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Three Ways Medicaid Work Requirements Could Affect Your Hospital’s Revenue Cycle Performance

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Three Ways Medicaid Work Requirements Could Affect Your Hospital’s Revenue Cycle Performance

A growing healthcare trend among states is a move toward implementing work requirements for Medicaid eligibility. Under this restriction-centered approach, patients must work a minimum number of hours weekly or monthly, or prove they are seeking a job or being trained for one.

The trend began in January 2018, when the Centers for Medicare & Medicaid Services (CMS) announced a new policy “designed to assist states in their efforts to improve Medicaid enrollee health and well-being through incentivizing work and community engagement among non-elderly, non-pregnant adult Medicaid beneficiaries who are eligible for Medicaid on a basis other than disability.”

The policy does give states flexibility to identify activities other than employment that promote health and wellness while meeting state requirements for continued Medicaid eligibility. These activities include community service, caregiving, education and substance use disorder treatment.

Within weeks of the CMS announcement, Kentucky became the first state to gain approval to launch a Section 1115 demonstration that would make employment an eligibility requirement.

According to data from Kaiser Family Foundation, as of April 7, 2020, the CMS had approved work requirements in six states: Arizona, Indiana, Ohio, South Carolina, Utah and Wisconsin, although only Indiana and Utah have actually implemented them. Nine states―Alabama, Georgia, Idaho, Mississippi, Montana, Nebraska, Oklahoma, South Dakota, and Tennessee―have similar proposals pending. And work requirement waivers have been set aside by courts in four states: Arkansas, Kentucky, Michigan and New Hampshire.

In June 2019, The Commonwealth Fund―founded in 1918, according to its website, “to improve health care and make it affordable and accessible for all Americans”―warned that Medicaid work requirements in nine states could cause 600,000 to 800,000 adults to lose their Medicaid eligibility. In addition, it argues that work requirements could have an impact on hospitals’ revenues, uncompensated care costs and operating margins.

Burden on Providers

Work requirements, like block grants, create greater revenue cycle challenges for hospitals, health systems and medical practices that rely on Medicaid reimbursement revenue. Previously, all those under a certain federal poverty level had to do to get Medicaid was to reapply once a year. With work requirements, patients―and subsequently their providers―face another burden. And patients are likelier than before to come in for treatment lacking insurance.

While work requirements and other restriction-centered approaches create challenges on both the front and back ends, for now we will look at three front-end challenges.

1. Work reporting difficulties. Work requirements often require Medicaid recipients to report

their work hours through an online portal set up by that state’s Department of Human Services. For recipients without internet access or an ability to navigate the system, this places a burden on providers to both enroll them and help them post work hours.

2. Heavy burden of proof for exceptions. Many states with work requirements also have a detailed list of potential exceptions, which are difficult to prove. For instance, in Indiana, a person can be exempt from the work requirements if he or she is being treated for a substance abuse disorder, homeless, a part-time student or “medically frail.” In Kentucky, exemptions include being homeless or a former foster child. But locating and providing documentation of these exceptions is difficult for patients and providers.

3. Rules vary state by state. Each state’s process is unique, potentially requiring a health system to implement different procedures in each state where it operates. For instance, in some states such as South Carolina and Utah, a work requirement is in place, but providers don’t have to verify a new patient’s weekly work hours because these states allow 90 days of Medicaid benefits before the work requirement kicks in. In those states, a provider can get the new patient on Medicaid and get that first bill covered. But when that patient comes back 90 days later and has been kicked off the Medicaid program for not submitting any of their requirements, the provider is back to square one. While the provider can resubmit the patient’s Medicaid application, the person no longer has the 90-grace period to fulfill work requirements.

Should You Outsource Your RCM Medicaid eligibility and enrollment?

If your state institutes work requirements for Medicaid eligibility, outsourcing Medicaid eligibility operations to a qualified RCM vendor could be the answer. This could relieve the pressure from constantly working to respond to the latest changes in Medicaid reimbursement.

A vendor who is focused on government relations can adapt to changes and scale solutions more quickly than in-house staffers can. An RCM vendor can also manage programs across multiple states or out-of-state, taking into account the variety of 1115 programs in force in each.

To learn more about Parallon’s eligibility and advocacy services, contact our experts.