Report: Feds Mull Cuts Due To Medicaid Backlogs

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States are working through hundreds of thousands of backlogged applications due to Obamacare’s Medicaid expansion, but the administration is threatening to cut funding for dealing with them.

A massive influx of Medicaid applications has been further complicated by technological snafus between and incompatible state technologies, creating backlogs across the country. According to a report from Washington, D.C. think tank the American Action Forum, outgoing Health and Human Services Sec. Kathleen Sebelius is proposing a solution that will make the problem worse.

During a recent Senate Finance Committee hearing, Sebelius suggested that the Centers for Medicare and Medicaid Services (CMS) would temporarily cut federal funding for Medicaid administrative tasks to states that are struggling with a backlog. Sebelius theorized that looming cuts would incentivize states to get their backlogs under control as soon as possible.

Cutting administrative funding to states already struggling with insufficient administrative infrastructure would appear to make the problem worse, according to American Action Forum health care policy analyst Angela Boothe.

“In order to encourage states to move through their backlogged applications more quickly, [CMS] may decrease the federal matching rate for Medicaid — with the cut expected to come in the forms of reductions to administrative Medicaid funding,” Boothe told The Daily Caller News Foundation. “States that are still reporting an inability to connect with the federal marketplace, and are therefore seeing applications back-up in the determination process, are subject to these cuts.”

Federal systems have been facing problems transferring accurate information to state Medicaid agencies for months. is supposed to direct applications of customers eligible for Medicaid to state agencies, which should be able to confirm eligibility and finally enroll the applicant, but miscommunication in states across the country have forced customers to sign up again.

It’s not clear whether the problem lies within federal or state technology or both, but HHS’ seems to be putting the onus on state agencies to solve any problems on their own.

Whether states received a Medicaid expansion or not, customers already qualified for traditional Medicaid programs have increasingly come out of the woodwork and signed up thanks to publicity surrounding the Obamacare debate. Many state administrative functions are already swamped.

The Washington Post reported in January that software defects in’s back-end systems were preventing over 100,000 Americans from being fully enrolled in Medicaid or the Children’s Health Insurance Program. couldn’t properly communicate eligible Medicaid applicants’ information to state agencies, preventing them from verifying the applications and creating thousands of backlogs themselves.

Even today, major back-end components of have still not yet been built.

On top of transferring accounts to state programs, state Medicaid staff “are revamping eligibility requirements, answering calls from confused beneficiaries, and working through other Affordable Care Act changes,” Boothe writes. “These competing priorities would be strained further should funding decrease.”

Hundreds of thousands of Medicaid applicants are still waiting for access to care. Illinois has a backlog of 200,000 applications that haven’t yet been processed, according to the most recent report from the Chicago Tribune. California’s Medicaid backlog is 800,000 strong; Nevada has hired temp workers to deal with 65,000 applications that are in limbo.

For administrative tasks, Medicaid programs are funded with 50 percent federal taxpayer dollars and 50 percent state dollars, according to AAF.

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