7. ICRs Regarding State Requirements for Outreach (§ 435.561) and Noncompliance (§ 435.558).

The following changes will be submitted to OMB for approval under control number 0938-1147 (CMS-10410).

As discussed in section II.L. of this IFC, State Medicaid agencies are required to develop (or update) and disseminate standardized, targeted communications notices to certain individuals about the requirement to demonstrate community engagement under section 1902(xx) of the Act. States must also implement the operational processes needed to deliver those communications in a timely manner. Among the communications, under new § 435.561, States must provide outreach notices to individuals eligible for or enrolled under § 435.119 and to certain individuals covered through specified section 1115 demonstrations. While CMS will not be providing States with templates for these notices, States must send outreach at the times specified at § 435.561(b), include the content required by § 435.561(c), and deliver outreach notices through at least two modalities as required by § 435.561(d) (regular mail or, if elected by the individual, electronic delivery consistent with § 435.918, plus at least one additional modality such as an electronic account, telephone, text message, or other commonly available electronic means), consistent with the plain language and accessibility standards at § 435.905(b). States may also coordinate outreach with other beneficiary communications, such as eligibility determination notices under § 435.917.

In addition, under new § 435.558, when a State cannot verify compliance with, or an exception (for deemed compliance), or exclusion from the community engagement requirement, the State must issue a notice of noncompliance, in the form and manner outlined at § 435.558(c), that provides at least 30 calendar days for the individual to demonstrate compliance or an exception/exclusion. This requirement will likely create additional information collection activities related to preparing and sending the notice, tracking the response period, and documenting outcomes prior to any denial or disenrollment, including advance notice and fair hearing rights. At renewal, States may choose when to send the noncompliance notice relative to the pre-populated renewal form but must still generate and issue the notice and track responses.

These requirements also leverage existing State communication infrastructure, including online accounts and portals. In particular, § 435.561(d)(2)(i) (delivery through the individual's electronic account) extends State's Medicaid website obligations under § 435.1200(f), including accessibility consistent with § 435.905(b).

States will need to develop or update outreach and noncompliance notice templates and establish or update the associated operational workflows to support required delivery modalities and timing. For both outreach and noncompliance notices, these operational workflows will include mailing paper copies to the subset of individuals who receive paper notices. Since mailing paper notices is the default modality under § 435.561(d), we estimate that 75 percent of beneficiaries do not elect to use electronic notices.

To comply with these requirements, we estimate that it will take a one-time burden of 80 hours at $87.52/hr for a Business Operations Specialist to develop or update the notice templates and update the associated workflows as necessary, 8 hours at $128.00/hr for a General and Operations Manager to review and approve the updated notice templates and workflows, and 24 hours at $99.66/hr for a Computer Programmer to conduct the technical changes to the State electronic data collection means. In aggregate, we estimate a one-time burden of 4,928 hours (112 hr × 44 jurisdictions) at a cost of $458,367 (44 × [(80 hr × $87.52/hr) + (24 hr × $99.66/hr) + (8 hr × $128.00/hr)]). Accounting for the Federal administrative match of 75 percent, the requirement will cost States $114,592 ($458,367 × 0.25). We have summarized the initial State outreach and noncompliance notice burden in Table 27.

We also estimate it will take 1 minute (0.017 hr) at $38.66/hr for a Mail Clerk to mail paper materials to 75 percent of the applicable beneficiaries (20 million total applicable beneficiaries). This results in 15 million outreach notices (20,000,000 applicable beneficiaries × 0.75 that will not elect electronic delivery), as well as 6 million noncompliance notices (0.75 × the 8,000,000 applicable individuals whose eligibility could not be verified ex parte ), or 21 million mailings in the initial year. In aggregate, we estimate a one-time burden of 357,000 hours (21,000,000 total mailings × 0.017 hr per mailing) for Mail Clerks to complete all mailings at a cost of $13,801,620 (357,000 hr × $38.66/hr). Accounting for the Federal administrative match of 50 percent, the labor burden of this requirement will cost States $6,900,810 ($13,801,620 × 0.50).

In addition, the mailing of the initial notices will add ancillary non-labor costs. We assume these costs include paper, toner, envelopes, and postage (envelope weight is normally considered negligible when citing these rates and is not included) for hard-copy mailings. Using the same assumptions as described for mailing short-term hardship request notices in ICR 6, we estimate the aggregate cost per mailed notice is $0.802 [($0.007 for paper × 2 pages) + ($0.007 for toner × 2 pages) + $0.73 for postage + $0.044 per envelope]. Assuming 21 million initial mailings in the initial year, we assume non-labor ancillary costs of $16,842,000 (21,000,000 × $0.802). Accounting for the Federal administrative match of 50 percent, the non-labor burden of this requirement will cost States $8,421,000 ($16,842,000 × 0.50). We have summarized the ongoing, total State outreach and noncompliance notice burden in Table 28.

States will also need to conduct ongoing annual maintenance of outreach and noncompliance notice templates and the associated operational workflows to ensure continued compliance with required outreach delivery modalities and timing. We estimate this ongoing annual activity will require approximately 28 hours per State (one-quarter of the 112-hour one-time effort) to review, update, and implement minor policy, operational, and technical changes to notices and delivery workflows. Of the 28 hours, this includes 20 hours at $87.52/hr for a Business Operations Specialist to update notices and workflows, 2 hours at $128.00/hr for a General and Operations Manager to review and approve updates, and 6 hours at $99.66/hr for a Computer Programmer to make necessary technical adjustments to the State's electronic data collection methods.

In aggregate, we estimate an annual burden of 1,232 hours (28 hr × 44 jurisdictions) at a cost of $114,592 (44 × [(20 hr × $87.52/hr) + (6 hr × $99.66/hr) + (2 hr × $128.00/hr)]). Accounting for the Federal administrative match of 75 percent, the requirement will cost States $28,648 ($114,592 × 0.25). We have summarized the ongoing burden for State maintenance of outreach and noncompliance notices in Table 29.

In addition, we continue to estimate 1 minute (0.017 hr) at $38.66/hr for a Mail Clerk to process and mail each beneficiary notice. We assume that the initial estimate of 15 million beneficiaries that receive paper notices will be moderately reduced in subsequent years as more beneficiaries opt to receive their notices electronically. On an ongoing basis we assume that 11.25 million beneficiaries (0.75 × 15,000,000) will need to be mailed paper outreach notices, and that 4.50 million beneficiaries (0.75 × 6,000,000) will need to be mailed noncompliance notices on an ongoing basis. For the combined 15.750 million beneficiary notices (11,250,000 + 4,500,000), this equals 267,750hours annually (15,750,000 mailings × 0.017 mailings/hr) at an annual cost of $10,351,215 (267,750 hours × $38.66/hr). Accounting for the Federal administrative match of 50 percent, the annual labor cost to States is $5,175,608.

In addition, the ongoing mailing of the notices will add ancillary annual non-labor costs associated with paper, toner, envelopes, and postage. Assuming 15.75 million mailings annually at a cost of $0.802 [($0.007 for paper × 2 pages) + ($0.007 for toner × 2 pages) + $0.73 for postage + $0.044 per envelope], we estimate an additional aggregate annual non-labor cost of $12,631,500. Accounting for the Federal administrative match of 50 percent, the non-labor burden of this requirement will cost States $6,315,750 ($12,631,500 × 0.50). We have summarized the ongoing, annual State outreach burden in Table 30.

States will also need to send notices to beneficiaries to inform them of the loss of a beneficiary's status as a specified excluded individual under § 435.554. We estimate 44 jurisdictions will need to send notices to beneficiaries to inform them of the loss of a beneficiary's status as a specified excluded individual under § 435.554. Per data from our “Medicaid and CHIP Leavers and Coverage Transitions” report, 3.02 million adult non-expansion beneficiaries left Medicaid between March 31, 2023, and December 31, 2023. [ 130 ] We therefore use 3.02 million beneficiaries as a proxy for the number of beneficiaries that will need to be informed of the loss of a beneficiary's status as a specified excluded individual under § 435.554 in a given year, but acknowledge that this number may be higher than the actual number of adult beneficiaries who may lose their status as a specified excluded individual in a given year, given the population differences between these two groups. We estimate it will take 1 minute (0.017 hr) at $38.66/hr for a Mail Clerk to mail the notice of the loss of a beneficiary's status as a specified excluded individual under § 435.554 to 3.02 million beneficiaries. In aggregate, we estimate an annual burden of 51,340 hours (3,020,000 notices × 0.017 hr per mailing) for Mail Clerks to complete all mailings at a cost of $1,984,804 (51,340 hr × $38.66/hr). Accounting for the Federal administrative match of 50 percent, the labor burden of this requirement will cost States $992,402 ($1,984,804 × 0.50).

In addition, the mailing of notices to beneficiaries to inform them of the loss of a beneficiary's status as a specified excluded individual under § 435.554 will add ancillary annual non-labor costs associated with paper, toner, envelopes, and postage. Assuming 3.02 million mailings annually at a cost of $0.802 [($0.007 for paper × 2 pages) + ($0.007 for toner × 2 pages) + $0.73 for postage + $0.044 per envelope], we estimate an additional aggregate annual non-labor cost of $2,422,040 (3,020,000 mailings × $0.802). Accounting for the Federal administrative match of 50 percent, the non-labor burden of this requirement will cost States $1,211,020 ($2,422,040 × 0.50). We have summarized the ongoing State burden associated with mailing notices to beneficiaries to inform them of the loss of a beneficiary's status as a specified excluded individual under § 435.554 in Table 31.