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SCongressional Research Service
Medicaid Funding for the Territories
Updated July 30, 2019
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 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 19020) 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 made 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 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%.
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.
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 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.
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.
Figure I. Proportion of Federal Medicaid Funding
from Annual Capped Funding and ACA Funding
(FY2017)
$19.4A $17.OM . $5g.S $1,4826M $37.6M
100%
60%
40%
20%
American CNMI Guam
Samoa
w Annual Capped Funding
Puerto U.S. Virgin
Rico Islands
i ACA 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. Il I-
148, 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 low-
income 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.
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, 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 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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