Apr, 20, 2020

COVID-19: CMS Issues Guidance for States About New Increased Medicaid and CHIP Matching Rate

Allison Orris, Alice Lam, and Patricia Boozang, Manatt Health

This post was originally published on March 27, 2020. The version below is updated as of April 20, 2020.

On Wednesday, March 18, Congress enacted, and the President signed into law, the Families First Coronavirus Response Act (FFCRA) (P.L. 116-127), which included a 6.2 percentage point increase in the regular Medicaid matching rate. Moving quickly to provide states with information they need about how the federal medical assistance percentage (FMAP) increase applies, what conditions states must meet to qualify for the increased funds, and how to access the funds, CMS released Frequently Asked Questions (FAQ) about these provisions on March 24. CMS issued updated guidance on April 13, updating some of the earlier FAQs and providing additional FAQs about FFCRA and the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), which was enacted on March 27. The CARES Act includes a modest revision to P.L. 116-127 to assure that all states can qualify for the increased FMAP but does not alter the rate of the increase.

This expert perspective reviews key information for states about the FMAP increase and conditions they must meet to qualify for it.

Medicaid Matching Rate Increase

The 6.2 percentage point FMAP increase–which is available to all states and territories–applies to expenditures (defined by date of payment, not date of service) beginning on January 1, 2020 and will be available to states through the last day of the calendar quarter in which the public health emergency ends, as long as states meet certain requirements.

The increase applies to most Medicaid coverage and benefit expenditures (see exceptions below), including Disproportionate Share Hospital (DSH) payments and payments under Section 1115 waivers that are tied to the state’s regular FMAP. The FMAP increase will be automatically applied; states do not have to take specific action to trigger the increase although they need to be in compliance with the conditions discussed below.[1]

The increase does not apply to the following expenditures, which will continue to be matched at the statutorily established rates (as they applied before enactment of the FFRCA).

  • Administrative expenditures
  • Expenditures under the Affordable Care Act adult group that are matched at 90 percent[2]
  • Expenditures for family planning and health home services that are matched at 90 percent
  • Expenditures matched at 100 percent for individuals in Qualifying Individuals programs
  • Expenditures matched at 100 percent for services at an Indian Health Service (IHS) facility or “received through” an IHS facility
  • Any other Medicaid FMAP that is not determined by the state-specific FMAP rate determined in the first sentence of Section 1905(b) of the Social Security Act (SSA)

CHIP and Other Matching Rate Increases

Because, by statute, the Children’s Health Insurance Program (CHIP) matching rate is derived from the regular Medicaid matching rate (described in the first sentence of Section 1905(b) of the SSA), the new FMAP enhancement also applies to CHIP. However, due to the formula used to develop enhanced CHIP matching rates, the CHIP match is not simply increased by 6.2 percentage points. Rather, the standard enhanced FMAP (EFMAP) calculation for CHIP applies.

CMS provides the following illustrative example in its FAQ:  if a state’s regular Medicaid FMAP is 50 percent and its regular CHIP EFMAP is 65 percent (using the statutory formula to establish the CHIP EFMAP), applying the new FMAP increase would increase the regular Medicaid FMAP to 56.2 percent and the CHIP EFMAP to 69.3 percent. Furthermore, under current law, the EFMAP for CHIP expenditures is increased by an additional 11.5 percentage points for federal fiscal year (FFY) 2020, with a cap of 100 percent. Therefore, in the example above, the EFAMP plus 11.5 percentage points results in a CHIP EFAMP for FFY 2020 of 80.84 percent. CMS notes in its April 13 FAQs that CHIP allotments will not increase as a result of the 6.2 percentage point increase in the FMAP as those allotments are set in statute and the recent legislation did not modify them. CMS also clarifies that the 6.2 percentage point increase would have the same indirect effect on the match rate for CHIP administrative expenditures as it does on CHIP service expenditures because – unlike in Medicaid – CHIP administrative expenditures are matched at the EFMAP rate.[3]

Other expenditures, like expenditures to treat beneficiaries enrolled for breast and cervical cancer treatment only that are reimbursed at the EFMAP would be paid at the newly increased EFMAP (69.3 percent in this example, i.e., the 11.5 percentage point CHIP increase does not apply). The April 14 FAQs clarify that the match rates for  Money Follows the Person demonstration expenditures and Certified Community Behavioral Health Clinic (CCBHC) expenditures also will be indirectly increased as a result of the 6.2 percentage point increase.

Maintenance of Effort, Coverage, and Continuous Coverage Requirements

To qualify for the increased 6.2 percentage point increase, states must meet five requirements specified in the legislation and continue to satisfy these requirements during any calendar quarter in which the FMAP increase is claimed:

  1. Maintain program-wide Medicaid eligibility standards, methodologies, or procedures that are no more restrictive than what the state had in place as of January 1, 2020.
  2. Not charge premiums for any Medicaid beneficiaries that exceed those that were in place as of January 1, 2020.[4]
  3. Cover–without any cost sharing–testing, services and treatments related to COVID-19, including vaccines, specialized equipment, and therapies.
  4. Not terminate any individuals from Medicaid if they were enrolled in the program as of March 18, 2020, or become enrolled during the emergency period, unless the individual voluntarily terminates eligibility or is no longer a resident of the state.
  5. Assure that non-federal share contributions by localities decline in recognition of the increased federal contribution

The first two components are similar to the conditions that applied the last time Congress increased the FMAP, in the American Recovery and Reinvestment Act of 2009 (ARRA). The fourth provision, which CMS calls the “continuous coverage requirement,” is new; it applies effective March 18 (when the legislation went into effect) and is designed to ensure that people do not lose coverage during the emergency period. It also will help lighten the administrative burdens on states during this challenging period; the guidance states that states do not have to conduct renewals during the emergency period (and if they do conduct renewals they cannot terminate coverage based on those renewals).

CMS details the contours of that continuous coverage requirement in both sets of guidance, providing a variety of examples about how it applies. Simply stated, the requirement continues Medicaid coverage through the end of the emergency for beneficiaries determined eligible and enrolled in the program at the beginning of the emergency on March 18: it applies to all Medicaid beneficiaries who were enrolled on or after March 18, 2020, regardless of changes in circumstances that occur during the emergency period. This provision will protect the following groups from losing coverage: women who were enrolled based on pregnancy and who have reached the end of the 60-day post-partum period; children and former foster youth who would otherwise age out of Medicaid; individuals who lose other benefits such as Supplemental Security Income (SSI) that was the basis of their Medicaid eligibility; people who are receiving coverage as a result of a pending administrative appeal; and people for whom current address is unknown.

The second set of FAQs issued on April 14 provided additional examples of how the continuous coverage provision is to be applied. For example, CMS provides numerous examples to illustrate further that states may not terminate eligibility nor make changes that reduce the scope of benefits that enrolled individuals receive during the pendency of the emergency period. Therefore, for example, an individual receiving HCBS services as of March 18would continue to be eligible for such services even if he or she no longer meets the level of care requirements of the waiver. Similarly, an individual aging out of a particular Medicaid category may only be moved to a different eligibility category if it provides the same – or better – benefits as the original eligibility category. The FAQs also clarify that continuous coverage extends to Medicare Savings Programs – Qualified Medicare Beneficiary (QMB), Specified Low-Income Beneficiary (SLMB), and Qualifying Individual (QI) programs – where Medicaid supports helps low-income Medicare beneficiaries afford the costs of their Part A and B premiums, deductibles, and co-insurance. If a Medicare Savings Program beneficiary enrolled as of March 18 is found to no longer meet the eligibility criteria or qualifies for a lesser amount of assistance within the Medicare Savings Programs, the state would not be able to disenroll the individual or move them to another Medicare Savings Program group. CMS is likely to issue additional FAQs in the future to address other questions as states continue to assess their compliance with the continuous coverage requirement.

Even with all of these protections, states can terminate coverage for individuals who request the closure or who move out of state. The continuous coverage requirements do not apply to individuals who were found presumptively eligible for Medicaid but have not yet received a determination of eligibility (it would apply once that determination was made). Nor do states need to provide continuous coverage in separate Title XXI CHIP programs.[5]

Recognizing that many states have already initiated actions to redetermine and/or disenroll certain beneficiaries this month, CMS advises in the FAQs that to qualify for the increased FMAP, those states should make a good faith effort to identify and reinstate individuals whose coverage was terminated on or after March 18 for reasons other than a voluntary request for termination or ineligibility due to residency. States must inform individuals whose coverage was terminated after March 18, 2020 of their continued eligibility and encourage them to contact the state to re-enroll. Where feasible, CMS also advises states to automatically reinstate coverage for individuals terminated after March 18, 2020 and to suspend any terminations already scheduled to occur during the emergency period. Coverage should be reinstated back to the date of termination.

CMS is not conducting reviews for state compliance; rather, CMS asserts in the FAQs that it believes all states can take steps to be compliant and earn the enhanced funding, and that CMS will provide technical assistance to states on this issue.

Key Next Steps for States

CMS quickly issued grant awards [through the Payment Management System (PMS)] to all states reflecting the additional funding associated with the increased FMAP, retroactive to January 1, 2020 and also made funding available for the quarter beginning on April 1. Funds were distributed quickly based on states’ recent budget reports. The amounts will eventually be reconciled against actual state expenditures for the quarter, and CMS plans to provide more guidance to states about required reporting to assure accurate funding going forward.

To access the funds, states must attest to complying with the conditional requirements prescribed by the new legislation, as described above. States will not be asked to provide an upfront demonstration of compliance; rather, CMS is accepting passive attestation that states make when they draw down funds in the PMS. To ensure that they qualify for the FMAP increase, states should implement other eligibility-related changes such as suspending terminations at renewal (or suspending renewals altogether), discontinuances for pregnant women in the post-partum period as well as of individuals “aging out” of Medicaid coverage (e.g. individuals turning 65), and people determined eligible and in a “reasonable opportunity period” to provide additional documentation. Additionally, states should take steps to re-enroll individuals whose eligibility was terminated on or after March 18. CMS is available to provide technical assistance to states as needed.

[1] The April 13 update to the March 24 FAQs clarifies that the increased FMAP applies to the already enhanced Community First Choice matching rate under Section 1915(k) and that the matching rates are additive, so a state would benefit from a total 12.2 percentage point FMAP increase for these expenditures. CMS’s initial set of FAQs indicated that the FFCRA increased FMAP did not apply to these expenditures.

[2] The April 13 FAQ clarify that the 6.2 percentage point increase is available for services provided to “not newly eligible” individuals enrolled in the adult expansion groups in states that do not qualify as an 1905(z) “expansion state.”  In other words, services for individuals in the adult expansion group that are regularly matched at the state’s regular FMAP would be increased by 6.2 percentage points under FFCRA, but services matched at the 90 percent rate are not increased.

[3] States that operate their CHIP programs as an optional expansion of Medicaid eligibility to targeted low-income children (also known as Medicaid expansion CHIP under Social Security Act Section 2103) have the option to claim administrative expenditures as Medicaid administrative expenditures; in such states, the regular Medicaid match would apply, without regard to the 6.2 percentage point increase.

[4] Section 3720 of the CARES Act amends Section 6008 of P.L. 116-127 to provide that a state that increased premiums between January 1 and March 18, 2020 is not ineligible for the increased FMAP during the 30-day period after passage of P.L. 116-127. The provision is intended to give such a state a “grace period“ to secure a legislative change to restore premiums to the level in effect as of January 1, 2020.

[5] Although the continuous coverage provision does not apply to separate CHIP programs, note that states already are subject to a CHIP maintenance of effort provision under Section 2105(d)(3) of the Social Security Act, which prohibits states from applying more restrictive eligibility standards, methodologies, and procedures than were in effect as of March 2009, when the Affordable Care Act was passed.