Changes to Medicaid’s Retroactive Coverage in Nebraska

Dr. Ann Anderson Berry works in the Neonatal Intensive Care Unit at Children’s Nebraska, dealing with some of the state’s smallest and sickest patients.

Pregnancies can end in unanticipated ways, and unfortunately, a newborn’s survival may often be jeopardized. For families relying on Medicaid, which is the government program serving low-income and disabled Americans, filling out the paperwork to insure a newborn typically seems straightforward. But, Anderson Berry, the head of neonatology at Children’s Hospital of Nebraska, mentions an important point: “It’s too stressful to think about the paperwork after delivery.” This stress can lead to delays in applications, sometimes extending beyond the first few days or weeks.

Families eligible for Medicaid used to have a lengthy grace period allowing them to apply for benefits, as Medicaid law traditionally covered three months of treatment retroactively. However, the Nebraska Department of Health and Human Services is now looking to entirely eliminate that retroactive application.

If this change goes through, it would make Nebraska the only state to cut retroactive coverage entirely, affecting children and pregnant individuals. While ten other states are reducing their retroactive coverage, they do still have exceptions or longer coverage periods than what’s being proposed in Nebraska. The DHHS is currently welcoming public comments on this proposal.

State officials argue that this measure could save millions annually and encourage hospitals to swiftly enroll Medicaid-eligible patients. Yet, many health care professionals, advocates, and some lawmakers believe it could cause more harm than good, placing further strain on an already burdened health care system and impacting vulnerable low-income Nebraskans in need of urgent care.

Justin Wolf, CEO of Memorial Community Health Hospital in Aurora, expressed his concern: “I think this is cruel and a money grab. It adds an administrative burden that saves the state money but at the expense of the health care system.” While Medicaid beneficiaries in Nebraska will remain covered during the month they apply for care, those with emergencies at the end of a month could find themselves without coverage for earlier treatment if their application is submitted late.

Anderson-Berry highlighted the financial impact, noting that care for a baby in the NICU can cost around $4,000 per day, and for extremely low birth weight infants, costs can exceed $1 million. The consequences of cutting retroactive coverage may also extend to low-income individuals who face emergencies, like severe accidents or heart attacks, who might not complete their applications on time.

Sarah Maresh, from Nebraska Appleseed, mentioned that retroactive Medicaid coverage is critical to preventing low-income individuals from incurring devastating medical debt. This coverage ensures that hospitals are compensated, particularly in urgent scenarios where care is provided without prior insurance verification.

John Meals, the DHHS Chief Financial Officer, indicated that the proposed elimination would incentivize hospitals to assist patients in completing their Medicaid applications more diligently. In contrast, Jeremy Nordquist, CEO of the Nebraska Hospital Association, noted that hospitals are already heavily invested in patient engagement to facilitate Medicaid enrollment. Still, some patients may not arrive until they are in crisis.

Nordquist further pointed out that burdening hospitals with the responsibility of Medicaid enrollment isn’t feasible given their limited resources. Nebraska DHHS officials did not offer interviews for this article, citing their involvement with legislative and budget discussions.

Without state action, however, Medicaid coverage is already set to tighten. A tax and spending bill signed by former President Donald Trump will reduce the retroactive coverage period to one month for Medicaid expansion participants and two months for traditional enrollees, starting January 1, 2027. The Nebraska DHHS is seeking a five-year waiver that would end retroactive coverage entirely beginning October 1, which would impact all Medicaid populations, including vulnerable groups like those with disabilities or nursing home residents.

Although other states have reduced retroactive coverage, some have made exceptions following public feedback. For example, Iowa previously eliminated retroactive coverage for everyone except pregnant women and infants, easing restrictions after nursing homes voiced concerns.

Ending the retroactive application could save Nebraska between $18 million and $21 million each year during the five-year exemption period. However, Nordquist warned that such savings come at a higher cost to states and the federal government in health care expenses, as the federal government contributes significantly to state Medicaid expenditures.

Bryan Health, which runs six hospitals in Nebraska, predicts a loss of about $35 million annually if retroactive coverage is removed entirely. “For every dollar the state saves, it costs hospitals two dollars,” remarked Ashton Willick, senior director of government and community relations.

Senator Makaela Kavanaugh has introduced legislation to mandate that states maintain the maximum retroactive compensation prescribed by federal law. Although the bill hasn’t been put forth by the Health and Human Services Committee yet, ongoing negotiations are taking place.

Chairman Brian Hardin expressed doubts about Nebraska’s readiness to fully eliminate retroactive coverage, suggesting it could lead to significant challenges. Nordquist reiterated that while the new federal guidelines would create hurdles, they would not compare to the repercussions of completely dropping retroactive coverage.

Jim Ulrich, CEO of York General, noted that rural providers already operate on very thin margins, making it challenging to assist residents in completing Medicaid applications without family help for necessary documentation. It can be a lengthy process, and in cases of hospitalization, residents might be placed in facilities without finalized applications, leading to significant financial burdens for families.

Ulrich added that families often struggle to manage the costs of care during these application processes, which can compel providers to write off expenses as charity care. “It’s tough to keep nursing homes running…” he remarked, acknowledging that retroactive payments are simply one aspect impacting care, but even minor changes can have far-reaching consequences.