CMS Issues Guidance on FMAP Increase During COVID-19 Outbreak

As my colleague Tom Barker wrote last week, the second emergency COVID-19 supplemental bill (officially referred to as the Families First Coronavirus Response Act), signed by the President on March 18, 2020, included a new section 6008 increasing each state Medicaid program’s federal medical assistance percentage (FMAP) by 6.2% during the period of the current national emergency to the extent they abide by certain minimum standards. CMS has now issued a lengthy FAQ on the availability of these new enhanced Federal funds, which were made retroactive to January 1, 2020 and will continue through the last day of the calendar quarter in which the COVID-19 public health emergency terminations. Experts estimate this funding boost will deliver roughly$35 billion in extra funding to states.

As Tom noted last week, Section 6008 does impose some conditions on states being able to access this higher FMAP rate.  Specifically, a state may not tighten its eligibility standards to a level more restrictive than they were on January 1, 2020.  The limitation applies to “eligibility standards, methodologies, or procedures under a State plan,” including those adopted via a waiver. So, too, states may not increase any applicable premiums for Medicaid coverage, nor may they terminate coverage for individuals currently enrolled in Medicaid until the end of the month in which the public health emergency ends. Lastly, section 6008 conditions the new enhanced FMAP on states offering COVID-19 testing services and treatments (including vaccines) without any cost-sharing.

As we discuss below, much of CMS’ guidance focuses on what states cannot do in order to access the increased FMAP. With an overarching goal of helping states to address immediate public health needs and prevent Medicaid cuts during the COVID-19 outbreak, CMS details a very bright line for the types of actions (or inactions) a state can take in order to access these enhanced dollars. To orient our readers from a historic perspective, we should note that temporary FMAP increases are a common response to economic downturns under both past Democratic and Republic administrations. For example, the 2009 Recovery Act provided an initial 6.2 percentage point FMAP increase to all states, plus increases based on state economic conditions (most states ended up receiving 10%).

In slightly unrelated news, we should flag for our readers that CMS has withdrawn its long-awaited eligibility determination rule, likely in response to concerns about “disturbing” the program during this time of crisis.

In the FAQ, CMS provides even more details to states eager to learn what sorts of “strings” may be imposed under the new FMAP increase.

  • First, CMS notes that while all states and territories are eligible for the 6.2% FMAP increase, the enhanced match rate does not apply to all Medicaid expenditures. In particular, to the extent a particular expenditures is already receiving an enhanced Federal match, the state would not be eligible for this additional FMAP increase. CMS cites, as examples, expenditures for services provided to individuals in the expansion population, for services received through an IHS facility, or for Community First Choice services. In each of these cases (and more), CMS is already providing an enhanced match, and so the additional 6.2% would not apply. Expenditures for Medicaid DSH and eligible expenditures provided under waiver authority would be eligible for the increased FMAP.
  •  To determine whether or not a particular expenditure falls within the period in which the increased FMAP is available, CMS directs states to look at the date the payment is made to the provider, not the date the service is furnished.
  • States are not required to submit a State Plan Amendment (SPA) to take advantage of the increased FMAP.
  • CMS will permit states to make maintenance of effort (MOE) changes during the public health emergency and still allow for the increased FMAP, so long as such changes are less restrictive than prior to the public health emergency. So, for example, a state could lower premiums or streamline an application process. But, a state that, for example, increases premiums would not be eligible for the increased FMAP.
  • In order to maintain eligibility for the increased FMAP, states may not terminate coverage for any individual effective March 18, 2020. This means, for example, a state that has imposed a “community engagement” requirement could not disenroll individuals failing to meet their plan requirements and still maintain eligibility for the increased FMAP. CMS notes that if a state has already disenrolled an individual, they should offer to reinstate those individuals. This restriction applies going forward and throughout the emergency — so, as new individuals are added to the Medicaid rolls during this COVID-19 outbreak, the continuous coverage requirements will also apply to them.
  • The requirement to maintain continuous coverage is strict. While states are welcome to continue to conduct redeterminations and renewals, the only reasons a state may disenroll an individual during the emergency period and still maintain eligibility for the increased FMAP is: (1) the individual is no longer a resident of the state; or (2) the individual requests voluntary termination. Thus, even if an individual ages out of Medicaid, has a change in income, or loses receipt of benefits that may affect their eligibility, they still cannot be disenrolled.
  • CMS expects states will receive the first set of funding for the increased FMAP through their Payment Management System by March 25, 2020 for the period beginning January 1, 2020 through March 31, 2020.

Perhaps most notable in the guidance — the maintenance of effort requirements set forth in section 6008 and further detailed in the FAQ imposed upon those states receiving the increased FMAP under the Families First Coronavirus Response Act are quite strict. This is of course not by accident – in light of the ongoing public health emergency, Congress has offered states a “carrot” to keep in place coverage and benefits for those enrolled in – or soon to be enrolled in – their Medicaid programs. In light of unprecedented unemployment claims, we expect state Medicaid rolls will soon enter a period of rapid growth. It was clearly Congress’ hope that the increased FMAP will attract interest from states already struggling to maintain tight budgets. Still, advocates continue to press Congress for additional action, arguing that the increased FMAP, while welcome, is simply insufficient.

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