House Bill Would Enable U.S. Territories to Maintain, Improve Medicaid

The House Energy and Commerce Committee plans to mark up a bill today that would prevent the U.S. territories (American Samoa, the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands) from running out of Medicaid money when their current added federal funding expires later this year. It also would let them expand and improve their Medicaid coverage by raising their funding allotments and rates at which the federal government covers the cost of services.

If left unaddressed, the severe funding constraints that would cause the money to dry up later this year would cause significant harm — for example, cuts to benefits such as prescription drugs and people losing their Medicaid coverage altogether, including over half of enrollees in Guam and the Virgin Islands.

Unlike the states, whose federal Medicaid funding covers a specified share of their Medicaid spending, the territories receive a fixed block grant that’s unrelated to need. For example, Puerto Rico’s allotment for fiscal year 2020 (which begins October 1) is $375.1 million, but it’s projected to spend almost $2.8 billion. Puerto Rico and the other territories have received added federal Medicaid funding in recent years, but it mostly expires on September 30.

And while each state’s Medicaid matching rate is tied to its relative per capita income and can go as high as 83 percent, the territories’ matching rate — which would likewise be 83 percent if based on its per capita income — is fixed at 55 percent.

Due to these funding constraints, the territories generally cover fewer benefits than the states, set their eligibility limits lower, and pay much lower rates to health care providers. Puerto Rico, for example, covers only 10 of Medicaid’s 17 mandatory benefits, and its low provider payment rates are helping to drive an exodus of doctors and a shortage of such providers as emergency physicians and neurosurgeons.

The Energy and Commerce bill would significantly raise each territory’s capped allotment and matching rate. The U.S. Virgin Islands’ allotment would rise to $126 million, from its current $18.8 million, for 2020-2025, and its matching rate would be 100 percent in 2020, 83 percent for 2021-2024, and 76 percent in 2025. American Samoa, the Northern Marianas, and Guam would receive similar six-year increases in their allotments and matching rates, ensuring that they can maintain critical services, raise provider reimbursements, and expand eligibility and benefits.

Puerto Rico would receive four-year increases, with an 83 percent match in 2020-2021 and 76 percent in the next two years. From 2020 to 2024, its block grant would rise significantly, in line with Puerto Rico’s request of the amount needed to provide stable funding and support much-needed improvements — namely, higher payment rates for hospitals and physicians, coverage of drugs to treat Hepatitis C, and coverage of Medicare Part B premiums for people eligible for both Medicaid and Medicare.

Under the bill, each territory would report each year on how it has used its increased federal funds to expand access to health care, including by increasing reimbursement to health care providers, increasing benefits, and other measures. Each territory also would have to meet various program integrity measures and data reporting requirements that apply to the states.

At a June 20 House hearing, Medicaid officials from all the territories explained the harmful consequences if the current added federal funding expires, including the loss of participating doctors (due to low reimbursement rates), cuts in benefits such as dental care and prescription drugs, and elimination of off-island transport for people needing services unavailable in the territory. As noted, some people would lose coverage altogether.

The Medicaid officials all agreed that uncapped federal Medicaid funding at a higher matching rate would let them better align their programs with federal Medicaid rules, including standards for eligibility and benefits. The Energy and Commerce bill provides a pathway to achieving this alignment and ensures that the territories can enhance the health care they provide to their low-income and vulnerable residents.