April 7, 2000  
Dear State Medicaid Director:  
Over the past few years, States have made enormous progress increasing access to health care 
coverage for low-income, working families. As a result of eligibility expansions, simplified 
enrollment procedures, and creative outreach campaigns, millions more low-income children and 
parents are eligible for health care coverage through Medicaid or through separate State Children's 
Health Insurance Programs (SCHIP). And yet, at the same time that States have made expansions 
of coverage a priority, instances in which eligible children and parents have lost out on coverage 
have come to light.  
The delinkage of Medicaid from cash assistance has made it possible for States to offer low-
income families health care coverage regardless of whether the family is receiving welfare, but it 
has created challenges as well as opportunities for States. Last August, President Clinton spoke to 
the National Governors' Association (NGA) about the importance of ensuring that everyone who 
is eligible for Medicaid is enrolled, and directed the Department of Health and Human Services 
(HHS) to take several actions to improve the health care available to low-income families.  
Today, I am writing to provide guidance and information that will build on our joint efforts to 
improve eligible, low-income families' ability to enroll and stay enrolled in Medicaid. We are 
concerned that some families who left the Temporary Assistance for Needy Families (TANF) 
program and who remain eligible for Medicaid or Transitional Medical Assistance (TMA) benefits 
may have lost coverage. In addition, it appears that some children who became ineligible for 
Supplemental Security Income (SSI) benefits due to a change in the SSI disability rules may not 
have been continued on Medicaid despite Congressionally mandated requirements.  
This letter covers three related topics. First, it outlines a series of actions that all States must take to 
identify individuals and families who have been terminated improperly and to reinstate them to 
Medicaid. Second, it clarifies guidance on Federal requirements relating to the process for 
redetermining Medicaid eligibility. Third, it reviews the obligations imposed by Federal law with 
regard to the operation of computerized eligibility systems. We have also enclosed a set of 
questions and answers to help States implement the guidance. We will continue to issue written 
answers to questions that arise and make those questions and answers available to States on an 
ongoing basis. Reinstatement for Improper Medicaid Terminations  
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Over the past several years, cash assistance rules have changed at both the Federal and State levels. 
As a result of these changes to promote work and responsibility, and a strengthened economy, 
many fewer families are receiving cash assistance. When eligibility for cash assistance and 
Medicaid were delinked, Congress and the Administration took specific actions to assure that 
Federal law continued to guarantee Medicaid eligibility for children and families who formerly 
qualified for Medicaid through their receipt of cash assistance.   These changes required a significant retooling of Medicaid eligibility rules and procedures at the 
State and local level. In some cases, it appears that necessary adjustments to State and/or local 
policies, systems and procedures have not been made.  
Several States have taken action to reinstate coverage for families and children who have been 
terminated improperly from Medicaid. Reinstatement is compelled by Federal regulations and prior 
court decisions. Under Federal regulation 42 CFR 435.930, States have a continuing obligation to 
provide Medicaid to all persons who have not been properly determined ineligible for Medicaid. 
This includes individuals whose Medicaid has been terminated through computer error or without a 
proper redetermination of eligibility. Therefore, all States must take steps to identify individuals 
who have been terminated improperly from Medicaid and reinstate them, as described below.  
Identifying Improper Actions  
A. Requirements for TANF-related terminations  
States must determine whether individuals and families lost Medicaid coverage when their TANF case was closed, 
or when their TMA coverage period ended without a proper notice or without a proper Medicaid redetermination, 
including an ex parte review consistent with previous guidance. For example, States should review whether their 
computer system improperly terminated Medicaid coverage when TANF benefits were terminated, and they should 
consider whether families whose TANF termination was due to earnings were evaluated with respect to ongoing 
Medicaid eligibility, including TMA. In addition, if a State did not implement its Section 1931 category until some 
time after its TANF program went into effect, the State must review Medicaid/TANF terminations that occurred 
before the State had an operative Section 1931 category.  
 
B. Requirements for terminations of disabled children eligible for Medicaid under Section 
4913 of the Balanced Budget Act of 1997  
Children who became ineligible for SSI due to the 1996 change in the SSI disability rules and then 
were terminated from Medicaid either without adequate consideration of their eligibility under 
Section 4913 of the BBA, or without a proper redetermination, including an ex parte review 
consistent with previous guidance, must be identified and reinstated. States must compare the 
Social Security Administration (SSA) list of children whose Medicaid eligibility was protected by 
Section 4913 and determine which, if any, of those children are not currently receiving Medicaid or 
are receiving Medicaid but are not  
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identified as a Section 4913 child. The Health Care Financing Administration (HCFA) and SSA 
will work with States to ensure that States have the information that they need to identify Section 
4913 children. The results of these cross-matches should be promptly reported to the HCFA 
Regional Office.  
 
C. Improper Denials of Eligibility   In some States, eligible individuals applying for both Medicaid and TANF may have been 
denied Medicaid improperly because eligibility determinations continued to be linked. While 
HCFA is not requiring States to identify and enroll these applicants, we encourage you to do 
so.  
 
Reinstatement  
If, after a State-wide examination of enrollment policies and practices, it appears that there have 
been improper terminations since their TANF plan went into effect, States must develop a 
timetable for reinstating coverage and conducting follow-up eligibility reviews as appropriate. 
Action to reinstate coverage should be taken as quickly as possible, and States should keep their 
HCFA regional office informed as they review their policies and practices and develop their 
plans. This guidance should not delay State actions to reinstate individuals that are already under 
way.  
Because it may not always be clear or easy for the State to determine whether a particular 
individual was terminated properly, States that determine that problems in policy or practice did 
cause individuals to lose Medicaid improperly may reinstate coverage without making a specific 
finding that an individual termination was in fact improper. Such action is consistent with Federal 
regulations that require that eligibility be determined in a manner consistent with simplicity of 
administration and the best interests of the applicant or recipient (42 CFR 435.902).  
Federal Financial Participation (FFP) will be available for up to 120 days of coverage after 
reinstatement, pending a redetermination of ongoing eligibility, regardless of the outcome of the 
redetermination process. States that have developed reinstatement procedures have typically 
reinstated individuals and families for a period of 60 or 90 days. Coverage provided during this 
time period will not be considered for any Medicaid Eligibility Quality Control (MEQC) 
purpose.  
If a State determines that there have been no instances of improper terminations, it should 
inform the Regional Office of the review undertaken and the basis for its conclusions. HCFA 
will provide assistance to States throughout this process.  
 
Contacting Individuals and Families  
States may have to reinstate individuals and families who have not been in contact with the 
Medicaid agency for some time, and should take all reasonable steps to identify the individual or 
family's current address. For example, States could check Food Stamp program records for a 
more up-to-date address and alert caseworkers to the list of affected individuals so that these 
individuals are identified if they  
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contact the agency for other reasons. Other outreach efforts might include notices to families 
receiving child care services and television and radio spots.    
Redetermining Eligibility Once Reinstatement is Accomplished  
In most situations, States will need to redetermine eligibility after reinstatement to assess whether 
the family or individual is currently eligible for Medicaid. To ensure that families understand the 
process and have adequate time to respond to requests for further information, States should allow a 
reasonable time for the review process. As noted above, FFP will be available for up to 120 days 
after reinstatement to allow States adequate time to review ongoing eligibility.  
Individuals and families whose most recent Medicaid eligibility determination or redetermination 
occurred less than 12 months before reinstatement may be continued on Medicaid until 12 months 
from the date of that last eligibility review, without any new redetermination of eligibility. In these 
situations FFP will not be limited to 120 days. Individuals and families who have earnings may be 
covered under TMA and therefore would be subject to the State's TMA reporting and review 
procedures.  
When States redetermine the eligibility of children identified by SSA as a Section 4913 child, the 
child does not lose protection under Section 4913 because of a prior break in eligibility. Continuous 
eligibility is not a requirement of Section 4913.  
 
Covering Services Provided Prior to Reinstatement  
Many of the individuals and families who were terminated improperly will have incurred medical 
expenses that would have been covered under Medicaid. States have the option to provide 
payment to providers and individuals for the cost of services covered under the State's Medicaid 
plan provided between the time the individual was terminated from Medicaid and reinstatement. 
FFP will be available to States that provide such retroactive payments, including direct payments 
by the State to individuals who had out-of-pocket costs for services that would have been covered 
by Medicaid had the individual not been terminated from the program. FFP in direct payments 
will be based on the full payment amount. FFP in payments to participating Medicaid providers 
will be at the Medicaid rate.  
 
Review of Federal Requirements for Eligibility Redeterminations  
Over the past few years, HCFA has issued guidance on the redetermination process (see letters 
issued February 6, 1997, April 22, 1997, November 13, 1997, June 5, 1998 and March 22, 1999). 
This guidance instructs States that individuals must not be terminated from Medicaid unless the 
State has affirmatively explored and exhausted all possible avenues to eligibility. It also outlines 
requirements for ex parte reviews. However, recent reports indicate that inadequate redetermination 
procedures have caused some eligible individuals and families to lose coverage, and some States 
have asked for more guidance in this area. As such, this letter restates and clarifies the previous 
guidance on (1) information that can be required at redeterminations; (2) ex parte reviews; and (3) 
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eligibility.  
 
Information Required at Redeterminations  
Pursuant to Federal regulations (42 CFR 435.902 and 435.916), States must limit the scope of 
redeterminations to information that is necessary to determine ongoing eligibility and that relates 
to circumstances that are subject to change, such as income and residency. States cannot require 
individuals to provide information that is not relevant to their ongoing eligibility, or that has 
already been provided with respect to an eligibility factor that is not subject to change, such as 
date of birth or United States citizenship.  
Questions about the proper scope of a redetermination also arise when an individual reports a 
change in circumstances before the next regularly scheduled redetermination. Federal regulations 
require a prompt redetermination in such cases, but States may limit their review to eligibility 
factors affected by the changed circumstances and wait until the next redetermination to consider 
other factors. For example, if a State generally conducts a redetermination every 12 months and a 
parent reports new earnings three months after the family's most recent redetermination, the State 
must assess whether the individuals in the family continue to be eligible for Medicaid in light of 
the new earnings. However, it may wait until the next regularly scheduled redetermination to 
consider other eligibility factors.  
 
Ex Parte Reviews  
States are required to conduct ex parte reviews of ongoing eligibility to the extent possible, as 
stated in HCFA's previous guidance. By relying on information available to the State Medicaid 
agency, States can avoid unnecessary and repetitive requests for information from families that can 
add to administrative burdens, make it difficult for individuals and families to retain coverage, and 
cause eligible individuals and families to lose coverage. States should use the following guidelines 
and enclosed questions and answers in conducting redeterminations.  
Program records. States must make all reasonable efforts to obtain relevant information from 
Medicaid files and other sources (subject to confidentiality requirements) in order to conduct ex 
parte reviews. States generally have ready access to Food Stamp and TANF records, wage and 
payment information, information from SSA through the SDX or BENDEX systems, or State child 
care or child support files.  
Family records. States must consider records in the individual's name as well as records of 
immediate family members who live with that individual if their names are known to the State. 
Again, this should be done in compliance with privacy laws and regulations.  
Accuracy of information. States must rely on information that is available and that the State 
considers to be accurate. Information that the State or Federal government currently relies on to 
provide benefits under other programs, such as TANF, Food Stamps or SSI, should be considered  accurate to the extent that those programs require regular redeterminations of eligibility and 
prompt reporting of changes in  
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circumstances. Even if benefits are no longer being provided under another program, information 
from that program should be relied on for purposes of Medicaid ex parte reviews as long as the 
information was obtained within the State's time period for conducting Medicaid 
redeterminations unless the State has reason to believe the information is no longer accurate.  
Timing of redetermination. States have the option to schedule the next Medicaid 
redetermination based on either the date of the ex parte review or the date of the last eligibility 
review by the program whose information the State relied on for the ex parte review. Since the 
date of the ex parte review will be the later of the two dates, States could reduce their 
administrative burden by scheduling the next redetermination based on the ex parte review date.  
Use of eligibility determinations in other programs. The responsibility for making Medicaid 
eligibility determinations is generally limited to the State Medicaid agency or the State agency 
administering the TANF program. However, the State may accept the determination of other 
programs about particular eligibility requirements and decide eligibility in light of all relevant 
eligibility requirements.  
Obtaining information from individuals. If ongoing eligibility cannot be established through ex 
parte review, or the ex parte review suggests that the individual may no longer be eligible for 
Medicaid, the State must provide the individual a reasonable opportunity to present additional or 
new information before issuing a notice of termination.  
 
Exhausting All Possible Avenues of Eligibility  
The Medicaid program has numerous and sometimes overlapping eligibility categories. For 
eligibility redeterminations, States must have systems and processes in place that explore and 
exhaust all possible avenues of eligibility. These systems and processes must first consider 
whether the individual continues to be eligible under the current category of eligibility and, in the 
case of a negative finding, explore eligibility under other possible eligibility categories.  
The extent to which and the manner in which other possible categories must be explored will 
depend on the circumstances of the case and the information available to the State. If the ex parte 
review does not suggest eligibility under another category, the State must provide the individual a 
reasonable opportunity to provide information to establish continued eligibility. As part of this 
process, the State will need to explain the potential bases for Medicaid eligibility (such as disability 
or pregnancy).  
In addition, in States with separate SCHIP programs, children who become ineligible for 
Medicaid are likely to be eligible for coverage in SCHIP. States should develop systems for 
ensuring that these children are evaluated and enrolled in SCHIP, as appropriate. As is consistent  with the statutory requirements, States must coordinate Medicaid and SCHIP coverage.  
Computerized Eligibility Systems  
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Changes in eligibility rules affecting cash assistance and Medicaid have required States with 
computerized eligibility systems to modify their computer-based systems. If a State has not 
modified its system properly, some applicants may be erroneously denied enrollment in Medicaid. 
In addition, some beneficiaries may lose coverage even though they still may be eligible.  
States have an obligation under Federal law to ensure that their computer systems are not 
improperly denying enrollment in, or terminating persons from, Medicaid. The attached 
questions and answers explain this obligation and present some practical suggestions on how 
States might meet their responsibilities under the law.  
 
Conclusion  
Most States are addressing the challenges associated with changing eligibility rules and systems, and 
many have developed promising new strategies for ensuring that children and families who are not 
receiving cash assistance are properly evaluated for Medicaid. HCFA will work with States as they assess 
the need for reinstatement, provide technical assistance to States implementing reinstatements, and 
facilitate exchanges among States to promote best practices to improve and streamline redetermination 
procedures. We anticipate that there will be many questions about the reinstatement process and the 
redetermination guidelines. We will make every effort to address your questions promptly, and to post and 
maintain a set of questions and answers on HCFA's website so that all States will be aware of how 
particular situations should be handled.  
As important as it is to correct problems that have led eligible children and families to lose coverage, it is 
equally important that we improve eligibility redetermination processes and computer systems to prevent 
problems in the future. We are committed to working with you to implement this guidance to help achieve 
our mutual goal of an efficient, effective Medicaid program that helps all eligible families. If you have any 
questions concerning this letter, please contact your regional office.  
Sincerely,  
/s/  
Timothy M. Westmoreland 
Director  
Attachment  
cc: All HCFA Regional Administrators All HCFA Associate Regional Administrators For Medicaid and 
State Operations Lee Partridge - Director, Health Policy Unit, American Public Human Services  Association  
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Joy Wilson - Director, Health Committee, National Conference of State Legislatures Matt Salo - Director 
of Health Legislation, National Governors' Association Director  
 
 
QUESTIONS AND ANSWERS  
Redeterminations  
Q. When should a State rely on information available through other program records?  
A. States must rely on all information that is reasonably available and that the State considers to 
be accurate. Information that the State or Federal government is relying on to provide benefits 
under other programs, such as TANF, Food Stamps or SSI, should be considered accurate to the 
extent that those programs require regular redeterminations of eligibility and prompt reporting of 
changes in circumstances. For example, in the Food Stamp program, Federal law requires States 
to recertify eligibility on a regular basis, and individuals receiving food stamps are required to 
report promptly any change in their circumstances that would affect eligibility. Thus, information 
in Food Stamp files of individuals currently receiving food stamp benefits should be considered 
accurate for purposes of Medicaid ex parte reviews.  
Q. If benefits are no longer being paid under another program, can information from 
that program be relied on for purposes of Medicaid ex parte reviews?  
A. It can be relied on if the information was obtained within the time period established by the 
State for conducting Medicaid redeterminations unless the State has reason to believe the 
information is no longer accurate. For example, take the case of a State that normally schedules 
Medicaid redeterminations every 12 months. If a child was determined financially eligible for SSI 
in January, 2000 and then loses SSI on disability-related grounds in March, 2000, the SSA financial 
information should still be considered accurate when the State redetermines Medicaid eligibility in 
March, 2000.  
Q. When can the State schedule the next Medicaid redetermination if it relies on information 
from another program for its ex parte review?  
A. The State may schedule the next Medicaid redetermination based on the date of the ex parte 
review or the date when the last review of eligibility was conducted in the other program. For 
example, consider a State that normally schedules Medicaid redeterminations every six months and 
that determines, based on a Medicaid ex parte review in March, that the family continues to be  eligible for Medicaid. If the ex parte review relies on Food Stamp program information, and the last 
Food Stamp review took place in January, the State may wait until September (six months from 
March) to schedule its next Medicaid redetermination review, or it may schedule the next 
redetermination in June (six months after the last  
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Food Stamp recertification).  
Q. When can Medicaid accept another program's eligibility requirement determination?  
A. When an eligibility requirement under another program applies equally to the Medicaid 
program, the State may accept the other program's determination with respect to this particular 
eligibility requirement. For example, if the resource standard and method for determining countable 
assets under the State's TANF program were the same or more restrictive than the asset rules in the 
Medicaid program, the Medicaid agency may accept TANF agency's determination that a family's 
assets fall below the Medicaid asset standard without any further assessment on it own part 
regarding this requirement. The Medicaid agency would then proceed to make a final determination 
of eligibility in light of all relevant eligibility requirements.  
Q. When an individual reports a change in circumstances before the next regularly 
scheduled redetermination, must the State conduct a full redetermination at that time?  
A. No. The State may limit this redetermination to those eligibility factors that are affected by the 
changed circumstances and wait until the next regularly scheduled redetermination to consider 
other eligibility factors. For example, if a State generally conducts a redetermination every 12 
months and a parent reports new earnings three months after the family's most recent 
redetermination, the State must assess whether the individuals in the family continue to be 
eligible for Medicaid in light of the new earnings. However, it may wait until the next regularly 
scheduled redetermination to consider other eligibility factors.  
Whether the State conducts a full or limited redetermination when an individual reports a 
change in circumstance, Federal regulations require that the redetermination must be done 
promptly.  
Q. How must the State proceed to consider all possible avenues of eligibility before 
terminating (or denying) eligibility?  
A. The systems and processes used by the State must first consider whether the individual 
continues to be eligible under the current category of eligibility and, if not, explore eligibility 
under other possible categories. The extent to which and manner in which other possible 
categories must be explored will depend on the circumstances of the case and the information 
available to the State.  
For example, if the State has information in its Medicaid files (or other available program files) 
suggesting an individual is no longer eligible under the poverty-level category but potentially may  be eligible on some other basis (e.g., under the disability or pregnancy category), the State should 
consider eligibility under that category on an ex parte basis. If the ex parte review does not suggest 
eligibility under another category, the State must provide the individual a reasonable opportunity 
to provide information to establish continued eligibility. As part of this process, the State will need 
to explain the potential bases for Medicaid eligibility (such as disability or pregnancy).  
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Q. If a State has determined that an individual is no longer eligible under the original 
category of coverage, does the State have the option to terminate coverage and advise the 
individual that he or she may be eligible under other categories and could reapply for 
Medicaid?  
A. No. States must affirmatively explore all categories of eligibility before it acts to terminate 
Medicaid coverage.  
Q. Does this requirement to explore all categories of coverage apply to Transitional Medical 
Assistance? When the TMA period is over, can the State terminate coverage and advise the 
family to reapply for Medicaid?  
A. No. TMA is like any other Medicaid eligibility category. Eligibility under other categories 
of coverage must be explored before coverage is terminated. In light of expansions in 
coverage, particularly for children, many children in families receiving TMA will continue to 
be eligible under other eligibility categories.  
Computer Systems  
Q. My State's computer system may be erroneously terminating Medicaid coverage when 
families leave cash assistance. Because of Y2K, programming on a number of priorities has 
been backed up. The delinking reprogramming is scheduled to take place this fall. Is this an 
acceptable corrective action?  
A. No. HCFA recognizes that Y2K delayed other priorities, and we know that it takes time to 
make computer changes. However, States have an obligation to move expeditiously to correct 
computer programming problems that are leading to erroneous Medicaid denials and 
terminations. HCFA will be working with States to correct computer problems and will provide 
whatever assistance we can to help resolve the problem.  
In the meantime, no person should be denied Medicaid inappropriately due to computer error, and 
no person should have his/her Medicaid coverage terminated erroneously due to computer error. 
Once a problem with a State's computerized eligibility system has been identified, the State must 
take immediate action to correct the problem. If programming changes cannot be made 
immediately, an interim system to override computer errors must be put in place to ensure that 
eligible individuals are not denied or losing Medicaid.  
HCFA will review State procedures and State plans to adopt new procedures as follow-up  to the Medicaid/TANF State reviews.  
Q. Have other States experienced these problems? How have they corrected the problems?  
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A. Each State's issues and processes are unique. The measures that will be effective to remedy 
computer-based problems will vary from State to State. There are a number of ways States can 
address these issues:  
Correct the Computer Error -The most direct way to remedy the problem is by 
making the necessary changes to the computer system. This should occur 
expeditiously.  
Implement an Effective Back-Up System to Prevent Erroneous Actions-While corrections to 
the computer system are being made, States must ensure that erroneous actions do not occur. 
States that have identified computer-based problems in their systems have adopted different 
approaches; four different approaches are described below. In each case, the State adopted a 
formal and systematic approach to correcting computer-based errors. A simple instruction to 
workers to override or work around computer errors is insufficient to ensure that erroneous 
denials and terminations will not occur.  
Supervisory review -To stop erroneous terminations from occurring due to Medicaid/TANF 
delinking problems, Pennsylvania required supervisors to review all TANF case closures before 
any Medicaid termination could proceed. Having trained supervisors review terminations (and 
denials) can prevent wrongful terminations (and denials) from occurring.  
Centralized review -Maryland instituted a system in which local supervisors and a State-
level task force review all Medicaid denials and terminations that coincide with a TANF 
denial or termination. This system has been instrumental in ensuring that thousands of eligible 
families were not denied or terminated from Medicaid while computer fixes were finalized.  
"Peremptory" reinstatement -The State of Washington devised a system in which cases to be 
terminated were given a next-day audit by caseworkers and managers. Cases that continue to be 
eligible for Medicaid are reinstated' before the case is scheduled to be closed.  
Interim hold on case actions -A short-term moratorium on Medicaid case closings based on 
certain computer codes pending implementation of other solutions might be an option for some 
States. Medicaid case closings could be held as long as Federal requirements on the frequency of 
redeterminations are met. Q. Are there any actions that States must take before they alter their 
computer systems?  
A. Yes. In general, prior authorization from HCFA must be obtained in order for a State to  receive federal matching funds for changes it makes to its computer systems. HCFA will work 
with States and provide technical assistance as early in the planning process as possible in an 
effort to help States accomplish their objective.  
Q. Is there additional funding available to help with the changes in the computer system?  
A. Yes. Per our letter of January 6, 2000 concerning the $500 million federal fund established in 
1996,  
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there is federal funding available for computer modifications related to delinking. We encourage 
you to review that letter and the amount your State has available from the enhanced matching funds 
to make changes needed as a result of the enactment of Section 1931 (the delinking provision). 
MMIS enhanced funding may also be available for some MMIS changes; please consult with your 
regional office.  
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