By Clarissa Donnelly-DeRoven 

One of the traditional problems with Medicaid is that many beneficiaries cycle on and off of the program frequently as their income changes. 

Medicaid – paid for by both the state and federal governments – primarily serves low-income children, some of their parents, people with disabilities and older folks who are very low-income. The parents of those children, for example, might get seasonal work which puts them over the income limits for the program. When they lose those jobs, their children are again eligible, meaning that those parents and children ping pong on and off the public insurance program.

That can affect the continuity of care for these families.

Every year, every patient on Medicaid has their eligibility for the program reviewed. In North Carolina, county workers at the local Department of Social Services conduct the reviews, but back in 2017, they were overwhelmed and far behind. 

Many people’s applications expired before the workers could get to them.

“What we started seeing is that people would go to their doctor or the pharmacy and they were told, ‘You don’t have Medicaid anymore,’” said Doug Sea, an attorney at the Charlotte Center for Legal Advocacy. “It turned out the reason for that is the state’s computer system, NC FAST, was automatically cutting off their Medicaid at the end of their usual 12-month certification period. And so when DSS didn’t process the review to see if they were still eligible, the computer just cut them off.

“These people got no notice,” Sea said. “They got no determination that they were ineligible, nothing.” 

In response, the Charlotte Center for Legal Advocacy filed a lawsuit in federal court against the state Department of Health and Human Services, which is ultimately responsible for Medicaid administration in the state. The Center argued that by cutting people off from Medicaid without a proper review of their application, the state was violating the Social Security Act and the Due Process Clause of the 14th Amendment

The federal court certified the case as a class action, meaning that the handful of people acting as plaintiffs in the case represented the state’s Medicaid population at large. It also issued an injunction, ordering the state to stop abruptly terminating people’s Medicaid in this way. 

The department complied. It made changes to its software so that it stopped cutting people off from their insurance before a proper review. 

Over the next few years, DHHS worked with the Charlotte Center to make other critical modifications. They improved the forms used to notify people about changes to their Medicaid, revised the instruction manual given to county workers to help guide them through the redetermination process, and created a detailed set of steps to follow during a review in which someone is trying to extend their Medicaid benefits because of a disability. 

All of these agreements and more were formalized in a settlement agreement that the two parties filed in federal court this fall. As part of the settlement, the state does not admit any wrongdoing or legal violations.

“We are pleased to have resolved this matter collaboratively and to have avoided lengthy and costly litigation,” DHHS wrote in a statement to NC Health News. “Ensuring the timely provision of Medicaid benefits to eligible North Carolinians remains a top priority for NCDHHS and we believe this settlement furthers that goal.” 

While the details are specific to North Carolina, advocates say this is a national problem. Jane Perkins, the legal director of the National Health Law Program and co-counsel on the class action, said in a press release that the settlement could serve as a model to Medicaid agencies across the country. 

“Once the [public health emergency] ends, state Medicaid agencies will be making massive redeterminations of Medicaid eligibility for millions of people who had coverage during the duration of the  [public health emergency],” she said. “Millions of people could improperly lose their insurance coverage if this is not done right. Robust eligibility and redetermination protections, like those just agreed to in North Carolina, will go a long way in ensuring that eligible people do not lose access to care.”

Medicaid beneficiaries can see a description of the settlement here. They can call  1-800-936-4971 or email with any questions. 

There will be a hearing on Jan. 13 at the federal courthouse in New Bern on whether to approve or deny the agreement. Any person who is on Medicaid in North Carolina is considered a plaintiff of this class action and is entitled to object to the settlement either in person or in writing. Written objections need to be submitted by Dec. 31, while verbal objections can be made at the courthouse on Jan. 13. 

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Clarissa Donnelly-DeRoven covers rural health and Medicaid. She previously worked at the Asheville Citizen Times where she reported on the police, courts, and other aspects of the criminal justice system....