On April 2, the Centers for Medicare and Medicaid Services (CMS) published the most significant set of eligibility regulations since the initial rule implementing the Affordable Care Act (ACA). The new rule will help eligible individuals enroll in Medicaid and Children’s Health Insurance Program (CHIP) coverage and stay enrolled as long as they remain eligible. Many of the provisions address issues that contributed to coverage losses during the unwinding of the continuous enrollment provision that has resulted in at least 13.7 million people losing Medicaid coverage, mostly for procedural reasons.

The new rule is effective 60 days after publication, but because most of the new regulatory requirements will necessitate significant policy, operational, and system changes, CMS has set a three-year pathway for states to come into compliance. This approach attempts to balance the competing needs of making the streamlined processes available as soon as possible and responding to states’ capacity issues.

Key changes that address Medicaid unwinding specifically include:

• Updating address information. States took different steps during the unwinding process to update addresses and respond to returned mail. Certain actions, like relying on updated address information from managed care plans and the United States Postal Service (USPS), were permitted only under temporary authority. The final rule codifies many of these best practices and outlines actions states must take to respond to returned mail and use address information from reliable data sources, such as the USPS. States must come into compliance by December 2025.
• Timelines for responding to requests for information. During the unwinding period, some beneficiaries lost their coverage because they did not respond to requests for information in a timely manner. The final rule allows more time for beneficiaries to respond to such requests. For example, individuals will have at least 15 days to respond to requests at the time of application and 30 days to respond to requests when they report a change in circumstances. A 30-day minimum period already exists at renewal. States must come into compliance with these changes by June 2027.
• Transitions between Medicaid and CHIP. Children can lose coverage or have gaps in coverage when transitioning between Medicaid and CHIP programs. For example, if a child is enrolled in Medicaid and family income increases, he or she may be no longer eligible for Medicaid but eligible for CHIP. In this case, the child would still need to go through a CHIP eligibility determination. The new rule requires each agency to accept determinations of eligibility made by the other agency at both application and renewals, ensuring that children no longer “bounce” between state-run programs. States must come into compliance with these changes by June 2024.

Other key changes in the new regulations include:

• Aligning eligibility and enrollment processes across Medicaid eligibility groups. The final rule extends streamlined, modernized processes that are already required for children, pregnant people, parents, and adults eligible under the ACA Medicaid expansion to people who are older and disabled. For example, under the new rules, individuals who seek coverage based on disability status or age (i.e., 65 or older) must be able to submit applications in person, online, by telephone, or by mail and have their eligibility determined without an in-person interview. Renewals cannot be more frequent than every 12 months, states must first attempt to renew coverage by reviewing data sources rather than requesting documentation, and individuals must have a minimum time period to respond to renewal forms. These changes will significantly ease the administrative burden on individuals who are older or disabled. These populations are more likely to live on fixed incomes and be financially eligible for coverage but disproportionately challenged with meeting enrollment and renewal requirements. States must implement these changes by June 2027.
• Removing CHIP coverage barriers. The final rule eliminates the ability of states to lock out children who are behind in premiums for a set time period (e.g., 30 or 60 days). It also eliminates waiting periods before children can enroll and annual and lifetime benefit limits for CHIP-enrolled children. States are also no longer permitted to require payment of past-due premiums as a condition of reenrollment. Fourteen states currently lock CHIP-enrolled children out of coverage for a period for failure to pay premiums. Nine states have waiting periods, a practice dating back to the early days of CHIP to address concerns that CHIP might “crowd out” or “substitute” coverage under group health plans. Thirteen states currently impose annual or lifetime limits on CHIP benefits, most applied to dental and orthodontia services. States must implement these changes to CHIP by June 2025.

While some states have already implemented many of these policies under temporary authority granted by CMS during the unwinding period, all states will need to evaluate the policy, operational, and systems changes needed to comply with the new rule. Given the issues arising during the unwinding period, states will be developing corrective action plans following the unwinding period. The phased timing of the provisions in the new rule will allow states to combine these efforts, bringing their systems into compliance with both the new and the preexisting rules. Notably, the implementation of many of these changes will qualify for enhanced federal administrative matching funds, helping defray the cost of implementation for states. Once implemented, the changes should result in a more streamlined, efficient, and customer-focused process to determine eligibility, enroll, and renew Medicaid and CHIP coverage.