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Updated September 15, 2022
Medicaid Financing for the Territories
Medicaid is a joint federal-state program that finances the
reached, absent another source of federal funding, the
delivery of medical services for low-income individuals.
territories assume the full cost of Medicaid services or, in
The territories (i.e., American Samoa, the Commonwealth
some instances, may suspend services or cease payments to
of the Northern Mariana Islands [CNMI], Guam, Puerto
providers until the next fiscal year.
Rico, and the U.S. Virgin Islands [USVI]) operate Medicaid
programs under rules that differ from those applicable to
Certain Medicaid expenditures are disregarded for purposes
the 50 states and the District of Columbia (DC).
of the annual federal capped funding, such as (1) Medicaid
Electronic Health Record Incentive Program payments, (2)
American Samoa and CNMI operate their Medicaid
design and operation of the claims and eligibility systems,
programs under the Section 1902(j) waiver authority. Under
(3) services for citizens of Freely Associated States (the
these waivers, the only Medicaid requirements that may not
Marshall Islands, Micronesia, and Palau), and
be waived are (1) the federal medical assistance percentage
(4) Coronavirus Disease 2019 (COVID-19) vaccines during
(FMAP) rate (i.e., federal matching rate); (2) the annual
the COVID-19 public health emergency period. Also, for
federal capped funding; and (3) the requirement that
Puerto Rico and USVI, Medicaid Fraud Control Unit
Medicaid payments are for services otherwise coverable.
expenditures are disregarded.
For Guam, Puerto Rico, and USVI, most of the eligibility
Supplemental Medicaid Funding
and benefit requirements for the states apply. However, the
Prior to the Patient Protection and Affordable Care Act
Government Accountability Office (GAO) has documented
(ACA; P.L. 111-148, as amended), all five territories
that these three territories had not covered all of the
typically exhausted their Medicaid annual federal capped
federally mandated coverage groups or benefits.
funding before the end of the fiscal year. For this reason,
the ACA included supplemental Medicaid federal funding
Medicaid financing for the territories is different from the
for all of the territories; later legislation provided additional
financing for the states. Federal Medicaid funding to the
federal funding to certain territories. All of these funds
states and DC is open-ended, but the Medicaid programs in
expired on either September 30 or December 31, 2019.
the territories are subject to annual federal capped funding.
The FMAP rate for the territories is not determined using
Funding for FY2020 and FY2021
the FMAP formula used for the states and DC.
The Further Consolidated Appropriations Act, 2020 (P.L.
116-94), as amended by the Family First Coronavirus
Federal Medicaid Funding
Response Act (FFCRA; P.L. 116-127), provided
Federal Medicaid funding for the territories has come from
significantly increased federal annual capped funding for
a few different sources. The permanent source is the annual
Medicaid to the territories for FY2020 and FY2021. Table
federal capped funding, which was supplemented by
1 shows these funding amounts, which are comparable to
various funding sources from July 1, 2011, through
what the territories received in recent years through the
December 31, 2019. During this period, most of the federal
combination of the annual federal capped funding and the
Medicaid funding for the territories was provided through
supplemental Medicaid funding.
the supplemental funding rather than the annual federal
capped funding.
Table 1. Annual Federal Capped Funding for FY2020,
FY2021, and FY2022
The territories also receive Section 1935(e) of the Social
($ in mil ions)
Security Act (SSA) funding in addition to the annual
federal capped funding. Section 1935(e) funding is
FY2019
FY2020
FY2021
FY2022
sometimes referred to as the Enhanced Allotment Program
American
(or EAP), and territories receive these funds in lieu of their
$12.2
$86.3
$85.6
$87.9
Samoa
residents being eligible for low-income subsidies under
Medicare Part D. The territories can use this funding to
CNMI
$6.7
63.1
62.3
64.0
provide prescription drug coverage under Medicaid for low-
income Medicare beneficiaries.
Guam
$18.0
130.9
129.7
133.2
Puerto
Annual Federal Capped Funding
$366.7
2,716.2
2,809.1
2,943.0a
Rico
The Medicaid programs in the territories are subject to
annual federal capped funding. These Medicaid cap
USVI
$18.3
128.7
127.9
131.4
amounts vary by territory and increase annually according
Total
$421.9
$3,125.2
$3,214.6
$3,359.5
to the change in the medical component of the Consumer
Price Index for All Urban Consumers. Once the cap is
Source: Communication from Centers for Medicare & Medicaid
Services (CMS) June 2019 for FY2019; SSA §1108(g)(2) and (6) for
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FY2020 and FY2021; CMS letters to territories September 24, 2021
federally funded) for all territories. For the remainder of
for FY2022.
FY2020 (i.e., December 21, 2019, through September 30,
Notes: CNMI = Commonwealth of the Northern Mariana Islands;
2020) and FY2021, the FMAP rate for the territories was
USVI = U.S. Virgin Islands. FY2019 annual capped funding was
increased from 55% to 83% for American Samoa, CNMI,
significantly supplemented by other funding sources (see
Guam, and USVI and from 55% to 76% for Puerto Rico.
“Supplemental Medicaid Funding”). Table does not include the $200
These increased FMAP rates were extended for FY2022
mil ion for Puerto Rico (see “Additional Funding for Puerto Rico”).
and the beginning of FY2023 through multiple laws;
a. The Government Accountability Office’s legal review of the
currently, the increased FMAP rates have been extended
statutory language found this funding amount was not
through December 13, 2022. (Puerto Rico’s FMAP rate
authorized (see “Funding for FY2022”).
reverted to 55% for the period of December 14, 2021,
through December 30, 2021.)
Funding for FY2022
For FY2022, the Centers for Medicare & Medicaid Services
FFCRA increases the FMAP rate for all states, DC, and the
(CMS) construed the effect of the amendments that
territories by 6.2 percentage points beginning January 1,
provided federal Medicaid funding to the territories in
2020, and ending on the last day of the calendar quarter in
FY2020 and FY2021 as providing federal Medicaid
which is the last day of the COVID-19 pandemic public
funding to the territories comparable to the annual capped
health emergency period.
funding provided in either FY2020 (for Puerto Rico) or
FY2021 (for the other territories). CMS informed each
Conclusion
territory of its FY2022 Medicaid funding level through
Federal Medicaid financing for the territories is uncertain
letters sent in September 2021. (See Table 1.)
for FY2023 and subsequent years. First, without legislation,
the federal Medicaid annual federal capped funding for
The Extending Government Funding and Delivering
Puerto Rico is uncertain after the legal review from GAO.
Emergency Assistance Act (P.L. 117-43) included a
Also, the FMAP rate for the territories has been increased
provision for GAO to provide a legal review of the statutory
through December 13, 2022; if the increased FMAP rate
language on the most plausible plain reading of how such
expires, the territories would have to pay for a much larger
FY2022 allotment levels should be calculated. GAO
share of the Medicaid program.
concluded “ ... that section 1108(g) requires that HHS base
its calculation of the FY 2022 allotment for Puerto Rico on
Table 2. FMAP Rates for the Territories
the territory’s allotment for FY 2019, rather than FY 2020.
American
Accordingly, HHS’s FY 2022 allotment of $2,943,000,000
Samoa,
for Puerto Rico was not authorized.” CMS sent a letter to
CNMI,
Puerto Rico
Puerto Rico after GAO released the legal review contending
Guam,
that the agency accurately calculated Puerto Rico’s FY2022
and USVI
funding amount.
FY2019
55%
55%
Additional Funding for Puerto Rico
FY2020
A provision in P.L. 116-94 provided Puerto Rico with an
additional $200 million in federal Medicaid funding for
Oct. 1-Dec. 20
100%
100%
each of FY2020 and FY2021 if Puerto Rico established a
Dec. 21-Sept. 30
83%
76%
floor for Medicaid physician payment rates that is 70% of
the Medicare rate in Puerto Rico for those services. Puerto
FY2021
83%
76%
Rico received this funding in both FY2020 and FY2021.
FY2022
83%
76%
This funding also was provided in FY2022 through the
Consolidated Appropriations Act, 2022 (P.L. 117-103).
Oct. 1-Dec. 3
83%
76%
FMAP Rates
Dec. 4-Dec. 31
83%
55%
The federal share of most Medicaid expenditures is
Jan. 1-Sept. 30
83%
76%
determined by the FMAP rate. The FMAP rates for the 50
states and DC are determined annually and vary by state
FY2023
according to each state’s per capita income. The rates can
Oct. 1-Dec. 13
83%
76%
range from 50% to 83%. By contrast, the FMAP rates for
the territories have been set at 55% since July 1, 2011; this
Dec. 14-Sept. 30
55%
55%
means each territory gets 55 cents back from the federal
FY2024
55%
55%
government for almost every dollar the territory spends on
its Medicaid program up to the federal funding limits.
Source: SSA §1905(b) and (ff).
Notes: FMAP rates do not include the FFCRA FMAP increase of 6.2
For FY2020 through FY2022, FMAP rates for the
percentage points during the COVID-19 pandemic public health
territories have been temporarily increased through a
emergency period. CNMI = Commonwealth of the Northern Mariana
number of laws. Table 2 shows FMAP rates for FY2019
Islands; USVI = U.S. Virgin Islands.
through FY2024. For the beginning of FY2020 (i.e.,
Alison Mitchell, Specialist in Health Care Financing
October 1, 2019, through December 20, 2019), the FMAP
rate for the territories was increased to 100% (i.e., fully
IF11012
https://crsreports.congress.gov
Medicaid Financing for the Territories
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