Hospitals benefit from Federal Medical Assistance Percentage extension under PHE

Moody’s predicts that states with the largest increases in Medicaid enrollment will benefit the most from the FMAP extension.

States and hospitals will likely continue to receive increased federal funding due to the pandemic through the end of 2021, according to a recent letter to governors from the Department of Health and Human Services under the Biden Administration.

The letter states that the current public health emergency caused by COVID-19 will likely last until the end of the year. With that extension, many of the flexibilities provided to states and hospitals at the start of the pandemic will continue.

Because of the extension, the expanded use of telemedicine, certain waivers to Medicare, Medicaid, the Children's Health Insurance Program and the Health Insurance Portability and Accountability Act Privacy Rule requirements, as well as the 6.2% increase in the Federal Medical Assistance Percentage, will remain in place. Additionally, the public health extension will allow hospitals to continue to receive a 20% Medicare add-on payment for patients who test positive for COVID-19.

WHY THIS MATTERS

The Federal Medical Assistance Percentage extension means states will be incentivized to maintain Medicaid funding and coverage as a way to receive the additional funds, resulting in fewer uninsured patients and more government reimbursements to hospitals, according to Moody's Investors Service.

The FMAP formula is designed so the federal government pays a larger portion of Medicaid costs in states that have lower per capita incomes compared to the national average. Rates can fall between 50% and 83%, depending on the per capita incomes of a state.

Under the Family First Coronavirus Response Act, states' regular FMAP rates were given a 6.2% boost to help states meet the need for increased health services and to handle increased Medicaid enrollment.

Last year, as unemployment rates hit record highs, every state also saw an increase in Medicaid and CHIP enrollment as more people became eligible, according to Moody's. Kentucky, Utah, Oklahoma and Nevada had the largest increases in enrollment, all experiencing more than 15% increases from February to September.

Moody's predicts that the states with the largest increases in Medicaid enrollment will benefit the most from sustained federal assistance because it will help cover the costs of more members.

For example, those four states that experience the largest Medicaid enrollments are expected to get an additional $635 million, $171 million, $317 million and $248 million, respectively, from the FMAP increase.

THE LARGER TREND

The U.S. first declared COVID-19 a public health emergency on January 31, 2020, following the World Health Organization's decision to declare the coronavirus a public health emergency of international concern.

Since then, HHS has extended the public health emergency four times. The current extension is set to expire on April 21.

A number of advocacy groups have the need to maintain the public health emergency until certain criteria are met.

The American Health Care Association and National Center for Assisted Living sent a letter to HHS saying that, until COVID-19 testing increases, the number of new cases decreases, there are fewer COVID-19 patients in intensive care units, the number of COVID-19 deaths decreases and herd immunity is achieved, the public health emergency should remain in place.

The American Hospital Association also sent a letter to President Joe Biden that requested that providers be allowed to retain Provider Relief Fund dollars by allowing for any reasonable method of calculating COVID-19-related lost revenue. The letter also urged the new administration to protect the 340B drug savings program and require that private plans eliminate administrative and financial barriers to coverage for COVID- 19 testing and treatment.

Twitter: @HackettMallory
Email the writer: mhackett@himss.org