J. Noncompliance Procedures

Section 1902(xx)(6) of the Act, which we implement at § 435.558, specifies the requirements for States when they are unable to verify that an applicable individual has demonstrated community engagement or is deemed to have demonstrated community engagement under § 435.553, or if applicable, § 435.555, during the review period specified at § 435.556(a). When a State is unable to verify compliance, section 1902(xx)(6)(A)(i) and (ii) of the Act requires the State to provide the applicant or beneficiary with a notice of noncompliance and 30 calendar days from the date the notice is received for the individual to make a satisfactory showing that they met the community engagement requirement or that such requirement does not apply. Section 1902(xx)(6)(A)(ii)(II) of the Act requires the State to continue to provide coverage to beneficiaries during the 30-calendar day period, and the regulations at § 435.930(b) require that a State maintain coverage for beneficiaries unless and until they are determined ineligible for medical assistance. If the individual fails to make a satisfactory showing during the 30-calendar day period, section 1902(xx)(6)(A)(iii) requires the State to deny the application, or if applicable, disenroll the beneficiary from coverage no later than the end of the month following the month in which the 30-calendar day period ends. Section 1902(xx)(6)(A)(iii)(I) of the Act and regulations in §§ 435.911(c)(2) and 435.916(f) require the State to first consider if there is another basis of eligibility for which the individual qualifies before denying the application for coverage or disenrolling the beneficiary from coverage.

Sections 1902(a)(3) and 1902(xx)(6)(A)(iii)(II) of the Act and §§ 435.917 through 435.918 and 42 CFR part 431, subpart E require States to provide written notice of an eligibility determination (including at least 10 days advance notice in the case of an eligibility termination or reduction) and the opportunity for a fair hearing to applicants and beneficiaries.

Section 1902(xx)(6)(B) of the Act requires the notice of noncompliance to include information on how the individual may make a satisfactory showing and how the individual may reapply for coverage.

While the statute uses the word “noncompliance” to describe the procedures that States must follow when they are unable to verify an individual's compliance with the community engagement requirement, the notice of noncompliance serves a similar purpose to that of a request for information in States' existing eligibility verification processes. The initiation of the noncompliance procedures described in section 1902(xx)(6) of the Act does not mean the State has made a final determination of noncompliance with the community engagement requirement or a determination of ineligibility for Medicaid. Rather, these procedures must be initiated when the State is unable to confirm, based on available information, that the individual has demonstrated community engagement, is deemed to have demonstrated community engagement, or is not an applicable individual (including those who meet the criteria for a specified excluded individual). Only after the individual receives the 30-calendar day opportunity to make a satisfactory showing can the State determine if the individual demonstrated or is deemed to have demonstrated community engagement or is excluded from the requirement and make a final determination of Medicaid eligibility.