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Feds scrutinize Indiana for Medicaid backlog

July 24, 2014

More than 80,000 Hoosiers had their applications for Medicaid health benefits stuck in a backlog in May, prompting the federal government to launch a special review this month.

The federal Centers for Medicare & Medicaid Services, known as CMS, sent a letter to Indiana officials July 9 expressing concern about the delays. Indiana was one of 13 states to receive the letters.

If not eliminated, the backlog could create problems for Gov. Mike Pence later this year, when he hopes to enroll as many as 350,000 into an expanded Healthy Indiana Plan to provide health care coverage for low-income Hoosiers.

Joe Moser, director of the Indiana Medicaid program, said his staff has already whittled down the backlog by roughly half. Indiana is scheduled to meet with CMS officials next week to begin the review process.

“We made a significant dent in pending applications in the last two months,” Moser said, estimating the backlog of 82,500 applications in May had dropped by more than 20,000 in June and by more in July. “That may alleviate any concerns they may have had.”

Still, Moser acknowledged, eliminating the backlog before expanding the Healthy Indiana Plan into what Pence calls HIP 2.0 is a critical goal for the state. The HIP 2.0 plan, proposed in May, is awaiting approval from CMS.

“Our goal here is to clear the decks on any pending applications when HIP 2.0 starts,” Moser said.

The backlog of applications developed even though Indiana was one of 24 states that did not expand eligibility for Medicaid this year, as called for by President Obama’s health reform law, known as Obamacare.

Indiana experienced problems from several issues, including the technical difficulties suffered by Healthcare.gov, the website created by Obamacare to help Americans sign up for private health insurance or Medicaid.

That website had a disastrous rollout in October and November, which prevented most Medicaid applications entered on the site from being forwarded to Indiana Medicaid officials. Not until the end of January, Moser said, did the state finally receive all the applications that had built up during the previous four months.

“The processing of those federal applications had an impact on the processing of our state applications,” Moser said.

The state’s progress on those applications can be seen in its monthly enrollment data. Enrollment dipped in January to 1.06 million Hoosiers, but by June had surged by nearly 52,000 to 1.11 million. Moser attributed the increase to Obamacare's tax on individuals who do not obtain health coverage as well as the attention the law brought to the expansion of health insurance.

Meanwhile, another problem developed because Obamacare required states to adopt a new method for calculating incomes of Medicaid applicants. That new method is known as Modified Adjusted Gross Income, or MAGI.

Jim Gavin, a spokesman for the Indiana Medicaid program, said the MAGI rules lengthened the application, adding about 30 percent more processing time for each.

Some Medicaid participants also have been kicked off the program, according to David Roos, executive director of Covering Kids & Families of Indiana. That’s because, he said, the MAGI rules require documentation of each person’s tax filing status—something not previously required—and some Hoosier families have not been able to produce that documentation quickly enough to renew their benefits.

Such families are still eligible for Medicaid if they sign up within 60 days after leaving the program. But that churn has added to the backlog, Ross said.

“It’s the lower income folks—the ones who are least likely to understand what changes are being made and for other reasons the least likely to respond to it, to reach out for help to navigate the system—but they’re the ones being kicked off the system,” Roos said.

Moser, however, said the documentation issue was not a significant contributor to the backlog.

A third issue challenging the state was that in March and April, it sent its field staff—some 750 employees and 2,000 employees from outside firms that help the Medicaid program—to training sessions on new Medicaid eligibility rules for aged and disabled Hoosiers. That change went into full effect June 1.

Only after that time could the Indiana Medicaid program turn all its resources to reducing the applications backlog.

“It’s been fully prioritized for the last two months,” Moser said.

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