The legislation passed by Congress to provide $26 billion in federal aid to states to save education jobs included $16 million for state Medicaid programs. The following analysis is provided by PCG Subject Matter Expert Tom Entrikin.
President Obama signed legislation on August 10 that partially extends an increase in Medicaid federal medical assistance percentages (FMAP) for all states. This partial extension offers a 3.2 percentage point increase for all states for the quarter ending 3/31/11 and a 1.2 percentage point increase for the quarter ending 6/30/11. It extends for six months but phases down a provision of the American Recovery and Reinvestment Act (ARRA) of 2009 -- due to expire abruptly for the quarter ending 12/31/10 – that offered a fixed 6.2 percentage point increase in FMAP for all states plus a variable increase based on each state’s reported unemployment statistics. It extends for six months all of the ARRA requirements related to maintenance of eligibility standards, timely payment, reporting, maintenance of state financial effort as compared with the financial contributions of political subdivisions, and other conditions for receipt of the FMAP increases stipulated in the ARRA. It adds a new requirement that each state certify within 45 days of enactment that the state will actually “request and use” the additional funds. It will provide up to $16 billion in fiscal relief to the states for 1/1/11-6/30/11 and other provisions of the new legislation offer up to $10 billion to states in fiscal relief for public education. However, as the requirements applicable to state Medicaid agencies in the new legislation are nearly identical to the requirements in the ARRA, the FMAP increases in the six month extension period will be much lower than under the ARRA, and nearly all states face growing budget shortfalls in FY’ 11, nearly all state Medicaid agencies will continue to face severe pressures to control Medicaid service utilization and provider payment rates.