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