The Families First Coronavirus Response Act (FFCRA), passed in response to the COVID-19 pandemic, offered states the option to expand Medicaid eligibility for coverage of COVID-19 testing and treatment.¹ FFCRA also increased federal financial participation for state Medicaid programs by 6.2% – on the condition that states must maintain beneficiaries’ Medicaid enrollment status until the end of the month following the end of the COVID-19 public health emergency (PHE).² Every state in America took advantage of this additional federal money for Medicaid. As a result of the FFCRA’s new eligibility requirements and enhanced funding, there has been a dramatic increase in Medicaid enrollment – more than 12 million individuals joined the Medicaid rolls between February 2020 and June 2021.³ This increase was driven by the twin economic forces of the COVID-19 pandemic and rapid increases in unemployment and loss of employer-based health insurance

While employment has not entirely recovered to pre-pandemic numbers, unemployment is declining. From a health care coverage perspective, this means that many newly employed workers are now eligible for employer-based health care coverage or have the means to purchase separate health insurance coverage through a state or national exchange.⁴ Under traditional eligibility rules, individuals with new employer-based health insurance would be removed from Medicaid enrollment as their other sources of coverage become effective (or as they cease to meet Medicaid income eligibility standards). FFCRA, however, requires Medicaid programs to maintain enrollment for these individuals until the PHE is over.⁵ With Omicron continuing to surge across the country, it’s unclear when the PHE might end, but it has been extended eight times since the initial declaration in March of 2020. The current declaration was effective January 16, 2022 and extends for 90 days or cessation of the PHE. Consequently, Medicaid enrollment will likely extend at least through the end of April 2022.

These unique circumstances – expanded Medicaid enrollment, expanded employment, and regulatory limits on disenrollment from Medicaid create a difficult situation for health care providers, and a need to focus on coordination of benefits. One Medicaid rule that hasn’t changed during the PHE is that Medicaid is generally the payer of last resort.6 Medicaid-participating providers are required to submit claims for health care services to other insurance or third parties that have an obligation to pay for those services before billing Medicaid. If providers (or the Medicaid program itself) discover alternative sources of coverage after the fact, the Medicaid payment will generally be recouped, and the provider must look to the primary insurance coverage for payment.7

Because patients are not always reliable sources of information regarding their existing health insurance coverage, and because patients may well be eligible both for Medicaid coverage and new employer coverage, the risk to providers of billing Medicaid in error has and will continue to increase over the coming months. Erroneous submission of claims to Medicaid where another party has primary responsibility risks recoupment from the Medicaid program, coverage and benefit confusion between primary payers and Medicaid coverage, and potential timely filing issues for health care providers. Given these risks, providers should take extra steps to ensure that they obtain full and complete information from patients to promote compliance with Medicaid third party liability rules.

Medicaid is the payor of last resort, and providers should follow that rule when submitting claims. To prepare for the inevitable audits and demands for repayment, Medicaid providers should focus on maintaining good eligibility and coverage records for patients and train billing personnel on proper coordination of benefits so claims will be billed and paid properly the first time.

¹ Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 209 (March 18, 2020), https://www.congress.gov/116/plaws/publ127/PLAW-116publ127.pdf

² Id. at § 6008; see also 42 U.S.C. § 1396d; COVID-19 Frequently Asked Questions (FAQs) for State Medicaid and Children’s Health Insurance Program (CHIP) Agencies, Continuous Coverage, Question 1 (updated as of Jan. 6, 2021), https://www.medicaid.gov/state-resource-center/downloads/covid-19-faqs.pdf.

³ See Bradley Carallo, Analysis of Recent National Trends in Medicaid and CHIP Enrollment (Jan. 10, 2022), https://www.kff.org/coronavirus-covid-19/issue-brief/ analysis-of-recent-national-trends-in-medicaid-and-chip-enrollment/#footnote-543920-1.

⁴ Unemployment rate declined by 0.3 percentage point to 3.9 percent in December 2021, and the number of unemployed persons decreased by 483,000 to 6.3 million. Throughout 2021, these rates dropped by 2.8 percentage points and 4.5 million, respectively. This means that unemployment rates are nearly back to pre-pandemic levels—the unemployment rate in February 2020 was 3.5 percent. Press Release, Bureau of Labor Statistics, The Employment Situation – December 2021 (Jan. 7, 2022), https://www.bls.gov/news.release/pdf/empsit.pdf.

⁵ Families First Coronavirus Response Act, Pub. L. No. 116-127, § 6008, 134 Stat. 209 (March 18, 2020), https://www.congress.gov/116/plaws/publ127/PLAW116publ127.pdf see also 42 U.S.C. § 1396d.

⁶ See 42 C.F.R. Part 433; Medicaid and Chip Payment Access Commission, Third Party Liability (last visited Jan. 24, 2022) https://www.macpac.gov/subtopic/thirdparty-liability/.

⁷ See, e.g., Colo. Dep’t of Health Care Policy & Financing, General Provider Information Manual (Nov. 24 2021) https://hcpf.colorado.gov/gen-info-manual#revlog.