Public health advocates applauded the Court’s decision in D.C. v. Division of Medical Assistance & Health Services, 464 N.J. Super. 343 (App. Div. 2020), because it resolved a longstanding logistical issue that caused severe hardship for people transitioning from one Medicaid program to another. Specifically, the New Jersey Appellate Division ruled that state Medicaid agencies must screen beneficiaries for eligibility in alternative programs before terminating their existing benefits, ensuring a seamless transition and continuous benefits. Despite the Court’s clear mandate, over four years later, New Jersey has repeatedly failed to implement an effective “screen before terminate” system, leaving many vulnerable individuals exposed to gaps in coverage and financial hardship. Let’s revisit the case.
Factual Background
A married couple receiving Social Security Disability benefits were enrolled in New Jersey’s Aged, Blind, and Disabled (ABD) Medicaid Program. The program provides Medicaid health coverage for people with limited income who are blind, have been determined disabled by the Social Security Administration, or are 65 and over. However, following a change in circumstances the couple’s income exceeded the limit ABD eligibility. As a result, the Essex County Board of Social Services sent them a letter indicating that their ABD coverage would terminate effective August 31, 2017. Although they no longer qualified for ABD Medicaid, the couple still qualified for the Specified Low-Income Medicare Beneficiaries (SLMB) Program, which covers Medicare Part B premiums for low-income Medicare beneficiaries. The couple applied for the SLMB Program on August 30, 2017. Although they clearly qualified, the Essex County explained that their application could not be processed until their ABD benefits were officially terminated, which caused a gap in benefits. They filed for a Fair Hearing before an Administrative Law Judge who concluded that since benefits could be applied retroactively for 90 days, the state could terminate benefits without first assessing eligibility for other programs. The ALJ’s decision was adopted by the Division of Medical Assistance & Health Services (DMAHS) and the matter was then appealed to the Superior Court, Appellate Division.
Appellate Division Decision
The couple argued that federal regulations, including provisions found at 42 CFR 435.916(f)(1), mandate that state agencies screen beneficiaries for eligibility in other Medicaid programs before terminating existing benefits. They contended that the Division of Medical Assistance and Health Services (DMAHS) failed to perform this pre-termination screening for the SLMB Program, thereby causing a gap in benefits. DMAHS argued that the SLMB Program was “a Medicare savings program that allows states to pay Medicare Part B premiums,” rather than a Medicaid program, and since beneficiaries cannot be eligible for Medicaid and SLMB in the same month, they had to wait until coverage was terminated before applying. They argued that the requirement to screen for other programs prior to termination did not apply because SLMB was not a Medicaid program.
Importantly, the ALJ and DMAHS relied heavily on the 90 day retroactivity of New Jersey Medicaid to justify forcing people to have a disruptive gap in benefits, rather than implement a more efficient system. Under these rules, SLMB benefits could be applied retroactively for up to three months. The agency’s rationale was that even if there was a gap in immediate coverage, the retroactive provisions would compensate for the period during which the petitioners were without benefits. However, the couple argued that this reasoning did not absolve the agency of its responsibility to ensure a seamless transition in coverage. They also noted that the gap created a hardship because they had current obligations such as rent, food, and utilities.
The court found that SLMB was clearly a Medicaid program and that DMAHS erred by not screening the couple for eligibility in the SLMB Program before terminating their ABD benefits. The court held that relying on retroactive benefits subverted the purpose of pre-termination screening and did not justify a policy that permitted gaps in essential healthcare coverage. The court held that this was a circumstance where DMAHS acted in a way that was clearly inconsistent with its statutory mission and legislative policy. The court concluded that DMAHS’s decision was arbitrary, unreasonable, and erroneous, and therefore subject to being overturned. The decision was clear: DMAHS was required to proactively assess eligibility for other programs to prevent the disruption of benefits.
Current Challenges – County-Level Variability
In New Jersey, a significant portion of Medicaid eligibility decisions are handled by county-level agencies. As a result, compliance with the pre-termination screening requirement varies considerably from one county to another. Limited resources, inexperienced staff, and clerical errors lead to inconsistent application of the screening mandate. Instead of proactively transferring eligible beneficiaries between various Medicaid programs—such as SSI Medicaid, NJ Family Care/MAGI Medicaid, ABD Medicaid, MLTSS Medicaid, Workability Medicaid, and SLMB—the county offices often merely provide a referral or a new application and leave beneficiaries to navigate the system on their own.
Despite the clear mandate from the court, DMAHS has yet to develop and implement a robust, statewide system for conducting the required pre-termination eligibility screening and facilitating seamless transitions between programs. In practice, many beneficiaries continue to experience gaps in coverage because DMAHS appears to lack an integrated, automated system that cross-references a beneficiary’s eligibility for other Medicaid programs prior to terminating existing benefits. This means that the court’s requirement is not uniformly applied, leaving beneficiaries vulnerable to disruptions in care.
These challenges underscore the need for DMAHS and county agencies to collaborate on developing a comprehensive, statewide protocol. Or perhaps eliminate the county system altogether. Such a system should not only automate the screening process but also establish clear guidelines and accountability measures to ensure that beneficiaries do not experience unnecessary interruptions in their Medicaid benefits.
Final Thoughts
The ruling in D.C. v. Division of Medical Assistance & Health Services emphasizes the critical need for proactive administrative practices in the management of Medicaid benefits. By failing to pre-screen for eligibility in alternative programs, DMAHS not only violated federal regulatory requirements but also jeopardized the well-being of vulnerable low income people. Moreover, the lack of a cohesive, state-wide system to implement this requirement further compounds the problem, resulting in inconsistent and often inadequate protections for those most in need. This case just one example highlighting the need to reexamine and overhaul Medicaid administrative processes.