December 2, 2010
State of Illinois officials want to tighten procedures for Medicaid by using electronic data to verify eligibility—a step also viewed as crucial to deal with the surge in Medicaid enrollment expected under federal healthcare reform.
On November 29, 2010, Julie Hamos, Director of the Department of Healthcare and Family Services (HFS), told a committee of the Illinois Senate that HFS needs to cross-check electronic data on Medicaid recipients’ income and employment to weed out ineligible enrollees and streamline state enrollment procedures. Ms. Hamos said authorization from the General Assembly would be required to match electronic records such as income tax returns from the Illinois Department of Revenue with Medicaid data.
Ms. Hamos and other Medicaid experts testified at the first hearing of the newly created Senate Special Committee on Medicaid Reform, which has been charged with delivering recommendations for legislation by January 3, 2011. Democratic leaders in the Senate and House of Representatives recently agreed to set up committees to consider reforms to Medicaid and workers’ compensation, programs long criticized by many Republicans as being too costly. There was no discussion at the hearing on November 29 about how much money—if any—could potentially be saved by tightening eligibility verification procedures for Medicaid.
The Senate reform panels were formed in mid-November, amid Democratic efforts to pass a pension-borrowing bill to pay for this year’s roughly $4 billion contribution to the State’s retirement systems. Legislative officials have denied any connection between the reform committees and attempts to win approval for pension borrowing. Please see a posting last month in this blog for more information about the pension-borrowing plan, which has been stalled in the General Assembly since May 2010.
Medicaid is a joint federal-state program that finances healthcare for certain categories of low-income people, including children, pregnant women, parents, the elderly and the disabled. As previously discussed in this blog, beginning in 2014 under federal healthcare reform the program will also cover anyone with income less than 133% of the Federal Poverty Level (currently $14,000 for a single person and $29,300 for a family of four).
Ms. Hamos said enrollment in Illinois is expected to increase by 700,000 from the current level of approximately 2.6 million to 3.3 million by 2019 because of healthcare reform. Under healthcare reform, enrollment in Medicaid must be coordinated with enrollment in newly created state health insurance exchanges through which individuals can purchase coverage, with federal subsidies for people whose income is 133% to 400% of the Federal Poverty Level. One of HFS’ long-term goals is to create a “seamless eligibility/verification/enrollment process for new and existing Medicaid clients” into the health insurance exchange, Ms. Hamos told the Medicaid committee.
The issue of verifying eligibility for Medicaid attracted widespread attention in May 2010, after the Illinois Auditor General issued an audit of the All Kids health insurance program. All Kids is Illinois’ Medicaid program for children. The program was expanded in 2006 to cover children whose family income was greater than 200% of the Federal Poverty Level and undocumented immigrant children. The Auditor General’s report, which only covered the expanded part of the program, found that state agencies were not able to determine whether all participants met age, residency and income requirements.
In particular, the report criticized “passive redeterminations,” the practice of only requiring families to return an annual renewal form if there is a change in their information; if there is no change and only children are receiving benefits, no submission is required. The Auditor General had previously cited the practice in state audits since FY2007. The State is required to make annual redeterminations of Medicaid eligibility for all clients under its agreement with the federal Centers for Medicare and Medicaid Services. The passive redetermination process is only used for families in the All Kids program with incomes below 200% of the Federal Poverty Level, estimated at roughly 300,000 to 400,000 recipients.
HFS had previously stated that the practice was intended to ensure that children did not experience unnecessary breaks in medical coverage and that it did not violate any law or requirement. However, in her testimony on November 29, Ms. Hamos said she would end passive redeterminations if eligibility verifications could be performed electronically, using computerized data matching. She and other officials said that the Department of Human Services, which handles Medicaid applications, does not have adequate staff to cope with a flood of new paperwork.