Medicaid documentation causing health center problems

A project to assess the impact on community health centers of recent Deficit Reduction Act changes that require Medicaid applicants and recipients to document their citizenship, legal U.S. residence, and personal identity has found significant adverse effects in terms of coverage disruptions and loss of Medicaid income.

The study, by George Washington University Department of Health Policy assistant research professor Peter Shin, PhD, MPH, and colleagues, found in a random nationwide survey of 300 health centers that:

1. Documentation requirements have caused a nationwide coverage disruption for health center patients, with more than 90% of all health centers reporting enrollment difficulties for patients of all ages, including newborns.

2. More than 25% report a longer application process, 30% report a longer enrollment process, 28% report that applications lack appropriate documentation, more than 10% report that patients must pay to obtain documents, and one in seven report delays in securing documents. Some 43% of health centers said their patients had at least one of these problems.

3. More than one-third report that they have had to increase the amount of staff time available to assist patients with their applications, ranging from a few hours per week to 40 hours per week, or the equivalent of one additional full-time staff member.

4. Some 45% report that enrollment and application disruption and delay have affected their ability to arrange for specialty care, 38% report difficulties in securing health care access for new patients, 28% report difficulties in prearranging hospital inpatient deliveries for pregnant women, and 24% report difficulties in securing supplies and equipment.

"We estimate conservatively that the immediate impact of the documentation requirements will be to eliminate Medicaid coverage for between 2.2% and 6.7% of all Medicaid enrolled pediatric and adult patients," Dr. Shin says. "This translates into between 105,100 and 319,500 Medicaid patients, including up to 212,400 children and 107,100 adults. In general, these estimates should be interpreted with caution, because they are so conservative. But these estimates provide insight into the initial magnitude of the impact. Indeed, health centers' own reported experiences suggest that ultimately the effects will be far greater. Furthermore, this early estimate does not include estimates of patients who can be expected to experience delays and barriers to future Medicaid enrollment. This immediate loss of Medicare coverage for current health center patients will translate into immediate financial losses of between $28 and $85 million in Medicaid revenues."

Dr. Shin says the lost Medicaid revenues represent services to between 55,000 and 166,000 uninsured patients; staffing reductions of 27-83 physicians, 21-66 dental professionals, 6-18 pharmacists, 11-33 mental health professionals, and 46-140 nurses and physician assistants; an average of 1% loss of all health center operating revenues and the entire operating surplus reported by health centers in 2005, which is crucial in planning for unanticipated emergencies; and establishment of 43-131 "new start" centers in the nation's poorest counties.

More than 14 million served

What happens to health centers is important, Dr. Shin says, because they are the nation's largest single source of primary health care for low income and medically underserved persons, including Medicaid beneficiaries. In 2005, 952 federally funded health centers operating in more than 5,000 service sites provided health care to more than 14 million people, including more than 5 million Medicaid beneficiaries.

Health centers play an essential role in the health care system, he says, both ensuring timely access to primary health care and serving as a critical bridge to medically necessary specialty services. As the number of U.S. uninsured has risen, the need for reduced cost services at health centers has grown correspondingly at an even more rapid pace.

Health centers are important to their patients not only because of the comprehensive primary health care they furnish, but also because they play a major role in helping patients secure Medicaid coverage and other patient and family support services. As part of these services, which are known as "enabling services," health centers offer help in obtaining and completing Medicaid application forms and securing necessary documents and supporting information.

Since 1986, federal law has required that when individuals apply for full Medicaid coverage, states must obtain a written declaration from applicants, under penalty of perjury, regarding their legal status. Applicants who declare they are not citizens have had to show satisfactory immigration documents that are verified with the U.S. Citizenship and Immigration Services Bureau of the Department of Homeland Security.

Under the 2006 Deficit Reduction Act, Congress revised the Medicaid law to extend documentation requirements to applicants who declare that they are citizens. All new applicants and recipients, whether they are citizens, U.S. nationals, or qualified aliens, must document their identity.

States vary in implementing law

While the new law requires states to provide "reasonable opportunity" and assistance in securing the satisfactory documentary evidence of citizenship or nationality, an interim rule issued by the Centers for Medicare & Medicaid Services doesn't make clear what types of assistance must be furnished. Dr. Shin's report says the interim rule also does not clarify the relationship between documentation and separate federal regulations pertaining to outstationed assistance available at federally qualified health centers. Evidence to date suggests states have implemented the documentation requirements in variable ways and that there is considerable variation in how states use outstationing as a means of assisting applicants and recipients.

An early analysis of the Medicaid documentation reform's effects estimated that 10.3% of citizen children and 8.1% of citizen adults would experience delayed or interrupted coverage as a result of the new documentation requirements. Anecdotal reports from health centers and state and regional health center primary care associations, as well as studies documenting early state experiences, have suggested that the requirements' effects are beginning to be felt. States also have reported increased administrative costs associated with citizenship documentation.

Health centers nationally are reporting coverage delays and disruption as a result of implementing the documentation requirements. Some 31% of health centers said the enrollment process has grown longer, while 25% said the application process is longer. And 28% reported that applications lack necessary documents.

Applicants are experiencing challenges related to securing the documents they need. Thus, 11% of health centers indicate applicants must pay to obtain documents, and 15% said applicants must wait two weeks or longer to obtain needed documents. Some 43% of health centers report at least one problem with a longer application process or with documentation.

More than 90% of all health centers report application difficulties affecting one or more patient groups, while only 8% of centers said that no patient groups are experiencing problems. For the patient groups affected, 30% of centers report that parents experience difficulties, 27% say new patients and pregnant women are experiencing problems, and 22% report difficulties among children. Dr. Shin says a significant proportion of health centers (13%) report newborn problems.

More than 20% of all health centers reported an actual decrease in Medicaid patients, even as their uninsured patients continued to increase. Dr. Shin says a closer examination of the reasons for the decline in Medicaid users at these health centers shows that the new citizenship and identification requirements are emerging as the single most important cause. Some 66% of health centers experiencing a Medicaid patient decline identified implementation of documentation requirements in their communities as an underlying factor, compared to 45% citing eligibility reductions or service mix changes.

Even as Medicaid delays and disruptions grow and coverage itself is threatened, Dr. Shin says, patients remain eligible for services at health centers on an uninsured basis, and survey respondents indicated this is the case. More than 60% of all respondents said they were furnishing health care to patients who had lost their Medicaid coverage and required health care prior to reinstatement.

Access and quality of care affected

The report notes that Medicaid's critical role in funding health centers and enabling them to provide or arrange for specialty and referral care means that coverage interruptions can be expected to translate into an impact on the accessibility and quality of care. There are indications that Medicaid interruptions are having this type of impact, particularly where the interruptions have led to an outright coverage decline. Disruptions and delays in care were reported by health centers for all patients, with 45% of health centers reporting reduced ability in arranging for specialty care, 38% reporting difficulties in securing health care access for new patients, 28% reporting difficulties in prearranging hospital inpatient deliveries for pregnant women, and nearly one-quarter reporting difficulties in securing supplies and equipment.

According to the report, a conservative estimate of the immediate impact of the documentation requirements on health center patients now enrolled in Medicaid is that in the near term, up to 319,500 Medicaid-enrolled health center patients (212,400 children and 107,100 adults) will lose coverage. The researchers point out their estimate includes only currently enrolled patients, and also say they believe people will lose coverage for only a few months due to health center assistance in regaining coverage. The researchers' estimates include newborns, even though health centers reported there is an impact on newborns and even though recent federal policy may reduce, but not eliminate, loss of coverage. They also excluded the disabled and elderly Medicaid beneficiaries because they are exempt from the documentation requirements.

Although the researchers note that their estimates are conservative and should be interpreted cautiously, they believe these findings provide insight into the initial magnitude of the impact.

Millions in lost revenue

A conservative estimate, adjusted to assume that health centers will be able to assist their patients in regaining coverage and minimize what otherwise might be many more months of disruption, suggests that patients' loss of coverage will have immediate and major financial implications for health centers. "We estimate that Medicaid coverage disruptions for currently enrolled patients could cost health centers near-term losses of between $28 million and $85 million in Medicaid revenues," Dr. Shin and his colleagues state. "This figure does not take into account losses connected with the denial of coverage to current and future uninsured patients who apply for medical assistance. Nor does this estimate account for the additional costs that health centers can be expected to incur as they allocate additional staff time to assisting patients experiencing disruption and delay because of the new documentation requirements.

The report says such losses translate into:

  • services for an additional 55,000-166,000 uninsured patients ($515 per uninsured patient in 2005 dollars), as grant funding is shifted to cover the cost of care for Medicaid-eligible patients seen on an uninsured basis;
  • major staffing reductions of 27-83 physicians, 21-66 dental professionals, 6-8 pharmacists, 11-33 mental health professionals, and 46-140 nurses and physician assistants;
  • loss of 43-131 "new start" health centers in the nation's poorest counties as funds are shifted to cover Medicaid-eligible patients served on an uninsured basis;
  • an average loss of 1% of all health center operating revenues and the entire operating surplus reported by health centers in 2005.

"Also lost," Dr. Shin says, "is the ability to properly manage care in the case of patients with specialty health care and referral needs. While studies show that health centers furnish primary care of equal quality to patients regardless of insurance status, research also shows that health centers experience serious barriers to appropriate care in the case of uninsured patients who need referral services for serious and chronic health conditions."

Dr. Shin says his findings suggest the importance of expanded health center outstationing assistance as some states are beginning to do. They also suggest, he says, the need to revise existing regulatory requirements to permit use of copies of required documents, as well as provision of coverage to otherwise eligible applicants while the process of securing documents is being completed.

Requirement should be changed

In the long run, he says, the findings call into question the wisdom of congressional requirements that so significantly add to the burden of Medicaid enrollment. "Documentation rules already apply to legal residents," Dr. Shin says. "As a result, it may be citizens who are feeling the heaviest effects of these new requirements. Furthermore, the barriers identified in this survey suggest that ultimately the delay and disruption in enrollment will affect not only the quality of health care, but also access to care at all for uninsured community residents."

Dr. Shin tells State Health Watch that what happens to health centers is important because they are the largest primary health care system for low-income populations. "They allow us to see the canary in the coal mine," he says. He also notes that health center costs are going up because they see patients who lose Medicaid coverage as uninsured patients. Centers absorb the costs one way or the other, he says, and the fiscal impact is just as important as the care impact.

Asked for his recommendation to fix the problem, Dr. Shin said the best thing would be to return to the pre-Deficit Reduction Act requirements. "Immigrants always had to provide documentation," he says. "So the new requirements affect citizens first and foremost."

Download the policy brief at E-mail Dr. Shin at or telephone him at (202) 530-2313.