The parents of 6-year-old Makayla Jefferson were livid after discovering last week during a visit to the doctor that she had been cut from the Quest health insurance program.

Her father, Michael, said the Ewa Beach family went home and found one previously overlooked notice — a cancellation letter — from Quest, the state’s version of Medicaid, informing them that Makayla was being dropped from the program because they didn’t return an eligibility renewal form.

"I never found any notice from before then, just one cancellation letter," said Jefferson, the family’s sole provider, who earns $40,000 annually. Quest had covered Makayla, but not her parents. "We’re stressed out and confused. We’re a family with one income so sudden changes like that matter to us a lot. My daughter still doesn’t have coverage. It will be pretty scary if something did happen during this gap period of coverage."

The state Department of Human Services, which administers the Medicaid health insurance program for low-income residents, told the Honolulu Star-Advertiser last week that families with children would be "passively renewed," or automatically re-enrolled in Quest, even if they didn’t return the renewal forms.

But after the newspaper published a story Sunday, the DHS said it had provided incorrect information regarding who was required to respond to renewal notices. Roughly 200,000 Quest members — including 110,000 children — must return the forms beginning in April or they will lose health insurance, DHS said.

"To clarify, all Quest households, including those with children, must return their completed (eligibility renewal) forms or they will lose Quest coverage," DHS spokeswoman Kayla Rosenfeld wrote in an email Tuesday.

For some Quest members, like the Jeffersons, it is already too late.

"This is outrageous," said state Sen. Roz Baker (D, West Maui-South Maui), chairwoman of the Senate Commerce and Consumer Protection Committee. "They ought to be making every attempt to keep these kids on health insurance. It just tells you that maybe the whole program is being mismanaged."

Jefferson’s wife, Liana, received a Quest termination notice dated April 16, notifying them that Makayla’s coverage would end on April 30 and that her application was forwarded to the Hawaii Health Connector, the online insurance marketplace created by the federal Affordable Care Act. The Connector’s open enrollment period ended April 30.

"There’s no way to use the Health Connector to get her private coverage. All this is happening right after their enrollment period for the Hawaii Health Connector closed," Michael Jefferson said, adding that his daughter has been covered by Quest since birth. "There’s a lot of parents who probably don’t even realize their kids lost their coverage yet. I’m sure they disrupted a lot of people."

The mailing of renewal notices in Hawaii was prompted by the Affordable Care Act, which requires Medicaid programs in all states to collect additional information on income and tax status, the DHS said. In Hawaii, eligibility for adults is limited to those earning no more than 138 percent of the federal poverty level, or $18,257 for individuals and $37,384 for a family of four. Children have different eligibility requirements.

Baker blasted the DHS for its handling of the renewals. "This seems to me to be something else they’re trying to use as a way to blame some other issue on the Affordable Care Act and Health Connector," she said. "They come up with all these lame excuses. Now they’re coming back and throwing kids off the program. This is something they’ve obviously been calculating for a while. I cannot trust them any longer to tell the truth. … It’s really very disturbing."

Baker said the Legislature must rein in the DHS to ensure transparency in the Medicaid program. "They don’t want to take any ownership for anything that they do and that’s the problem," she said. "It’s frustrating."

Until now, Quest members were automatically renewed each year, leaving the possibility that the state was paying for health insurance for people who no longer lived in Hawaii, were no longer qualified based on income, or had obtained insurance from another source.

The state has used "passive renewal" since 2004 because officials wanted "to eliminate barriers to continued coverage and to promote access to medical coverage for families with children," Rosenfeld said."However, it became apparent that the passive renewal policy resulted in a number of people being enrolled who are not eligible."

She added, "DHS has tried to stop this practice, but the federal government has failed to approve the request."

The Hawaii Medicaid program costs taxpayers roughly $2 billion a year with about half coming from the state and half from the federal government.

DHS said it is mailing eligibility renewal forms to about 102,000 Quest households — except people who are aged, blind or disabled — between April and September. The state will require renewal forms be sent in only this year and then will return to passive renewals. DHS is anticipating that beginning in October it will be able to verify eligibility based on information it has or can access from existing data sources.

The state launched a $95 million online eligibility system late last year to streamline the Medicaid process. But DHS eligibility workers, who asked not to be identified for fear of retaliation, said the system is not working properly and cannot verify income to determine whether people actually qualify for the program. DHS has said that it is verifying income manually and hopes to connect with both state and federal data hubs to determine Medicaid eligibility this year.