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With the recent passage of the One Big Beautiful Bill (OBBB), many in the health and social care industries are taking an accounting of how their worlds have changed. According to the Congressional Budget Office (CBO), the bill will reduce Medicaid spending by $793 billion over the next ten years. By 2034, the CBO estimates this bill would reduce dual eligible enrollment by 1.3 million. Why? The reality of many benefit programs is the use of administrative burdens to limit participation. If the benefit administrator wants to pay less for benefits, that administrator can change who qualifies (which is obvious and requires justification) or introduce or exacerbate administrative requirements. By creating or increasing administrative burdens, more people who might qualify don’t. It is effectively a back-door limit to eligibility. This process of administrative burden as a governor in benefits is sometimes called “sludge.” Sludge represents a significant challenge for Medicare and Medicaid recipients and the managed care plans that serve them. As the OBBB is implemented, it will be vital for the managed care plans to have robust advocacy solutions to ensure members get and retain the benefits they need despite the sludge!
Potential reductions in Medicare Savings Program (MSP) enrollment are first driven by the provisions in the bill that will make it harder for people to enroll in an MSP to begin with. Many of the administrative simplifications that were passed under the previous administration will be delayed, or possibly, never implemented. Previously, administrative simplifications would have required the states to assist with obtaining necessary documents for an application (things like life insurance policies, which can be onerous for an applicant to obtain, and which can result in abandonment of an otherwise valid application). These provisions are held in abeyance. Similarly, we will see the delay or elimination of provisions to automatically enroll people who receive SSI into MSPs and sync up the applications for the Low-Income Subsidy (LIS or Extra Help) with Medicaid/MSP applications.
Finally, the bill will open the door to significant changes to another mechanism being used to reduce Medicaid and MSP participation: complication of the Medicaid renewal process. As an example, currently, 38 states use pre-populated renewal forms as one of the main methods for Medicaid recipients to convey the needed information for renewal. Under the One Big Beautiful Bill, those prepopulated forms may be replaced by blank forms. It is a classic form of sludge to require people to fill out a form from scratch when much of the information has already been provided and is on file. Some recipients will not complete the daunting blank form, be removed from the Medicaid rolls, and the sludge has achieved its goal.
While the One Big Beautiful Bill is obviously federal, we’re also seeing changes occur at the state level. It is always important to bear in mind that while Medicaid is jointly funded by the federal and relevant state governments, it is administered at the state level. Some states have been emboldened by the current political environment to seek approval for additional administrative requirements.
Of course, there will be other impacts more direct than sludge. With funding constrained by limits on provider taxes, we are already seeing states look to preserve Medicaid budgets by limiting eligibility. Earlier this month, California issued a memo about the reinstatement of an asset limit for ABD Medi-Cal and MSP. Massachusetts has announced that it is changing its ninety-day grace period for members to remedy a failure to renew. We will certainly see more of this as states grapple with the budget impacts of the bill.
But, most immediately, healthcare leaders who want to serve their dual eligible and dually enrolled members need to get ready to work through a lot of sludge. This increase in sludge will inevitably make it harder for Medicare recipients to become dually enrolled. It will also make it harder for dually enrolled people to keep their benefits through an annual renewal. When changes are made at this scale, another expected outcome is confusion, not just for recipients, but for the state workers who are tasked with administering rapidly changing requirements. This will likely introduce a third challenge, the need to ensure that denials – both for new applications and renewals – are correct. All of this intensifies the need for professional advocates to assist members through the sludge. Advocates provide the energy, the confidence, the support, and the knowledge to ensure eligible people get and keep the benefits they deserve. At BeneLynk, we are proud to serve as professional social care advocates on behalf of the majority of all Medicare Advantage members in the country. If you want to help your members through the sludge, drop us a note today at sales@BeneLynk.com.
About the Author: Sean Libby is the CEO of BeneLynk, the nation’s leading social care company serving members of government-sponsored health plans. Sean has been an advocate for older Americans, people with disabilities, veterans, and individuals with low income for over 22 years. At BeneLynk, we are committed to helping managed care plans deliver superior social care solutions to their members.