FMAP - the most important four letters in Medicaid

[This is second in my occasional series of postings about how health reform legislation is changing the landscape for coordinated public and human services transportation.]

In the Medicaid realm, arguably the most important concept is the Federal Medical Assistance Percentage, or FMAP. This number represents the portion of eligible costs that the federal government will reimburse to states under Medicaid for the medical services they provide. Every state gets a unique FMAP, recalculated annually, that is based on each state's per capita income relative to the nation's average per capita income. In essence, the lower a state's per capita income, the higher its FMAP. Under Medicaid law, no state can have an FMAP below 50 percent, nor higher than 83 percent. However, states' FMAP rates all were boosted by approximately 6 to 9 percentage points (the amounts varied by formula and other factors) as part of the American Recovery and Reinvestment Act (ARRA). There also is an "enhanced FMAP" rate calculated for each state under an administrative formula; this rate primarily is used to determine federal payments to states for the Children's Health Insurance Program (CHIP).

The fact that every state has a different FMAP, and that every state's FMAP is subject to change every year, can be one of the challenging factors when trying to link states' Medicaid activities with public transportation or other Medicaid-related services. Under the just-enacted health reforms, different aspects of Medicaid-covered services and programs can have different FMAP rates, which could become an even greater challenge, although the generally increased federal funding should make these partnerships and programs possible.

The Assistant Secretary for Planning and Evaluation (ASPE) within the US Dept of Health and Human Services determines FMAP rates each year, which are published in the Federal Register, posted on the ASPE website, and are available in other places, as well.

For states, FMAP rates are huge concern. As the National Association of State Budget Officers, National Governors Association, and National Conference of State Legislatures report every year, Medicaid is one of the top three expense items in every state's budget (the other two are corrections and education). Of these, Medicaid is unique in that the federal government establishes the eligible population to be served and the scope of medical assistance to be provided to this population, and then leaves it up to each state to cover as much as 50 percent of costs, regardless of the state's ability to generate the needed funds.

Therefore, when the Patient Protection and Affordable Care Act (PPACA, or "health reform") became law, numerous FMAP provisions were made as an effort to soften the blow to states' budgets. Two of these instances have a direct bearing on transportation:

1. The mandatory expansion of Medicaid to all persons at or below 133 percent of poverty is financed at an FMAP of 100 percent in 2014 (when that requirement takes effect), scaling down to 90 percent federal share by 2020.
2. Elsewhere in PPACA, every state can use specified higher FMAP rates when providing certain home- and community-based long-term care services for persons with disabilities.

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