Medicaid: States Reported That Citizenship Documentation Requirement Resulted in Enrollment Declines for Eligible Citizens and Posed Administrative Burdens
Published: 2007-06-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Deficit Reduction Act of 2005 (DRA) included a provision that requires states to obtain documentary evidence of U.S. citizenship or nationality when determining eligibility of Medicaid applicants and current beneficiaries; self-attestation of citizenship and nationality is no longer acceptable. The Centers for Medicare & Medicaid Services (CMS) issued regulations states must follow in obtaining this documentation. Interested parties have raised concerns that efforts to comply with the requirement will cause eligible citizens to lose access to Medicaid coverage and will be costly for states to implement. GAO was asked to examine how the requirement has affected individuals' access to Medicaid benefits and assess the administrative and fiscal effects of implementing the requirement. To do this work, GAO surveyed state Medicaid offices in the 50 states and the District of Columbia about their perspectives on access issues and the administrative and fiscal effects of the requirement. GAO obtained complete responses from 44 states representing 71 percent of national Medicaid enrollment in fiscal year 2004. GAO also reviewed federal laws, regulations, and CMS guidance.
section_title: What GAO Found
paragraphs: States reported that the citizenship documentation requirement resulted in barriers to access to Medicaid for some eligible citizens. Twenty-two of the 44 states reported declines in Medicaid enrollment due to the requirement, and a majority of these states attributed the declines to delays in or losses of Medicaid coverage for individuals who appeared to be eligible citizens. Of the remaining states, 12 reported that the requirement had no effect and 10 reported they did not know the requirement's effect on enrollment. Not all of the 22 states reporting declines could quantify enrollment declines due specifically to the requirement, but a state that had begun tracking the effect identified 18,000 individuals in the 7 months after implementation whose applications were denied or coverage was terminated for inability to provide the necessary documentation, though the state believed most of them to be eligible citizens. Further, states reporting a decline in enrollment varied in their impressions about the requirement's effect on enrollment after the first year of implementation. States' enrollment policies and whether an individual was an applicant or a beneficiary may have influenced the requirement's effect on access to Medicaid. For example, states that relied primarily on mail-in applications before the requirement were more likely to report declines in enrollment than states where individuals usually applied in person. In addition, the requirement may have more adversely affected applicants than beneficiaries because applicants were given less time to comply in some states and were not eligible for Medicaid benefits until they documented their citizenship. Although states reported investing resources to implement the requirement, potential fiscal benefits for the federal government and states are uncertain. All 44 states reported taking administrative measures to implement the requirement and assist individuals with compliance. In addition, 10 states reported that a total of $28 million was appropriated in state fiscal year 2007, and 15 states budgeted funds for implementation costs in state fiscal year 2008. Despite these measures, states reported that the requirement has increased the level of assistance needed by individuals and amount of time spent by states during the enrollment process. States specified two aspects of the requirement as increasing the burden for them and for individuals: that documents had to be originals and the list of acceptable documents was complex and did not allow for exceptions. Further, although CMS estimated the requirement would result in savings for the federal government and states of $90 million for fiscal year 2008, states' responses indicated that this estimate may be overstated for two reasons. Specifically, CMS did not account for the increased administrative expenditures reported by states, and the agency's estimated savings from ineligible, noncitizens no longer receiving benefits may be less than anticipated. In commenting on a draft of the report, CMS raised concerns about the conclusions drawn from the survey responses as to the requirement's effect on access, mainly that states did not submit data to support their responses.

section_title: Letter
paragraphs: In recent years, states have focused on efforts to streamline and simplify  the application and eligibility determination processes for Medicaid, the  joint federal-state health care financing program that in fiscal year 2004  covered nearly 60 million low-income individuals, including children,  families, and individuals who are elderly or disabled. For example, many  states have made application and enrollment processes more accessible  through mail-in applications. Some states have also simplified application  processes by minimizing documentation requirements, permitting self- declaration of income, and automating systems. These streamlined  processes were part of an effort to increase enrollment of eligible  individuals in the program.
The Deficit Reduction Act of 2005 (DRA), which was enacted on   February 8, 2006, contains many changes to Medicaid requirements, at  least one of which affects states’ abilities to streamline certain program  operations. Specifically, in addition to changes related to benefits, cost- sharing, provider payment, and program integrity, the DRA includes a  provision that requires states to obtain satisfactory documentary evidence  of U.S. citizenship or nationality for nearly 40 million nonexempt  Medicaid beneficiaries within 1 year of the provision’s July 1, 2006,  effective date, as well as for new applicants to the program, who  constitute an estimated 10 million individuals annually. While U.S.  citizenship or satisfactory immigration status has long been a requirement  for Medicaid eligibility, individuals in most states could previously attest,  under penalty of perjury, to their citizenship status in writing. Self- attestation of citizenship is no longer acceptable. Instead, the DRA  requires that states implement an effective process for documenting  citizenship in order to obtain federal Medicaid matching funds. Although  the DRA did not provide any additional federal funds for costs associated  with complying with this requirement, states may seek federal matching  funds for such administrative expenditures. In implementing the DRA  provision, the Centers for Medicare & Medicaid Services (CMS) issued an  interim final rule that outlines a prescriptive process states must follow to  obtain satisfactory documentation of citizenship for Medicaid applicants  and existing beneficiaries and identifies a list of acceptable  documentation. Five months after the DRA provision took effect, the Tax  Relief and Health Care Act of 2006 was enacted, which exempted  additional populations from documenting citizenship, such as children in  foster care.
Interested parties, including states and advocacy organizations, have  raised concerns about the requirement, such as stating that the need for  the requirement had not been established, that efforts to comply with the  requirement will result in eligible citizens losing access to Medicaid  coverage, and that it will be costly for states and individuals. You asked us  to evaluate the effect of the requirement on eligible individuals’ access to  the Medicaid program and the administrative and fiscal burden the  requirement imposed on individuals, states, and the federal government.  For this report, we (1) examined how the requirement has affected  individuals’ access to Medicaid benefits and (2) assessed the  administrative and fiscal effects of implementing the requirement.
To conduct our work, we surveyed state Medicaid offices in the 50 states  and the District of Columbia about the effects of the requirement and  obtained responses from 96 percent of them (49 of 51). Of the 49  responses, 1 state’s response was largely incomplete and 4 states reported  they had not implemented the requirement as of January 2007, so we  excluded those 5 states from our analysis, leaving 44 usable responses.  States submitted responses in March and April 2007. With regard to the  effects on individuals’ access to Medicaid benefits, we asked states for  their perspectives about (1) changes in enrollment as a result of the  requirement, (2) the reasons for any enrollment declines, (3) the groups  most affected, and (4) expectations of how long reported changes would  continue. We also asked about state policies regarding the amount of time  states allow individuals to comply with the requirement before denying  coverage or terminating enrollment. With regard to the administrative and  fiscal effects of the requirement, we asked states about (1) measures taken  to implement the requirement and assist individuals with compliance,   (2) changes in the number of individuals needing assistance during the  eligibility determination process and the amount of time necessary for  states to make eligibility determinations after implementing the  requirement, (3) the average number of pending and completed eligibility  determinations before and after implementing the requirement, (4) the  challenges they and individuals faced in meeting the requirement, and   (5) the budget implications of the requirement in state fiscal years 2007  through 2010. We did not independently validate the trends or the data  states provided. The results of our survey represent only the views of the  44 state Medicaid offices that completed it.
In assessing the administrative and fiscal effects of the requirement, we  also reviewed federal laws, regulations, and CMS guidance to states  related to the requirement, and compared the requirement with citizenship  documentation requirements applied by other federal agencies, including  the Social Security Administration (SSA). In addition, we interviewed CMS  officials regarding certain aspects of the requirement. We also obtained  CMS’s estimates of the administrative and fiscal effects of the requirement  on states and the federal government. We performed our work from  November 2006 through June 2007 in accordance with generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: Medicaid programs generally represent an open-ended entitlement under  which the federal government is obligated to pay its share of expenditures  for covered services provided to eligible individuals under each state’s  federally approved Medicaid plan. Under federal Medicaid law, to qualify  for Medicaid coverage, individuals generally must fall within certain  eligibility categories—such as children, pregnant women, adults in  families with dependent children, and those who are aged or disabled— and meet financial eligibility criteria. In addition, since 1986, federal law  has required that, as a condition of Medicaid eligibility, individuals declare  under penalty of perjury that they are citizens or nationals of the United  States or in satisfactory immigration status. Eligibility is determined at  the time of application, and for individuals enrolled in the program, at a  regular basis referred to as redetermination.
States differ in how they determine eligibility for Medicaid, and many took  steps before 2006 to streamline their enrollment processes. While some  states conduct all eligibility screening and determinations within the  state’s Medicaid agency, other states contract with different state  agencies, counties, or other local governmental entities to conduct or  assist with eligibility determinations. In some cases, states also utilize  community-based organizations to assist with outreach and education in  their Medicaid programs. Over the past decade, states have also made  efforts to simplify the application process to make Medicaid programs  more accessible to eligible families. As part of these efforts, many states  implemented mail-in applications and ended requirements for face-to-face  interviews. States also began coordinating Medicaid eligibility  determinations with other public programs, such as school lunch  programs and Temporary Assistance for Needy Families.
Enacted in February 2006, the DRA includes a number of new  requirements for state Medicaid programs. Most relevant to this report, as  of July 1, 2006, the DRA required states to document citizenship of  applicants and beneficiaries as a condition of receiving federal matching  funds for their Medicaid expenditures. Under this provision, Medicaid  applicants and beneficiaries who are undergoing redeterminations of  eligibility must provide “satisfactory documentary evidence” of  citizenship. Documenting citizenship is a onetime event completed by  individuals either at application or, for those already enrolled, at their first  redetermination of eligibility. (Fig. 1 illustrates the sequence of key events  regarding the requirement from enactment of the DRA through February  2007.)
The DRA explicitly exempts certain individuals from having to document  citizenship, specifically those entitled to or enrolled in Medicare, certain  individuals receiving Supplemental Security Income, and any additional  populations as designated by the Secretary of HHS. In December 2006,  Congress expanded the list of populations that are exempt, adding  individuals receiving Social Security disability insurance benefits and  children in foster care or children who are receiving adoption or foster  care assistance.
In implementing the DRA provision, CMS first provided guidance to states  in a June 2006 letter to state Medicaid directors and subsequently  published an interim final rule on July 12, 2006, almost 2 weeks after the  DRA provision went into effect. In the interim final rule, CMS expanded  upon the list of acceptable documents identified in the DRA and published  regulations that grouped the documents by level of reliability, creating a  hierarchy in the list and restricting the use of less reliable documents.
As required under the DRA, certain documents, such as U.S. passports, are  considered sufficient evidence of citizenship. The DRA requires that if an  individual does not have one of these primary documents, the individual  must produce specific types of documentation establishing citizenship,  such as a U.S. birth certificate, as well as documentation establishing  personal identity. The regulations published by CMS similarly identify  primary, or tier 1, documents to establish citizenship. Under the  regulations, if individuals do not have primary evidence, they are expected  to produce secondary, or tier 2, evidence of citizenship, such as a military  record showing a U.S. place of birth, as well as evidence of identity, such  as a state-issued driver’s license. If neither primary nor secondary  evidence of citizenship is available, individuals may provide third tier  evidence of citizenship to accompany evidence of identity. If primary  evidence of citizenship is unavailable, secondary and third tier evidence do  not exist or cannot be obtained in a reasonable time period, and the  individual was born in the United States, then the individual may provide  fourth tier evidence of citizenship, along with evidence of identity. (See  table 1 and app. I.)
In addition to prescribing a list of acceptable documents for verifying  citizenship, the regulations issued by CMS specify, with one exception,  that documents must be originals or copies certified by the issuing agency.  The exception is that for a U.S. birth certificate, which is a tier 2  document, states may use a cross match with a state vital statistics agency  to document a birth record. The regulations allow states to accept original  documentation from individuals in person or through the mail.
Under the regulations issued by CMS, states must provide applicants and  Medicaid beneficiaries a “reasonable opportunity” to document their  citizenship before denying or terminating Medicaid eligibility. States have  flexibility in defining the length of the reasonable opportunity period. The  regulations further explain that current Medicaid beneficiaries must  remain eligible for benefits during this period but that states may  terminate eligibility afterward if they determine that the beneficiary has  not made a good faith effort to present documentation. In contrast,  applicants are not eligible for Medicaid coverage until they submit the  required documentation. The regulations also require states to assist  individuals who are physically or mentally incapable of obtaining  documentation and do not have a representative to assist them. However,  the regulations do not specify criteria for determining who is capable or  the level of assistance states should provide. CMS intends to monitor state  implementation of the requirement, including the extent to which states  use the most reliable evidence available to establish citizenship based on  its hierarchy. States that do not comply with the regulations may face  either denied or deferred payment of federal matching funds.
In the interim final rule, CMS assessed potential administrative and fiscal  effects of the requirement. For example, CMS estimated that individuals  would need, on average, 10 minutes to acquire and provide the state with  acceptable documentary evidence and that states would need 5 minutes  per individual to verify citizenship and maintain current records. In  addition, CMS determined that implementing the rule would have no  consequential effect on costs for state, local, or tribal governments or the  private sector. Under the rule, states may seek federal Medicaid matching  funds for administrative expenditures associated with implementing the  requirement at a 50 percent federal matching rate.
section_title: Many States Reported That the Requirement Resulted in Delayed or Lost Medicaid Coverage for Some Individuals Who Appeared to Be Eligible
paragraphs: States reported that the requirement resulted in barriers to access, such as  delayed or lost Medicaid coverage for some eligible individuals. Of the 44  states, 22 reported a decline in Medicaid enrollment due to the  requirement. Most that reported a decline in enrollment attributed it to  delays in or losses of coverage for individuals who appeared to be eligible  citizens, and all states reporting a decline reported that children were  affected by the requirement. States that reported a decline in enrollment  varied in their views of the effects on access to Medicaid coverage after  the first year of implementation. State enrollment policies and whether an  individual is an applicant or a beneficiary at redetermination are two  factors that may have influenced the effect of the requirement on  individuals’ access.
subsections: section_title: States Reported Enrollment Declines Largely Driven by Delays in or Losses of Medicaid Coverage for Eligible Citizens
paragraphs: Half the states that reported implementing the requirement noted that the  requirement resulted in declines in Medicaid enrollment. Of the 44 states,  22 states reported a decline in enrollment due to implementing the  requirement, 12 reported no change in enrollment as a result of the  requirement, and 10 reported that they did not know the effect of the  requirement on enrollment (see fig. 1). Of the 22 states that reported a  decline in enrollment due to the requirement, all responded that children  were affected by the requirement, and 21 reported that adults were  affected, with 2 specifying pregnant women. A few also responded that the  aged and blind and disabled were also affected.
Though states often cited a combination of reasons for the decline in  Medicaid enrollment, when asked the primary reason, the majority of  states (12 of 22) reported that enrollment declined because applicants who  appeared to be eligible citizens experienced delays in receiving coverage.  In addition, 5 of the 22 states identified the primary reason for the  enrollment decline as current beneficiaries losing coverage, with 4 of the   5 states reporting that those individuals appeared eligible. Two states  reported that declines were largely driven by denials in coverage for  individuals who did not prove their citizenship. It was unclear from survey  results, however, whether these individuals were determined ineligible  because they were not citizens or simply because they did not provide the  required documents within the time frames allowed by the state. (See   fig. 3.) Two of the remaining 3 states reported that the primary reason for  the decline was that individuals were discouraged from applying because  of the requirement or were not responding to states’ requests for  documentation of citizenship.
The extent of the decline in Medicaid enrollment due to the requirement in  some individual states or nationally was unknown because not all states  track the effect of the requirement on enrollment. However, 1 state that  had begun tracking the effect reported (1) denying an average of   15.6 percent of its monthly applications because of insufficient citizenship  documentation in the first 7 months following implementation and   (2) terminating eligibility for an average of 3.2 percent of beneficiaries at  redetermination per month over the same period and for the same reason.  Overall, these denials and terminations represented over 18,000  individuals, who the state generally believed were eligible citizens. While  not tracking the effect of the requirement on enrollment explicitly, 10  other states that attributed enrollment declines at least in part to  applicants who were delayed or denied coverage also reported increases  in monthly denials ranging from 1 to 14 percent after implementing the  requirement.
States reporting a decline in Medicaid enrollment differed in their views of  the effects of the requirement on enrollment after the first year of  implementation. Of the 22 states that reported a decline in enrollment, 17  states responded that they expected the downward enrollment trend to  continue. Five of these states indicated that the declines would level off  within approximately 1 year of implementation, citing, for example, a  drop-off in terminations once their current beneficiaries have successfully  documented their citizenship. Ten of the 17 states reported that they were  unsure how long enrollment declines would continue or generally  expected the trend to continue indefinitely. A few of these states noted  concern about the ongoing effect on new applicants who will be unfamiliar  with the requirement and may be denied enrollment or discouraged from  applying. The remaining 5 of 22 states reported that they did not expect  the decline to continue.
section_title: State Enrollment Policies and Individuals’ Enrollment Status May Have Influenced Effect of Requirement on Access to Medicaid
paragraphs: Variation in the effects of the requirement on individuals’ access may have  resulted from different state enrollment policies. For example, states that  reported a previous reliance on mail-in applications and redeterminations  were more likely to report a decline in Medicaid enrollment. About two- thirds of the 22 states that reported a decline in enrollment indicated that  individuals most commonly applied by mail before the requirement was  implemented. In contrast, the majority of the 12 states that reported no  change in enrollment reported that individuals most frequently applied in  person before the requirement was implemented. In addition, prior to  implementation, 6 states had documentation policies in place that were  similar to the requirement. Three of these 6 states reported no change in  enrollment, with 1 explaining that it was because the state already  required (1) proof of birth to verify age and family relationship and   (2) proof of identity for adults. Two of the 6 states reported a decline in  enrollment caused by the requirement.
Another enrollment policy that may have influenced the requirement’s  effect on access to Medicaid coverage was the amount of time states  allowed individuals to comply with the requirement—otherwise known as  reasonable opportunity periods. In total, 33 states reported the number of  days they allowed applicants and beneficiaries to meet the requirement  before denying applications or terminating eligibility, with limits generally  ranging from 10 days to 1 year. Nine of the 33 states reported allowing  applicants 30 days or less, and 4 of these states also reported a decline in  enrollment due to the requirement. A few states reported allowing  applicants and beneficiaries an indefinite amount of time to obtain and  submit the necessary documentation, provided they were deemed as  making a good faith effort. Some states’ written policies indicated that the  reasonable opportunity period could be extended, provided the individual  notified the state that he or she was making a good faith effort to obtain  the documentation but needed more time.
The effect of the requirement on access may have also depended on  whether the individual was a new applicant or a beneficiary at  redetermination. Applicants who declare themselves citizens are not  eligible for Medicaid coverage until they submit the required  documentation, while beneficiaries at redetermination maintain their  eligibility while collecting documents as long as they are within the  reasonable opportunity period allowed by the state or deemed as making a  good faith effort to comply with the requirement. For example, a pregnant  woman at redetermination is eligible to have her 20-week ultrasound  covered by Medicaid, even though she has not yet submitted her  documentation to the state. In contrast, a pregnant woman who is a new  Medicaid applicant would not be determined eligible for coverage until she  submits her documentation (see fig. 4). In addition, applicants who were  born out of state may have faced additional delays while attempting to  obtain documentation from their birth state. For example, one state noted  that it could take 6 months or more to obtain a birth certificate from  another state.
In addition, applicants in some states were given less time than  beneficiaries to meet the requirement. Of the 33 states that provided  information on their reasonable opportunity periods, 13 states reported  that the time allowed for providing documentation was longer for  beneficiaries at redetermination than for applicants, with this difference  ranging from 24 to 320 days. Five of the 13 states reported allowing   45 days for applicants and 300 days or more for beneficiaries. States may  offer more flexibility to Medicaid beneficiaries as CMS officials told us  that for these individuals the state cannot terminate benefits without  documenting that the beneficiary has not made a good faith effort to  provide the necessary documentation.
section_title: States Reported Investing Resources to Implement Requirement, with Fiscal Benefits Uncertain
paragraphs: Although states reported investing resources to implement the  requirement, potential fiscal benefits for the federal government and states  are uncertain. To implement the requirement and assist individuals with  compliance, all of the 44 states took a number of administrative measures,  such as providing additional training for eligibility workers and hiring  additional staff, and some also reported committing financial resources.  Despite these measures, however, states reported that as a result of the  requirement, individuals needed more assistance in person and it was  taking the state longer on average to complete applications and  redeterminations. According to states, two particular aspects of the  requirement increased the burden of implementing it: (1) that documents  must be originals and (2) the list of acceptable documents was complex  and did not allow for exceptions. While CMS estimated federal and state  savings from the requirement, the estimates may be overstated.
subsections: section_title: State Resources Invested to Implement the Requirement and Assist Individuals with Compliance
paragraphs: All 44 states reported taking a number of administrative measures to  implement the requirement and assist individuals with compliance.  Measures most frequently taken by states included training eligibility  workers, revising application and redetermination forms, conducting vital  statistics data matches, and modifying information technology systems.  For example, 1 state reported that in addition to training 18,000 staff on  the requirement, it also provided training and information to community  agencies, consumer advocates, and providers on how to assist individuals  with compliance. Another state established data matches with Indian  Health Services to obtain hospital records that met the requirement and  built a Web site on which eligibility workers could search the state’s vital  records to document citizenship. To supplement the efforts of eligibility  workers, 3 states reported having formed special units of staff focused  entirely on assisting individuals to meet the requirement, particularly in  difficult cases where eligibility workers had been unsuccessful in their  attempts to help individuals comply. One of those states reported that it  was in the process of expanding the size of its team from 22 workers to 40  workers. Table 2 lists the administrative measures frequently reported by  states.
Beyond these administrative measures, 40 percent of the 44 states  reported having appropriated funds for implementation or planned to do  so in future years. Specifically, 12 states reported that funds were  appropriated in their state fiscal year 2007 to implement the requirement,  which for the 10 states that specified the amount totaled over $28 million,  with appropriations ranging from $350,000 to $10 million in individual  states. Further, 15 states budgeted funds for implementation costs in  state fiscal year 2008. While many states did not specifically appropriate  funds toward implementing the requirement in state fiscal year 2007, this  may have been due, in part, to the timing of the requirement within the  budget year. States may not be budgeting funds for future years for various  reasons, including that the burden of the requirement may decrease after  the first year of implementation or that the state may face other budget  constraints. For example, one state Medicaid office that reported a  significant backlog in applications and redeterminations as a result of the  requirement requested funds for implementation in state fiscal year 2008  and planned to renew those requests in state fiscal years 2009 and 2010,  but was not sure whether the state legislature would appropriate the  funds.
section_title: Two Aspects of the Requirement Increased the Burden of Implementation
paragraphs: Despite investments of resources, most states reported that the  requirement resulted in the state spending more time completing  applications and redeterminations and individuals needing more  assistance in person during the process. Of the 44 states, 28 states  reported increases in the level of assistance provided to clients in person,  and 35 states reported an increase in the amount of time it took the state  to complete applications and redeterminations. (See fig. 5.) States  reporting no change in the level of in-person assistance or time spent  completing applications and redeterminations since implementation were  frequently states where individuals primarily applied for and renewed  Medicaid enrollment in person prior to the requirement.
Of the 35 states that reported increases in enrollment processing time,  most reported that the requirement added 5 or more minutes per case to  the processing time for applications and redeterminations. While only 1 of  the 35 states expected an increase of less than 5 minutes per case, 9 states  estimated an additional 5 to 15 minutes per case, and 16 states expected  the requirement to add over 15 minutes of processing time per application  or redetermination, well above the 5 minutes estimated by CMS in the  interim final rule. One of these 16 states reported processing an average  of over 150,000 applications per month in the 8 months following  implementation. In that state, assuming an increase in processing time of a  minimum of 16 minutes per application since implementing the  requirement, this would have added at least 40,000 hours of staff time per  month. Other states emphasized that the effect of the requirement on  workload goes beyond the amount of time necessary to complete  applications and redeterminations. For example, one state reported a   60 percent increase in phone calls (from 24,000 to 39,000 per month), a  tenfold increase in voice messages (from 1,200 to 11,000 per month), and  an 11 percent increase in the amount of time spent on each call.
Though the requirement represented a change in enrollment procedures  for most states, states reported that certain aspects of the requirement  specified under federal regulations by CMS increased their  implementation burden. More than 80 percent of states (36 of 44) reported  facing administrative challenges in implementing the requirement, and  many attributed the challenges to two specific aspects of the requirement  outlined in the regulations, namely (1) that documents must be originals  and (2) that the list of acceptable documentation was complex and did not  allow for exceptions. In fact, nearly all states (42 of the 44) reported that  having to provide original documentation posed a barrier to eligible  citizens’ meeting the requirement. Further, many states also reported that  mandating originals affected state workload primarily because individuals  did not feel comfortable mailing the documents to the state and instead  began presenting them in person. With regard to the list of acceptable  documents, states reported that the list was complex, often confusing both  individuals and eligibility workers, and left states with no discretion to  allow exceptions. For example, 1 state that documented citizenship for  Medicaid prior to enactment of the DRA noted that when acceptable  documentation was not available, the state made an assessment based on  a preponderance of evidence, which included certain tribal documents  excluded from CMS’s list. Thirty-four states reported that an individual’s  inability to provide documents other than those defined under federal  regulations by CMS created a barrier to individuals’ compliance with the  requirement. Table 3 presents some of the challenges reported by states to  implement the requirement.
When developing its interim final rule, CMS officials said that CMS  considered the specifications of the DRA and other existing federal  policies on documenting citizenship, including policies of SSA. CMS  officials told us that after meeting the specifications of the DRA, the  agency modeled its regulations after the policy established by SSA for  documenting citizenship when individuals apply for a Social Security  number. Specifically, SSA’s policy mandates that documents be originals  and includes a hierarchy of documents with restrictions on the use of less  reliable documents. Also, the list of acceptable documents identified by  CMS mirrors SSA’s list with only a few exceptions. In contrast, however,  SSA’s policy allows more flexibility in special cases. For example, when a  U.S.-born applicant for a Social Security number does not have any of the  documents from the list, SSA’s policy allows staff to work with their  supervisors to determine what would be acceptable in those cases. CMS  officials told us that CMS’s list of acceptable documents represents a  significant expansion of what was included in the DRA provision and is  exhaustive and that they were not aware of any case where an individual  was unable to provide any document from the list.
To assist states and individuals in complying with documenting  citizenship, CMS included some important tools in the regulations. For  example, the regulations allow states to use data matches with state vital  statistics agencies to verify citizenship and with other government  agencies to verify identity, which could alleviate the need for individuals  to submit original documents. While many states reported conducting data  matches on behalf of individuals, several also expressed concerns that  such matches required additional resources and could not be done for  individuals born out of state. One state reported conducting 60,000 on-line  inquiries per month into the state’s vital records system after  implementing the requirement. In one area of the state, however, nearly all  children were born across state lines and therefore the state could not  electronically verify their citizenship. The state reported that verifying  citizenship for children in that portion of the state was especially difficult.  While CMS officials confirmed that there is no nationwide database for  verifying citizenship, they also told us that there are currently initiatives  under way in more than one state to share vital statistics with other states  through data matches.
section_title: Estimates of Federal and State Fiscal Benefits May Be Overstated
paragraphs: Though CMS expected some savings to result from the requirement in  fiscal year 2008, the estimate did not account for the cost to states and the  federal government to implement the requirement. CMS’s Office of the  Actuary estimated that the requirement would result in $50 million in  savings for the federal government and $40 million in savings for states in  fiscal year 2008, with all savings resulting from terminations of eligibility  for individuals who were not citizens. Specifically, CMS assumed that  50,000 noncitizen beneficiaries (which represent less than 1 percent of  Medicaid enrollment nationwide) would prove ineligible for Medicaid  benefits and be terminated from the program. Though CMS authorized  states to claim federal Medicaid matching funds for administrative  expenditures related to implementing the requirement, and 15 states  reported budgeting funds for 2008 in addition to the numerous other  measures being taken by states, CMS’s estimate of savings did not account  for any increase in administrative expenditures by states or the federal  government. CMS expected, however, that states would experience higher  administrative costs during the first year of implementation with these  costs decreasing in later years.
In addition to not accounting for the cost of the requirement, survey  results indicated that CMS may have overestimated the potential savings  from the requirement because the intended effect of the requirement, that  is, to prevent ineligible noncitizens from receiving Medicaid benefits, may  be less prevalent than expected. When asked about potential savings from  the requirement, only 5 of the 44 states reported expecting the requirement  to result in a decrease in their expenditures for Medicaid benefits in state  fiscal year 2008, due in large part to individuals who appeared to be  eligible citizens who experienced delays in or lost coverage. Only 1 of the  5 states expecting savings reported that enrollment declines resulted in  part from denials or terminations of Medicaid coverage for individuals  who were determined ineligible because of their citizenship status. The  remaining 39 states expected no savings (20 states) or reported that it was  too early to know (19 states). Several of the 20 states that expected no  savings in 2008 reported that though some individuals have experienced  delays in coverage, those individuals were eligible citizens and would  eventually provide the required documentation and receive coverage. In  addition, 2 of these 20 states noted that they were not inappropriately  financing Medicaid benefits for noncitizens in the past and so expected no  savings. Of the 19 states that were unsure how the requirement would  affect expenditures, 2 were still tracking the effects of the requirement.  Another of these 19 states—a state that reported a decline in enrollment as  a result of implementing the requirement—noted that it was difficult to  determine whether it would result in lower costs or whether costs would  increase, as the state expected individuals would wait to enroll until they  were ill or injured, rather than receive preventive care that is less costly to  provide.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to CMS for comment and received a  written response, which is included in this report as appendix II. CMS also  provided technical corrections, which we incorporated as appropriate.  CMS commented that it generally did not disagree with the approach of  our study, but raised several concerns regarding the sufficiency of the  underlying data for, and certain aspects of, our findings. In particular, CMS  characterized the report’s conclusions as overstating the effect of the  requirement on enrollment, and stated it had concerns about the fact that  the states did not submit data to substantiate their responses to the survey  questions on which we based our findings. CMS also commented on our  findings related to the challenges posed by the requirement for states and  individuals and the cost to states of implementing the requirement.  Specific concerns raised and comments made by CMS, and our evaluation,  follow.
Regarding the sufficiency of underlying data for certain findings, CMS  commented that our survey asked states about the effects of the  requirement on enrollment, although states did not provide data to  validate their responses. In addition, CMS expressed concerns that the  draft report appeared to draw broad conclusions about the effect of the  requirement from data provided by one state. The purpose of our work  was to report on the initial effects of the requirement. Absent national  CMS data on the effects and because state Medicaid offices were largely  responsible for implementing the requirement, we determined they were  the best source for this information. Though not all states could quantify  the effect of the requirement on enrollment, 22 states reported that the  requirement resulted in decreases in enrollment, 12 reported that the  requirement had no effect on enrollment, and 10 reported not knowing the  effect of the requirement on enrollment. We disagree with CMS’s assertion  that the draft report drew broad conclusions about the effect of the  requirement on enrollment from one state’s data. The report clearly  indicates that these data are from a single state and further notes that the  extent of the decline in Medicaid enrollment due to the requirement in  some individual states and nationally is unknown.
CMS raised concerns about one survey question that asked states that  reported enrollment declines due to the requirement the reasons for those  declines and also about the level of information provided regarding the  degree to which the requirement deterred nonqualified aliens from  applying for Medicaid. With regard to the first concern, in responding to  our survey, states could check an option that said enrollment declines  were caused by the delays in or losses of coverage for individuals who  appeared eligible. CMS objected to the use of “appeared eligible,” noting  that the term is vague and subjective and that it tends to lead the  respondent to certain conclusions. However, as we explain in the report,  asking states to assess the citizenship status of individuals is consistent  with most states’ experience in making such determinations under the self- attestation policies that were in effect prior to the DRA provision. With  regard to the second concern, we agree with CMS that our report provides  limited information about the extent to which the requirement is deterring  nonqualified aliens from applying for Medicaid. However, the report does  discuss whether CMS had evidence that such individuals were falsely  declaring citizenship when applying for Medicaid. Specifically, our report  notes that CMS in its comments to the 2005 OIG report on state self- attestation policies acknowledged that the OIG did not find problems  regarding false allegations of citizenship, and CMS was not aware of any  such problems.
CMS commented that the draft report overstated the effect of the  requirement on enrollment because the majority of states reporting  enrollment declines attributed the declines primarily to delays in receiving  coverage rather than denials of coverage. Our report notes the  implications for individuals of such delays in coverage. The report points  out, for example, that a pregnant woman who is a citizen may be forced to  forgo needed prenatal care while her coverage is delayed by efforts to  meet the requirement. CMS also noted that its goal in implementing the  requirement was to minimize the incidence of delays in or denials of  eligibility due to the requirement.
In response to our findings that two aspects of the requirement specified  under regulations issued by CMS—namely that documents be originals  and that the list of acceptable documents is complex and does not allow  for exceptions—presented challenges to states and individuals, CMS  commented that the agency has attempted to provide as much flexibility  as possible and that other federal agencies require original documentation.  Nonetheless, our survey results clearly indicated that these two aspects of  the requirement are viewed by most states as posing barriers to access. In  particular, 42 of 44 states reported that having to provide original  documentation posed a barrier to eligible citizens’ meeting the  requirement, and 34 states reported that an individual’s inability to provide  documents other than those defined under federal regulations by CMS  created a barrier to compliance. Further, while the report explains that  CMS modeled its regulations after SSA’s policy for documenting  citizenship when individuals apply for a Social Security number, the report  also notes that, unlike CMS, SSA provides for flexibility in special cases.
CMS also commented on our finding that CMS’s estimates of potential  savings from the requirement in fiscal year 2008 did not account for  administrative costs. Specifically, CMS agreed that its estimate did not  account for administrative costs incurred by states to implement the  requirement, but stated that any such costs would decrease after the first  year of implementation. Our report describes that some states reported  not having budgeted funds for the requirement in future years and explains  that one reason for this may be that the burden of the requirement may  decrease after the first year of implementation. However, the ongoing  costs of assisting applicants in complying with the requirement may  continue to be significant for some states, especially those states that had  to substantially modify their enrollment procedures. For example, as  noted in the report, due to the requirement, one state faced an additional  40,000 hours of staff time needed per month to process applications.
CMS commented that it was not surprised that states reported facing  challenges, given that the report’s findings were based on states’  experiences after less than 1 year of implementing the requirement. While  agreeing that the requirement posed challenges for individuals and states,  CMS asserted that these initial challenges have diminished and will  continue to do so. Based on our survey responses, states largely do not  share CMS’s optimism in this regard. In addition to describing the initial  effects of the requirement, which in states’ perspectives have included  enrollment declines and increased administrative burdens, our report  includes additional indicators that the effects states experienced in the  first year will continue at least to some extent in the future. For example,  17 of the 22 states that reported a decline in enrollment due to the  requirement reported that they expected the downward trend in  enrollment to continue, with some expecting the decline to continue  indefinitely. In addition, 15 states reported already having budgeted funds  for the requirement in state fiscal year 2008.
CMS also emphasized actions it has taken to implement the requirement,  such as issuing a letter to state Medicaid directors, publishing an interim  final rule, and working on a final rule to be issued shortly. Our report  describes the steps taken by CMS to implement the requirement. With  regard to CMS’s work on a final rule, we modified our report to indicate  CMS’s plans to issue such a rule shortly.
As arranged with your offices, unless you publicly announce the contents  of this report earlier, we plan no further distribution of this report until   30 days after its issue date. At that time, we will send copies of this report  to the Secretary of HHS, the Administrator of the Centers for Medicare &  Medicaid Services, and other interested parties. We will also make copies  available to others on request. In addition, the report will be available at  no charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made major contributions to this report  are listed in appendix III.
section_title: Appendix I: List of Acceptable Documents for Proving Citizenship and Identity, as Defined under Federal Regulations
paragraphs: Federal regulations published by the Centers for Medicare & Medicaid  Services (CMS) identify primary, or tier 1, documents that are considered  sufficient to establish citizenship.  Under the regulations, if individuals do  not have primary evidence, they are expected to produce secondary, or  tier 2, evidence of citizenship as well as evidence of identity. If neither  primary nor secondary evidence of citizenship is available, individuals may  provide third tier evidence of citizenship with accompanying evidence of  identity. If primary evidence of citizenship is unavailable, secondary and  third tier evidence do not exist or cannot be obtained in a reasonable time  period, and the individual was born in the United States, then the  individual may provide fourth tier evidence of citizenship, along with  evidence of identity. See table 4 for a list of acceptable documents to  prove citizenship and table 5 for acceptable identity documents.
section_title: Appendix II: Comments from the Centers for Medicare & Medicaid Services
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: Kathryn Allen, Director, led the engagement through its initial phases. In  addition, Susan Anthony, Assistant Director; Susan Barnidge; Laura  Brogan; Elizabeth T. Morrison; and Hemi Tewarson made key  contributions to this report.