Daniel Tsai, director of the CMS Center for Medicaid and Children's Health Insurance Program Services, was more specific, telling ABC News that a "'systems glitch' in some states is flagging entire households for further information — and dropping all family members when there's no response — instead of reviewing each individual separately and automatically renewing children who remain eligible."

CMS officials admit they believe that eligibility systems in a number of states are programmed incorrectly, and they note that children often have higher eligibility thresholds than their parents — making them more likely to be eligible for Medicaid or CHIP coverage even if their parents no longer qualify. This conflicts with existing federal Medicaid requirements and may have a disproportionate impact on children.

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"I think it's a very significant problem," Joan Alker, executive director of the Georgetown University Center for Children and Families — which is tracking the Medicaid renewal process in each state — told ABC News. She added that at least half of all states and potentially millions of children likely are affected.

Following the end of pandemic-era conditions for Medicaid coverage, states across the country have resumed regular processes for renewing individuals' Medicaid and CHIP enrollment. One of the strongest tools states have to keep eligible people enrolled in Medicaid or CHIP coverage is conducting auto-renewals (also known as "ex parte" renewals). States are required by federal regulation to use information already available to them through existing reliable data sources (such as state wage data) to determine whether people are still eligible for Medicaid or CHIP. Auto-renewals make it easier for people to renew their Medicaid and CHIP coverage, helping to make sure individuals are not disenrolled due to red tape.

The recent CMS letter directs states to:

1. Immediately pause disenrollments for impacted individuals.
2. Reinstate coverage for all affected individuals.
3. Implement one or more CMS-approved mitigation strategies to prevent continued inappropriate disenrollments.
4. Fix state systems and processes to ensure renewals are conducted appropriately and in accordance with federal Medicaid requirements.

"[The] letter reiterates how critical it is for state compliance with federal law and for ensuring eligible individuals, including children, maintain their health care coverage," according to a statement from CMS. "States must take these steps to protect coverage for eligible individuals, including children, in order to avoid additional federal oversight and action, such as CMS withholding a state's enhanced federal funding or issuing a corrective action plan."