Congress’s Medicaid funding increase creates massive legal uncertainty for states during the COVID-19 crisis

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On March 18, 2020, Congress passed the Families First Coronavirus Response Act (FFCRA) as part of the federal government’s response to the COVID-19 public health emergency. Section 6008 of the FFCRA temporarily increases the Federal Medical Assistance Percentage (FMAP)—the portion of Medicaid costs paid by the federal government to the states—by 6.2 percent. The FMAP increase is expected to provide states with an additional $9-10 billion in Medicaid funding per quarter.

In exchange for the additional Medicaid funding, states must agree not to remove individuals who are either currently enrolled in Medicaid or will enroll during the declared emergency period unless they request their cases be cancelled or they move out of state. In other words, to receive this additional funding, states must provide continuous Medicaid coverage to every current and incoming enrollee—including individuals that are ineligible—to receive the FMAP increase. The Centers for Medicare and Medicaid Services (CMS) has already issued guidance confirming that states must provide this continuous coverage notwithstanding normal requirements and procedures to disenroll ineligible beneficiaries.

This condition creates several problematic legal conflicts at both the state and federal level. Many states, for example, have laws requiring their Medicaid agencies to remove ineligible enrollees on a regular basis. Considering that states often report that more than 30 percent of cases reviewed at redetermination are cancelled, and enrollees’ circumstances frequently change throughout the year, this is a sensible approach. But these states are being asked to make an impossible choice: ignore state laws and keep ineligible enrollees on the program—crowding out resources for the truly needy—or forgo the extra funding altogether.