In New Jersey, Medicaid Backlog Leaves Families Uninsured, Could Prompt ACA Penalties

Several states hit backlogs enrolling the flood of new Medicaid recipients under the Affordable Care Act (ACA), but New Jersey's experience appears to be in a category of its own: an effort to upgrade antiquated computer systems and fold in the ACA at the same time failed miserably, leaving an estimated 11,000 residents without coverage as 2014 ends.

A massive backlog of unprocessed Medicaid applications in New Jersey is causing thousands of families to go without insurance—and medical care—they should receive under the Affordable Care Act (ACA). What’s worse, according to a special report in the state’s largest newspaper, these families could face penalties under the ACA for not having coverage, despite their efforts to gain it.

A December 23, 2014, report by Kathleen O’Brien of NJ Advance Media, appearing in The Star-Ledger and nj.com, detailed how an estimated 11,000 people remain without Medicaid coverage, more than a year after the start of ACA open enrollment last fall. The report outlines how the state’s efforts to upgrade antiquated computer systems, for Medicaid and other welfare programs, missed the mark in time to capture the flood of Medicaid applications that were anticipated in New Jersey.

Even with the backlog, since October 2013 Medicaid grew by 25%, and the state reports enrolling 300,000 adults through Medicaid expansion. The worry is that with a new round of open enrollment just concluded for coverage that takes effect this week, the backlog will swell again.

Now, applications are being inputed county by county, using paper forms that are stuffed in boxes under workers’ desks. Families in dire need of care make personal appointments to check on their applications or end-run the process by calling in favors with local politicians to expedite things, according to the report. As O’Brien wrote, “New Jersey has yet to announce a permanent solution.”

In the meantime, New Jersey has cancelled a $118 million contract with Hewlett-Packard, which would respond to the report, and the state auditor found the project riddled with “delays and defects.”

Matt Salo, executive director of the National Association of Medicaid Directors, told nj.com that New Jersey was one of a handful of states in which the software upgrades to implement the ACA were a “colossal failiure,” despite the fact that the law provided funds to ease the transition. As O’Brien’s report pointed out, New Jersey’s upgrade of 1980s technology was already underway, and once healthcare reform passed, an effort was made to add ACA and Medicaid expansion to the mix.

Salo did not attribute the failure to politics. “There was just a gross underestimation of how long it would take,” he said. It’s worth noting that New Jersey Human Services Commissioner Jennifer Velez, is a career civil servant who started her tenure under Democrat Jon Corzine and stayed on under Republican Governor Chris Christie.

Also, much of the day-to-day work in Medicaid and welfare administration occurs in New Jersey’s 21 counties, which operate in their own spheres of influence. The Hewlett-Packard contract was supposed to better connect this decentralized delivery system.

NJ Spotlight, which covered the state auditor’s recent testimony, reported that the Hewlett-Packard contract was reached during the waning days of Corzine’s tenure in 2009, and that contract managers have changed multiple times since then.

It’s unclear what will be done to families who have pending applications with the state for Medicaid but did not get coverage during 2014 because of the delays, which are well-known to the federal government. Salo told nj.com that for now, CMS has not sent New Jersey a warning letter about its delays, as it has a few other states.

California experienced a class action lawsuit over its delays, and a health plan and its contractor were sued by a patient who attributed a permanent injury to a delay in seeing a specialist because of an inadequate network under the ACA.

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