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Medicaid Financing for the Terr
Medicaid is a joint federal-state program that finances the
delivery of medical services for low-income individuals.
The territories (i.e., American Samoa, the Commonwealth
of the Northern Mariana Islands [CNMI], Guam, Puerto
Rico, and the U.S. Virgin Islands [USVI]) operate Medicaid
programs under rules that differ from those applicable to
the 50 states and the District of Columbia (DC).
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 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
Medicaid payments are for services otherwise coverable.
For Guam, Puerto Rico, and USVI, most of the eligibility
and benefit requirements for the states apply. However, the
Government Accountability Office (GAO) has documented
that these three territories had not covered all of the
federally mandated 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 open-ended, but the Medicaid programs in
the territories are 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
Federal Medicaid funding for the territories has come from
a few different sources. The permanent source is the annual
federal capped funding, which was supplemented by
various funding sources from July 1, 2011, through
December 31, 2019. During this period, most of the federal
Medicaid funding for the territories was provided through
the supplemental funding rather than the annual federal
capped funding.
The territories also receive Section 1935(e) of the Social
Security Act (SSA) funding in addition to the annual
federal capped 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 drug coverage under Medicaid for low-
income Medicare beneficiaries.
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
Updated September 15, 2022
itories
reached, absent another source of 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.
Certain Medicaid expenditures are disregarded for purposes
of the annual federal capped funding, such as (1) Medicaid
Electronic Health Record Incentive Program payments, (2)
design and operation of the claims and eligibility systems,
(3) services for citizens of Freely Associated States (the
Marshall Islands, Micronesia, and Palau), and
(4) Coronavirus Disease 2019 (COVID-19) vaccines during
the COVID-19 public health emergency period. Also, for
Puerto Rico and USVI, Medicaid Fraud Control Unit
expenditures are disregarded.
Supplemental Medicaid Funding
Prior to the Patient Protection and Affordable Care Act
(ACA; P.L. 111-148, as amended), all five territories
typically exhausted their Medicaid annual federal capped
funding before the end of the fiscal year. For this reason,
the ACA included supplemental Medicaid federal funding
for all of the territories; later legislation provided additional
federal funding to certain territories. All of these funds
expired on either September 30 or December 31, 2019.
Funding for FY2020 and FY2021
The Further Consolidated Appropriations Act, 2020 (P.L.
116-94), as amended by the Family First Coronavirus
Response Act (FFCRA; P.L. 116-127), provided
significantly increased federal annual capped funding for
Medicaid to the territories for FY2020 and FY2021. Table
1 shows these funding amounts, which are comparable to
what the territories received in recent years through the
combination of the annual federal capped funding and the
supplemental Medicaid funding.
Table 1. Annual Federal Capped Funding for FY2020,
FY2021, and FY2022
($ in millions)
FY2019 FY2020 FY2021 FY2022
American $12.2 $86.3 $85.6 $87.9
Samoa
CNMI $6.7 63.1 62.3 64.0
Guam $18.0 130.9 129.7 133.2
Puerto
Rico $366.7 2,716.2 2,809.1 2,943.0a
USVI $18.3 128.7 127.9 131.4
Total $421.9 $3,125.2 $3,214.6 $3,359.5
Source: Communication from Centers for Medicare & Medicaid
Services (CMS) June 2019 for FY2019; SSA § I 108(g)(2) and (6) for
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