Updated July 30, 2019May 27, 2020
Medicaid FundingFinancing 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 themedical services for low-income individuals.
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.
the District of Columbia (DC).
drug coverage under Medicaid for low-income Medicare
beneficiaries.
Figure 1. Proportion of Federal Medicaid Funding
from Annual Capped Funding and ACAAdditional Funding
(FY2017)
Medicaid in the Territories
FY2020)
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 madeMedicaid payments are for services 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 states
apply. However, the Government Accountability Office has
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%.
coverage groups or benefits.
Medicaid financing for the territories is different from the
financing for the states. Federal Medicaid funding to the
states and DC is openendedopen-ended, 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 subject to annual federal capped funding.
The FMAP rate for the territories is not determined using
the FMAP formula used for the states and DC.
Federal Medicaid Funding
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 various
funding sources since July 1, 2011.
Figure 1 shows the proportion of each territory’s federal
Medicaid funding from annual federal capped funding and
additional Medicaid funding in FY2020. The aggregate
total of the annual federal capped funding for the territories
is $431.5 million, and the aggregate additional federal
Medicaid funding for all the territories is $3.1 billion. After
each territory spends through its capped funding, it has
access to additional federal Medicaid funding.
Usually, the territories also receive Section 1935(e) of the
Social Security Act (SSA) funding in addition to the annual
federal capped funding, but for FY2020 and FY2021, the
1935(e) funding comes out of the additional Medicaid
funding. Section 1935(e) 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
Source: SSA §1108(g)(2) and (6); Medicaid and CHIP Payment and
Access Commission, Medicaid and CHIP in the Territories, April 2020.
Notes: CNMI = Commonwealth of the Northern Mariana Islands;
USVI = U.S. Virgin Islands.
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, absent additional federal funding, 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.
providers until the next fiscal year.
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
disregarded.
Additional Medicaid Funding
Prior to the Patient Protection and Affordable Care Act
(ACA; P.L. 111-148, as amended), 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).
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.
The Bipartisan Budget Act of 2018
In spite of the additional funding from P.L. 115-31, Puerto
Rico still did not have enough funding to cover the federal
share of Medicaid for FY2018 and FY2019. Then, in
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
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 additional Medicaid federal
funding for all of the territories. Certain territories received
additional federal funding through the Consolidated
Appropriations Act, 2017 (P.L. 115-31); the Bipartisan
Budget Act of 2018 (P.L. 115-123); and the Additional
Supplemental Appropriations for Disaster Relief Act, 2019
(P.L. 116-20). All of these funds expired on either
September 30, 2019, or December 31, 2019.
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Medicaid Financing for the Territories
On December 20, 2019, the Further Consolidated
Appropriations Act, 2020 (P.L. 116-94), was enacted; this
law includes additional federal Medicaid funding for all of
the territories for FY2020 and FY2021 that was later
increased through the Family First Coronavirus Response
Act (FFCRA; P.L. 116-127). Table 1 shows the additional
funding amounts for FY2020 and FY2021.
For the remainder of FY2020 (i.e., December 21, 2019,
through September 30, 2020) and FY2021, P.L. 116-69
increases the FMAP rate for the territories from 55% to
83% for American Samoa, CNMI, Guam, and the U.S.
Virgin Islands and from 55% to 76% for Puerto Rico.
These matching rates for the remainder of FY2020 and
FY2021 could be reduced if the territories do not comply
Table 1. Additional Federal Medicaid Funding for
with certain program integrity requirements. All the
territories are required to designate a program integrity
FY2020 and FY2021
lead. Puerto Rico is also required to publish (1) a plan to
($ in millions)
develop measures to satisfy the payment error rate
measurement requirements; (2) a contracting reform plan
FY2020
FY2021
to combat fraudulent, wasteful, or abusive Medicaid
American Samoa
$86.3
$85.6
contracts; and (3) a plan to comply with the Medicaid
eligibility quality control requirements.
CNMI
63.1
62.3
Guam
130.9
129.7
FFCRA increases the FMAP rate for all states, DC, and
the territories by 6.2 percentage points beginning January
Puerto Rico
2,716.2
2,809.1
1, 2020, and ending on the last day of the calendar
quarter in which the last day of the Coronavirus Disease
USVI
128.7
127.9
2019 (COVID-19) pandemic public health emergency
Total
$3,125.2
$3,214.6
period. As a result, in FY2020 and FY2021, during this
Source: SSA §1108(g)(2) and (6).
period, the FMAP rate for American Samoa, CNMI, Guam,
and the U.S. Virgin Islands is 89.2% and the FMAP rate for
Notes: CNMI = Commonwealth of the Northern Mariana Islands;
Puerto Rico is 82.2%.
USVI = U.S. Virgin Islands.
Through a provision in P.L. 116-94, Puerto Rico could
receive an additional $200 million in each of FY2020 and
FY2021 if Puerto Rico establishes a floor for Medicaid
physician payment rates that is 70% of the Medicare
payment rate in Puerto Rico for those services.
The territories are to submit annual reports to Congress no
later than 30 days after the end of FY2020 and FY2021 to
describe how the territories increase access to health care
under Medicaid using the additional Medicaid funding and
the increased FMAP rates provided in P.L. 116-94.
FMAP Rates
The federal share of most Medicaid expenditures is
determined by the FMAP rate. The FMAP rates for the 50
states and DC are determined annually and vary by state
according to each state’s per capita income. The rates can
range from 50% to 83%. By contrast, the FMAP rates for
the territories have been set at 55% since July 1, 2011; this
means each territory gets 55 cents back from the federal
government for almost every dollar the territory spends on
its Medicaid program up to the federal funding limits (i.e.,
annual capped funding and additional Medicaid funding).
For FY2020 and FY2021, FMAP rates for the territories
have been temporarily increased through a few laws. Table
2 shows FMAP rates for FY2019 through FY2022.
For the beginning of FY2020 (i.e., October 1, 2019, through
December 20, 2019), the FMAP rate for the territories was
increased to 100% (i.e., fully federally funded) for all
territories through the Continuing Appropriations Act,
2020; the Health Extenders Act of 2019 (P.L. 116-59); the
Further Continuing Appropriations Act, 2020; and the
Further Health Extenders Act of 2019 (P.L. 116-69).
Conclusion
The territories are increasingly relying on the additional
Medicaid funding for their Medicaid programs. In every
year since FY2012, a majority of the federal Medicaid
funding has come from the additional Medicaid funding.
The additional Medicaid federal funding and the increased
FMAP rates expire after September 30, 2021. 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 2. FMAP Rates for the Territories
American
Samoa, CNMI,
Guam, and
USVI
FY2019
Puerto Rico
55%
55%
100%
100%
83%
76%
FY2021
83%
76%
FY2022
55%
55%
FY2020
Through 12/20/19
After 12/20/19
Source: SSA §1905(b) and (ff).
Notes: The FMAP rates do not include the FFCRA FMAP increase of
6.2 percentage points during the COVID-19 pandemic public health
emergency period. CNMI = Commonwealth of the Northern Mariana
Islands; USVI = U.S. Virgin Islands.
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Medicaid Financing for the Territories
IF11012
Alison Mitchell, Specialist in Health Care Financing
Disclaimer
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