Medicaid enrollment drop and cost warning signs flash for WV from GOP budget law

Cynthia Beane, commissioner of the West Virginia Bureau for Medical Services, previewed a path toward lower Medicaid enrollment and higher state administrative costs before the Joint Standing Finance Committee during the Legislature’s latest interim legislative session meeting on Oct. 6.

The One Big Beautiful Bill Act, a budget reconciliation law, requires states to condition Medicaid eligibility for individuals ages 19-64 applying for coverage — or enrolled through expanded Affordable Care Act coverage — on working or participating in qualifying activities for at least 80 hours per month.

The new law requires states to conduct eligibility redeterminations at least every six months for Medicaid expansion adults for renewals scheduled starting Dec. 31, 2026.

Beane indicated there are roughly 504,000 people in West Virginia’s Medicaid program — approximately 28% of the state’s population — including 160,000 participants covered by Medicaid expansion.

Beane predicted the law’s “community engagement� work-oriented requirements would decrease West Virginia Medicaid enrollment.

Roughly 60% of that group already draws earned income, Beane said before cautioning that her office doesn’t know if they’re meeting the new 80-hour requirement.

“Those are the kinds of things that we’re, kind of, nuancing and trying to figure out how many people will be directly impacted that maybe currently are not in the workforce that we need to encourage to get into the workforce in order to stay on the rolls,� Beane said.

The new law restricts states from setting new health care-related taxes known as provider taxes or from increasing rates of existing taxes.

Beginning in 2028, revenue reductions will start at $35.6 million and grow to $71 million in 2029, $107 million in 2030, $142 million in 2031 and $178 million in 2032 — a combined loss of $533.6 million.

Beane noted the decreases apply to funds that are federally matched and directed to West Virginia hospitals.

“That’s money no longer going to West Virginia hospitals,� Beane said, adding that “some of the rural hospitals that are on the margins are concerned.�

The West Virginia Hospital Association, which consists of 72 member hospitals, has sounded the alarm about the new law, saying that larger, acute care hospitals like ÂÒÂ×ÄÚÉä Area Medical Center’s complex of hospitals and WVU Medicine’s J.W. Ruby Memorial Hospital and critical access hospitals often located in rural areas will be impacted the most.

Critical access hospitals are federally designated as such if they are located either more than 35 miles from the nearest hospital or more than 15 miles in areas with mountainous terrain or only secondary roads.

West Virginia Hospital Association president and CEO Jim Kaufman predicted in July more than $1 billion will be stripped from West Virginia hospitals by the One Big Beautiful Bill Act.

Beane warned that West Virginia could easily be penalized by the law’s changes targeting erroneous payments made for ineligible individuals and overpayments for eligible individuals if the state’s eligibility “error rate� exceeds 3%.

The law requires the federal Department of Health and Human Services to reduce federal support for states in response to improper payment errors related to payments made for ineligible individuals and overpayments made for eligible individuals, with improper payments including those for which there’s inadequate information available to confirm eligibility.

Previous law allowed the Centers for Medicare & Medicaid Services to waive recoupment if a Medicaid agency showed a “good faith� effort to get its error rate below the 3% threshold.

Beane recalled that West Virginia’s error rate previously had been 15% and is now at 3.43%.

Errors, Beane warned, could come from an eligibility worker “fat-finger[ing] a birth date wrong.�

West Virginia’s Medicaid program doesn’t have total control over the error rate, Beane said, because lack of provider documentation to support a claim can be considered an error.

“I feel like this is a particular part of the bill that the state needs to pay a lot of attention to, because like I said, it could be one county worker stressed or entering something wrong or something like that could really affect your [payment error rate],� Beane said.

Beane said her “biggest concern� is the [payment error rate] piece.�

“If you’re not appropriately staffed, you can really get some errors in that,� Beane said, recommending that state lawmakers check in with Department of Human Services Secretary Alex Mayer and DHS Bureau for Family Assistance Commissioner Janie Cole to assess any potential need for staffing increases due to the One Big Beautiful Bill Act.

“Let’s say something happened and our error rate ballooned to 10%. That would be hundreds of millions of dollars [in state costs],� Beane said. “It would be an exorbitant amount of money.�

As West Virginia navigates administrative cost pitfalls, its Medicaid recipients face a spike in the chances their coverage will be cut off.

The law will result in about 17 million more people without health insurance, the Kaiser Family Foundation, a nonpartisan health policy research group, projected in July.Ìý

The legislation will cut off coverage for at least 69,000 West Virginians and increase the state’s uninsured rate by 70%, according to an analysis released in June by Families USA, a nonpartisan health care consumer advocacy group.

Studies found uninsured grew but workforce didn't 

Beane reported that West Virginia Medicaid officials were working with the West Virginia University Health Affairs Institute, West Virginia’s public health institute, to ensure the state is “project-managing� its work requirement oversight “correctly.�

State officials intend to model their recipient notification and interaction approaches after those already pertaining to work requirements for Supplemental Nutrition Assistance Program “able-bodied� adults without dependents.

The One Big Beautiful Bill Act also enacted sweeping cuts to SNAP, shifting a substantial share of SNAP benefit costs to states with a new cost-sharing formula linked to payment error rates and narrow exceptions for work requirements for able-bodied adults.

Beane said West Virginia was part of a pilot group including seven other state Medicaid programs and CMS to consider technology that could allow Medicaid recipients to report their work potentially through a “no-touch solution so that people aren’t constantly having to report their work hours.�

Studies show that similar past Medicaid changes made at the state level have significantly weakened state social safety nets without increasing employment.

Tennessee’s Medicaid program, TennCare, disenrolled roughly 170,000 adults from July to September 2005 following a change in eligibility rules, resulting in an increase in uninsured rates by nearly five percentage points relative to adults in other southern states, according to a 2018 working paper published by the National Bureau of Economic Research.

That study found no evidence of an increase in employment rates in Tennessee following the disenrollment. Instead, self-reported health and access to medical care worsened as hospitalization rates, doctor and dentist visits fell while use of free or public clinics increased.

Medicaid coverage was found to have no statistically significant effect on employment status or earnings in the Oregon Health Insurance Experiment, a study of the impact of expanding public health insurance on health care use, health outcomes, financial strain and well-being of low-income adults. The National Bureau of Economic Research-published study was based on an analysis following Oregon drawing names by lottery in 2008 for its Medicaid program for low-income, uninsured adults.

Medicaid coverage resulted in significantly more outpatient visits, hospitalizations, prescription medications and emergency department visits while substantially lowering medical debt and virtually eliminating the likelihood of having a catastrophic medical expense, the study also found.

Medicaid work requirements implemented in Arkansas in 2018 — an 80-hour-per-month threshold for adults ages 30-49 — resulted in an increase in uninsured Arkansans and no significant change in employment or work effort, according to a study published in April in Health Services Research, a health policy research journal. The study was authored by researchers from Loyola University Chicago’s Quinlan School of Business and the Urban Institute, an economic policy research nonprofit.

Expert: Implementation appears 'prohibitively expensive' 

Day Manoli, an associate professor at Georgetown University’s McCourt School for Public Policy who has worked with government agencies to analyze data and test economic models, noted that the significant Medicaid and SNAP changes ushered in by the One Big Beautiful Bill Act will present documentation challenges.

“Reaching out to HR [human resources] departments … [t]hat requires a significant amount of time [for work documentation],� Manoli observed at a National Press Foundation event in Washington on Oct. 7. “If those individuals are not able to process that in time, what happens? I think that is an open question about implementation.�

Manoli noted that the six-month recertification required by the One Big Beautiful Bill Act doesn’t match up well with the annual filing of tax returns, which could otherwise be used to verify individuals’ data.

“If you’re driving for Lyft or doing some gig economy work or are self-employed, how do we verify that?� Manoli said. “The short answer is that the costs seem to be prohibitively expensive in terms of staff time.�

Manoli predicts there will be an implementation policy discussion next year that revisits how the law’s requirements are implemented.

“[The One Big Beautiful Bill Act] really created transformative changes in our social safety net,� Manoli said.