6. Noncompliance Procedures and Ensuring Timely Eligibility Determinations at Application

Federal regulations in § 435.912 require States to complete eligibility determinations for Medicaid promptly and without undue delay. In general, the determination of eligibility for any individual may not exceed 90 days for applicants who apply on the basis of disability and 45 days for all other applicants, which includes individuals whose eligibility is being determined based on MAGI. The regulations specify that the timeliness standards cover the period from the date of application or transfer from another insurance affordability program to the date the State notifies the applicant of its decision.

New § 435.558(a) imposes an additional requirement on States to provide notice of noncompliance to an applicable individual who the State is unable to verify as being compliant with the community engagement requirement and to afford such individual 30 calendar days from the date they receive the notice to demonstrate community engagement or that they should be deemed to demonstrate community engagement, or establish that they do not meet the definition of an applicable individual, which States must account for when making determinations of eligibility.

We believe the 45-day timeliness standard under § 435.912 for MAGI beneficiaries is necessary to prevent delays in applicants' eligibility determinations. We also recognize that the 30-calendar day period that must be provided to individuals who receive a notice of noncompliance may make it difficult for States to comply with such timeliness standard requirements. For example, instances may arise where the 30-calendar day period that must be provided to applicable individuals following the receipt of a notice of noncompliance at application extends beyond the 45-day timeframe even if the State acts promptly to process the application. Based on anecdotal information through our work with States, we believe States ordinarily provide less than 30 days for the applicant to respond to any requests for information in order to meet the 45-day timeliness standard to make determinations of eligibility for applicants. Therefore, we are adding § 435.912(e)(3) to provide a new exception to the timeliness standard at § 435.912(c)(3)(ii) for applicants who receive the notice of noncompliance under § 435.558(a) and when the State is unable to meet the 45-day timeliness standard due to the required 30-calendar day period discussed in this section of this IFC. When a State uses this exception, it must do so on a case-by-case basis and document the reason for the delay in the applicant's case record as required by § 435.912(f).

We acknowledge that depending on States' systems and operational capacities, as well as the timing of an individual's response, the required 30- ( printed page 33415) calendar day period for applicants to return information related to community engagement will not always result in a delay in completing a determination of eligibility for an applicable individual who is sent a notice of noncompliance at application. States that can make a timely determination of eligibility for applicants who are sent a notice of noncompliance must do so within the timeliness standards. However, we understand that not all applicants will respond to the notice early in the 30-calendar day period, and that when the applicant has not responded to verify compliance with the community engagement requirement until the end of the 30-calendar day period, States may be unable to notify the applicant of an eligibility decision within the 45-day timeliness standard. We believe the exception at § 435.912(e)(3) is necessary to prevent States from being subject to compliance action for failure to meet the regulatory timeliness standard as a result of complying with section 1902(xx) of the Act. We also seek to ensure that States take necessary steps to continue to make timely and accurate determinations of eligibility to the greatest extent possible.

Consistent with existing requirements in § 435.912(g)(1), we expect States to complete their initial eligibility determinations as quickly as possible and not use the maximum period available under the timeliness standard to delay the initiation of coverage for individuals who would otherwise be determined eligible and enrolled more quickly. We expect States to use the new exception in those cases where the State would have made the determination within the timeliness standard at § 435.912(c)(3)(ii) but was unable to do so because the State was required to give the individual the full 30-calendar day period at § 435.558(a)(2), and the individual did not respond to the notice sufficiently early in this 30-calendar day period to enable the State to meet the timeliness standard.

The new exception is only available if a State is unable to process an application timely for applicants to whom the State is required to send the notice of noncompliance because the State is unable to verify whether such individual is a specified excluded individual or whether the individual demonstrated or should be deemed to demonstrate community engagement. The exception may not be used when a State sends a request for information that is not related to the notice of noncompliance, such as for Medicaid applications for applicants who are not applicable individuals or for CHIP or BHP applications. As such, we make corresponding revisions to §§ 457.340(d)(1) and 600.320(b) to specify that the exception added by this IFC in § 435.912(e)(3) does not apply to CHIP and BHP applications.