Medicaid eligibility reassessments are expected to begin in early 2023, but the impact will first be felt on OLS, behavioral health; much less SNF
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As President Joe Biden told 60 Minutes on Sunday, the “pandemic is over,” it’s time to take the implications of the end of the public health emergency a little more seriously.
There are a host of waivers that must be revoked, such as the three-day hospital stay required for Medicare admission to a skilled nursing facility. However, returning Medicaid eligibility determinations is a priority.
There are about 89 million people enrolled in Medicaid, about 25 million more than before the pandemic. Of this increase, part – our estimate is around 10 million – has other insurance.
Because Medicaid is the payor of last resort, MCOs receive PMPM payments with no associated benefit costs. Upon commencement of unlisting, these “all-margin” PMPM payments will be phased out over 18-24 months. Unenrollment of people with other insurance will be done upfront in most states, as their eligibility verification can be done on a “no touch” basis by reviewing things like federal income tax withholding .
Conventional wisdom suggests redeterminations will increase the rate of the uninsured, contributing to bad debts and charitable care.
However, given that the supply of labor remains limited at the moment and that part of the 25 million registrations in the era of the pandemic have other sources of insurance coverage, we do not probably won’t see what you might otherwise expect.
The MCOs argue that they will convert Medicaid beneficiaries into members of the ACA exchange plan. This will depend on the state as some believe the law does not allow this practice, but there should definitely be some of it.
The way to think about the impact of opting out of Medicaid is that it will affect MCOs first. After that, the biggest beneficiary was the behavioral health sector, as states stepped up their efforts to meet the significant demand for mental health services; use enhanced FMAP in some cases to make Medicaid patients more financially viable.
The PPI series for payers by service area suggests that hospitals and nursing facilities will be less affected. The connection in the PPI series for nursing homes from June suggests longer stays in nursing homes and more acute patients, as prices are quite sticky. Alleviating labor shortages is likely also a factor
We expect the PHE to persist through the end of the year – the White House would like to put the mid-terms behind them before risking an increase in the uninsured – and could last well into 1Q. Generally, everyone should be ready for the sauce to end in early 2023.