, providing comprehensive health coverage and long-term care that are likely to remain key aspects of pandemic response and recovery.

Pharmacy Methods

The Henry J. Kaiser Family Foundation Headquarters: 185 Berry St., Suite 2000, San Francisco, CA 94107 | Phone 650-854-9400
Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270

www.kff.org | Email Alerts: kff.org/email | facebook.com/KaiserFamilyFoundation | twitter.com/kff

Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in San Francisco, California.