Medicaid Enrollment Churn and Implications for Continuous Coverage Policies
Recent policy actions and proposals in Medicaid have renewed focus on the problem of churn, or temporary loss of coverage in which enrollees disenroll and then re-enroll within a short period of time. The Families First Coronavirus Response Act (FFCRA) passed during the coronavirus pandemic requires states to provide continuous coverage to Medicaid enrollees until the end of the month in which the public health emergency (PHE) ends to receive enhanced federal funding. During this time, people did not churn on and off Medicaid, but churn may resurface when the continuous enrollment requirement ends. The Build Back Better reconciliation bill under consideration in Congress would begin to phase out the continuous enrollment requirement and the enhanced match beginning April 1, 2022. Additionally, the bill would require states to provide 12-month continuous coverage for children and for postpartum individuals in Medicaid and the Children’s Health Insurance Program (CHIP), which could reduce churn for those groups. Currently more than half of states already provide 12-month continuous coverage for children on an optional basis.
To help inform the current policy discussion, this brief provides estimates of churn for people enrolled in Medicaid in 2018. We use 2017 and 2019 as look-back and look-ahead years, respectively, so we can examine what happens to people a full year before and after an enrollment date or disenrollment date in 2018. We also provide estimates of churn by eligibility group and compare rates in Medicaid expansion versus non-expansion states. Overall, we find that 10% of full-benefit enrollees have a gap in coverage of less than a year, and rates are higher for children and adults compared to aged and people with disabilities. Churn rates also vary substantially by state, ranging from 5% or less in some states to 15% or more in others. Churn has implications for access to care as well as administrative costs faced by states. Detail on the data and methods underlying this analysis are in the Methods section at the end of the brief.
The temporary loss of Medicaid coverage in which enrollees disenroll and then re-enroll within a short period of time, often referred to as “churn,” occurs for a several reasons. Enrollees may experience short-term changes in income or circumstances that make them temporarily ineligible. Alternatively, some people who remain eligible may face barriers to maintaining coverage due to renewal processes and periodic eligibility checks. Eligible individuals are at risk for losing coverage if they do not receive or understand notices or forms requesting additional information to verify eligibility or do not respond to requests within required timeframes.
Some enrollees may be at higher risk of churn than others. Working individuals whose monthly income fluctuates may be more likely to experience churn in states that have adopted frequent electronic data matches during the year. For example, adult enrollees without disabilities, most of whom are working, may have irregular work hours, overtime, or multiple part-time jobs that can lead to month-to-month changes in income. In contrast, elderly adults and people with disabilities, particularly those who qualify for Supplemental Security Income (SSI), are less likely to experience monthly income changes or other changes in circumstances. Most states conduct data matches on a periodic basis to identify changes in circumstances between annual renewal periods. If the data checks identify changes in income or other factors that affect eligibility and the individual is unable to resolve the discrepancy within the specified timeframe (often limited to within 10 days from the date of the notice), the person can be disenrolled from coverage.
Churn can result in access barriers as well as additional administrative costs. When individuals who remain eligible for coverage are disenrolled, they may experience gaps in coverage that could limit access to care and lead to delays in getting needed care. Research indicates that enrollees who experience fluctuations in coverage are more likely to report difficulties getting medical care and are more likely to end up in the hospital with a preventable condition. In addition, there are administrative costs associated with disenrolling an enrollee and then subsequently processing a new application.
What are the rates of churn in Medicaid?
Among full-benefit beneficiaries enrolled at any point in 2018, 10.3% had a gap in coverage of less than a year. About 4.2% were disenrolled and then re-enrolled within three months and 6.9% within six months (Figure 1).
Rates of churn were higher for children and adults compared to aged adults and people with disabilities (Figure 2). We estimate that 11.2% of full-benefit children and 12.1% of adults were disenrolled and then subsequently re-enrolled within one year. Analysis also shows that rates of churn are higher for enrollees with partial benefit packages, but there are similar churn rates across expansion and non-expansion states (Appendix Table 1). However, there is considerable variation in churn rates across states, with 4 states (HI, AZ, DC, and NC) having 5% of enrollees or fewer disenrolling and then re-enrolling within a year, and 4 states (TX, WI, NH, and PA) having 15% of enrollees or more disenrolling and re-enrolling within a year.
What are current policy issues related to churn?
The continuous enrollment requirement related to the coronavirus pandemic has all but halted Medicaid churn for the past year and a half, but disenrollments are expected resume once the requirement ends. In part due to the continuous enrollment requirement, Medicaid/CHIP enrollment has increased from February 2020 to May 2021 by 11.5 million (or 16.2%) to 82.8 million individuals. However, when the continuous enrollment requirement ends, states will begin processing renewals and individuals may lose coverage if they are no longer eligible or face barriers during the redetermination process, such as providing required documentation.
The Build Back Better Act (BBBA) that is currently being debated in Congress would phase out the continuous enrollment requirement beginning April 1, 2022. To continue receiving a phased-down enhanced federal match rate, states would be required to follow rules about disenrolling people that could help to reduce rates of churn. For example, states could only disenroll individuals who have been enrolled at least 12 consecutive months and must limit eligibility redeterminations to a set proportion of enrollees each month through September 2022. States could not disenroll individuals based on returned mail unless there were at least two failed attempts to contact the individual through at least two modalities (e.g., mail and text messages). States would also have to report monthly data on call center statistics (average volume, wait times, and abandonment rates) as well as rates of eligibility renewals, redeterminations, and coverage terminations due to changes in circumstances (e.g., increased income) or due to administrative reasons (e.g., failing to provide required documentation).
Prior to the pandemic, some states had adopted policies and processes to reduce churn and promote continuous coverage. For example, as of January 2020, 35 states account for anticipated income changes, such as recurring seasonable employment or a job change, when determining eligibility at renewal. Some states also use projected annual income for the remainder of the calendar year when determining ongoing eligibility at renewal or when an individual has a potential change in circumstances between renewal periods. States can also implement processes that improve communications with enrollees to help prevent them from losing coverage because they do not receive or respond to notices from the state. Such actions include conducting regular data matches with the U.S. Postal Service National Change of Address Database, working with managed care plans and providers to update enrollees’ address information, and calling enrollees or sending email or text notifications when returned mail from a notice sent to an enrollee is received.
The BBBA would require states to implement 12-month continuous coverage for children and postpartum individuals. States have the option to provide 12 months of continuous coverage for children. Under this option, states allow a child to remain enrolled for a full year unless the child ages out of coverage, moves out of state, voluntarily withdraws, or does not make premium payments. As such, 12-month continuous eligibility eliminates coverage gaps due to fluctuations in income over the course of the year. A recent MACPAC analysis found that states with 12-month continuous coverage for children had lower rates of churn among children enrolled in Medicaid and CHIP compared to states without this policy. Currently, 34 states provide 12-month continuous eligibility to at least some children in either Medicaid or CHIP. The Build Back Better Act would require states to extend 12-month continuous coverage for children in Medicaid and CHIP and would also require 12-month continuous coverage for postpartum individuals, a change from the current requirement of 60-day postpartum coverage.