October 29, 2018Updated July 30, 2019
Medicaid Funding for the Territories
Medicaid is a joint federal-state program that finances the
delivery of primary and acute medical services, as well as
long-term services and supports. Participation in Medicaid
is voluntary, though all states, the District of Columbia
(DC), and the territories (i.e., American Samoa,
Commonwealth of the Northern Mariana Islands [CNMI],
Guam, Puerto Rico, and the U.S. Virgin Islands) choose to
participate. The territories operate Medicaid programs
under rules that differ from those applicable to the 50 states
and DC.
Figure 1. Proportion of Federal Medicaid Funding
from Annual Capped Funding and ACA Funding
(FY2017)
Medicaid in the Territories
American Samoa and CNMI operate their Medicaid
programs under the Section 1902(j) waiver authority. Under
these waivers, the only Medicaid requirements that may not
be waived by the Secretary of Health and Human Services
(HHS) are (1) the federal medical assistance percentage
(FMAP) rate (i.e., federal matching rate); (2) the annual
federal capped funding; and (3) the requirement that
payment be made for services described in Section 1905(a)
of the Social Security Act (SSA)otherwise coverable under
Medicaid.
For Guam, Puerto Rico, and the U.S. Virgin Islands, most
of the eligibility and benefit requirements for the 50 states
and DC apply. However, it has been documented that these
three territories do not cover all of the federally mandated
coverage groups or benefits.
The five territories all have the same FMAP rate of 55%.
By contrast, the FMAP for the 50 states and DC varies by
state according to each state’s per capita income and can
range from 50% to 83%.
Federal Medicaid funding to the states and DC is openended, but the Medicaid programs in the territories are
subject to annual federal capped funding.
Federal Medicaid Funding
Source: CRS analysis of data received from the Centers for
Medicare & Medicaid Services (CMS) on May 9, 2018.
Notes: ACA = Patient Protection and Affordable Care Act (P.L. 111148, as amended); CNMI = Commonwealth of the Northern Mariana
Islands.
The territories also receive SSA Section 1935(e) funding in
addition to the annual federal capped funding. This funding
is sometimes referred to as the enhanced allotment program
(or EAP), and territories receive these funds in lieu of their
residents being eligible for low-income subsidies under
Medicare Part D. The territories can use this funding to
provide prescription drug coverage under Medicaid for lowincome Medicare beneficiaries.
The following provides additional information about the
annual federal capped funding, the ACA funding, and the
additional funding provided to Puerto Rico and the U.S.
Virgin Islands.
The federal Medicaid funding for the territories comes from
a few different sources. The permanent source of federal
Medicaid funding for the territories is the annual federal
capped funding, which has been supplemented by Patient
Protection and Affordable Care Act (ACA; P.L. 111-148, as
amended) funding since July 1, 2011. Two territories
(Puerto Rico and the U.S. Virgin Islands) have requested
and received funding in addition to the ACA funding.
Annual Federal Capped Funding
The Medicaid programs in the territories are subject to
annual federal capped funding. These Medicaid cap
amounts vary by territory and increase annually according
to the change in the medical component of the Consumer
Price Index for All Urban Consumers. Once the cap is
reached, the territories assume the full cost of Medicaid
services or, in some instances, may suspend services or
cease payments to providers until the next fiscal year.
Figure 1 shows the proportion of annual federal capped
funding and ACA Medicaid funding used by each territory
in FY2017. The aggregate total of the annual federal capped
funding for the territories was $400.0 million. Each territory
spent through its capped funding, at which point, the
territories used an aggregate of $1.2 billion in ACA
funding.
Certain Medicaid expenditures are disregarded for purposes
of the annual federal capped funding, such as (1) Medicaid
Electronic Health Record Incentive Program payments and
(2) design and operation of the claims and eligibility
systems. Also, for Puerto Rico and the U.S. Virgin Islands,
Medicaid Fraud Control Unit (MFCU) expenditures are
disregarded.
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Medicaid Funding for the Territories
ACA Funding
Prior to the ACA, all five territories typically exhausted
their federal Medicaid annual federal capped funding before
the end of the fiscal year. For this reason, the ACA included
a provision that provides $6.3 billion in additional Medicaid
federal funding to the territories available between July 1,
2011, and September 30, 2019. The $6.3 billion was
distributed among the territories in an amount proportional
to the annual capped amounts: Puerto Rico ($5.5 billion),
the U.S. Virgin Islands ($273.8 million), Guam ($268.3
million), American Samoa ($181.3 million), and CNMI
($100.1 million).
ACA Section 1323 provides $1.0 billion in additional
Medicaid funding to the territories that did not establish
health insurance exchanges. Because none of the territories
established exchanges, the territories all received additional
federal Medicaid funds. The provision specified that Puerto
Rico receive $925 million, and the HHS Secretary
distributed the remaining funding among the other four
territories. This funding is available January 1, 2014,
through December 31, 2019.
Figure 2 shows the percentage of each territory’s ACA
funding that each territory utilized from FY2011 through
FY2017. Puerto Rico used 94% of its ACA funding during
this period; it is the only territory that had used any of the
ACA Section 1323 funding through FY2017.
Figure 2. Percentage of ACA Funding Utilized
(FY2011 through FY2017)
relief. In September and October 2018, CNMI and Guam
were affected by Typhoons Mangkhut and Yutu.
In February 2018, the Bipartisan Budget Act of 2018 (BBA
2018; P.L. 115-123) increased the federal Medicaid funding
for the period of January 1, 2018, through September 30,
2019, by $3.6 billion for Puerto Rico and $106.9 million for
the U.S. Virgin Islands.
This funding may be further increased by $1.2 billion for
Puerto Rico and $35.6 million for U.S. Virgin Islands if the
HHS Secretary certifies that each territory has taken steps
to (1) report reliable data to the Transformed-Medicaid
Statistical Information System (T-MSIS) and (2) establish
an MFCU.
For all the additional federal Medicaid funding for Puerto
Rico and the U.S. Virgin Islands provided in BBA 2018,
the FMAP (i.e., federal matching rate) is increased from
55% to 100% (i.e., fully federally funded).
Conclusion
Table 1 shows that the territories are increasingly relying
on the ACA funding for their Medicaid programs. Since
FY2012, in every year, a majority of the federal Medicaid
funding has come from the ACA funding.
The $6.3 billion in additional Medicaid federal funding and
the additional funding provided to Puerto Rico and the U.S.
Virgin Islands will expire after September 30, 2019, and the
$1.0 billion in ACA Section 1323 funding will expire after
December 31, 2019. Without this funding, each territory
will need to make decisions about how to deal with its loss
of this federal funding. The territories could (1) make
programmatic changes (e.g., restrict eligibility or cut
benefits); (2) suspend Medicaid programs when the annual
spending cap is exhausted; or (3) increase territory funding
of Medicaid (if possible).
Table 1. Federal Medicaid Funding for All Territories
from Annual Capped Funding and ACA Funding
($ in millions)
Annual Capped
Funding
ACA Funding
FY2011
$334.2
$291.5
FY2012
$343.2
$586.0
Source: CRS analysis of data received from CMS on May 9, 2018.
Notes: See Figure 1.
FY2013
$355.5
$717.9
FY2014
$369.1
$889.5
Disaster Supplemental
The Additional Supplemental Appropriations for Disaster
Relief Act, 2019 (P.L. 116-20), included some Medicaid
financing provisions impacting CNMI, American Samoa,
and Guam.
For CNMI, P.L. 116-20 increased the federal Medicaid
funding for the period of January 1, 2019, through
September 30, 2019, by $36 million. For this additional
funding, the FMAP is increased from 55% to 100%.
For American Samoa and Guam, P.L. 116-20 increased the
FMAP from 55% to 100% for the territories’ share of the
$6.3 billion in additional Medicaid federal funding provided
in the ACA. Separately, American Samoa and Guam are
supposed to submit plans to report reliable data to the TMSIS by September 30, 2019.
Conclusion
The territories are increasingly relying on the ACA funding
for their Medicaid programs. Since FY2012, in every year,
a majority of the federal Medicaid funding has come from
the ACA funding.
Source: CRS analysis of data received from CMS on May 9, 2018.
Notes: See notes from Figure 1.
Additional Funding for Puerto Rico
Because Puerto Rico had spent most of its ACA funding, in
May 2017, Puerto Rico was provided an additional $296
million in federal Medicaid funding through the
Consolidated Appropriations Act, 2017 (P.L. 115-31). That
funding is available through September 30, 2019.
FY2015
$377.9
$1,300.0
FY2016
$385.9
$1,364.2
FY2017
$399.6
$1,210.7
The Bipartisan Budget Act of 2018
WithIn spite of the additional funding from P.L. 115-31, Puerto Rico
Rico still did not have enough funding to cover the federal share
share of Medicaid for FY2018 and FY2019. Then, in September
September 2017, both Puerto Rico and the U.S. Virgin
Islands were
affected by Hurricane Irma and Hurricane
Maria, and both
territories requested federal Medicaid relief. In September
and October 2018, CNMI and Guam were affected by
Typhoons Mangkhut and Yutu.
Source: CRS analysis of data received from CMS on May 9, 2018.
Notes: ACA = Patient Protection and Affordable Care Act (ACA,
P.L. 111-148 as amended). ACA funding includes the $6.3 billion in
additional Medicaid funding and the ACA Section 1332 funding.
The $6.3 billion in additional Medicaid federal funding and
the funding provided in the Consolidated Appropriations
Act, 2017; BBA 2018; and the Additional Supplemental
Appropriations for Disaster Relief Act, 2019, will expire
after September 30, 2019, and the $1.0 billion in ACA
Section 1323 funding will expire after December 31, 2019.
Each territory will need to make decisions about how to
deal with its loss of this federal funding. The territories
could (1) make programmatic changes (e.g., restrict
eligibility or cut benefits); (2) suspend Medicaid programs
when the annual spending cap is exhausted; or (3) increase
territory funding of Medicaid (if possible).
Alison Mitchell, Specialist in Health Care Financing
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IF11012
Medicaid Funding for the Territories
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