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From Health Law Daily, July 24, 2014

Class action slams Tennessee Medicaid eligibility determination process

By Bryant Storm, JD

A class action complaint filed by Tennessee Medicaid applicants is challenging the way Tennessee has handled Medicaid applications in the wake of the passage of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The complaint alleges that Tennessee has violated federal law by making the federally run health care Marketplace the only avenue through which individuals can apply for Medicaid. The applicants’ complaint also charges Tennessee with failing to comply with ACA deadlines and other CMS requirements for the administration of Medicaid. The complaint alleges that thousands of Tennessee Medicaid applicants have been systematically deprived of their right to apply for medical assistance and receive a determination of their eligibility.

Promptness. Medicaid law, through 42 U.S.C. sec. 1396a(a)(8), requires states to allow anyone wishing to apply for Medicaid the opportunity to do so and demands that states make eligibility determinations with reasonable promptness. Medicaid regulations, found in 42 C.F.R. secs. 435.930(a), and 912(c)(3), more specifically require states to make determinations within 40 days, unless the applicant is disabled, in which case the state has 90 days to make a determination. Federal Medicaid law, in 42 U.S.C. sec. 1396a(a)(3), also requires states to provide a fair hearing to applicants whose claims are denied or not dealt with promptly.

TennCare. According to the complaint, for over 40 years, TennCare, Tennessee’s Medicaid program, contracted with the Tennessee Department of Human Services (DHS) to make eligibility determinations. Most individuals applied at their local county DHS office and were evaluated through an in-person interview; their eligibility information was entered into a computer program. The class action asserts the ACA fundamentally altered the way Tennessee now makes those determinations.

ACA. The ACA changed aspects of Medicaid administration across the country and in Tennessee. It sought to simplify Medicaid eligibility by calculating income for Medicaid purposes in the same way that income is calculated to determine eligibility for the premium tax credits, which individuals at certain income levels are entitled to receive under the law. The Modified Adjusted Gross Income (MAGI) calculation is the method used to determine Medicaid eligibility for children, pregnant women and parents of dependent children, which are the groups that comprise the vast majority of TennCare applicants.

As part of the streamlining, the complaint contends, 42 U.S.C. 18083(b), requires that states utilize a single application to determine Medicaid, CHIP, and premium tax credit eligibility. In part to facilitate the application processes, the ACA authorizes the establishment of state online insurance Exchanges whose primary function is to allow individuals to purchase publicly subsidized health insurance. Tennessee exercised its right to have the federal government administer an Exchange, known as the federally facilitated Marketplace (FFM), on Tennessee’s behalf. Tennessee also elected use the FFM to conduct Medicaid eligibility determinations using the MAGI calculation method.

TEDS. As part of the ACA, Tennessee was also obligated to update its information technology (IT) systems. The TennCare Eligibility Determination System (TEDS) Project was intended to fulfill the eligibility determination function. According to the complaint, the TEDS project was also intended to satisfy the ACA’s IT requirement, but has failed to meet ACA deadlines. Specifically, despite requirements that the TEDS project would be operation by October 1, 2013, the complaint alleges that to date the system remains inoperative.

Mitigation. Due to the delay in the TEDS project, CMS required state Medicaid administration officials to enter a mitigation plan. According to the complaint, as part of that plan, it was agreed that FFM would determine MAGI eligibility for Tennessee Medicaid applicants between October 1 and December 31, 2013, at which point the TEDS project was to be operational and would overtake the role of determining Medicaid eligibility. Tennessee also assured CMS that until that time, it would notify applicants when accounts were received from the FFM, and the state would accept FFM determinations of Medicaid eligibility. The complaint contends that none of those assurances were fulfilled and Tennessee continues to rely on the FFM to determine the eligibility of its Medicaid applicants.

Closed door. When Tennessee began to rely on the FFM to make eligibility determinations, DHS allegedly stopped processing TennCare applications. Although several other states have allowed the FFM to make MAGI eligibility calculations for their Medicaid program, the complaint alleges that only Tennessee has made the federal Exchange the “exclusive portal” through which residents can apply for Medicaid. Despite widespread and publicized problems with the FFM, Tennessee continued to insist that all determinations be made exclusively through the federal Exchange. The TennCare website continues to inform the public that their only avenue is the federal Exchange and that local offices are no longer accepting applications.

Delay. The complaint alleges that Tennessee knows its current eligibility process is unworkable and that thousands of applicants have been notified by the FFM that they are eligible for TennCare and would be contacted by TennCare, yet have never received any additional information from the state program. For the non-MAGI categories of eligibility that are not determined through the FFM, the complaint alleges that thousands of applicants have received determinations far beyond the 45 and 90 day windows mandated by Medicaid regulation. The compliant also claims that Tennessee has altogether stopped granting opportunities for hearings to challenge a refusal of benefits or a failure to make a determination with reasonable promptness.

Injury. The complaint names several applicants as plaintiffs and describes the financial and medical cost they have suffered due to their inability to obtain timely determinations of their Medicaid eligibility. According to the complaint, several individuals were unable to take necessary medications or obtain critical physician services due to their inability to afford the care without Medicaid coverage. The complaint alleges that the named plaintiffs are only representatives of a much larger group which has experienced the same or greater hardships due to Tennessee’s allegedly unlawful handling of Medicaid applications.

Response. The Chattanooga Times Free Press reported that “TennCare spokeswoman Sarah Tanksley said the agency was reviewing the documents and had no comment about the lawsuit now.”

MainStory: TopStory HealthCareReformNews CMSNews HealthReformNews EligibilityNews MedicaidNews

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