CMS Issues Guidance on Maintenance of Effort Requirements for Enhanced FMAP
Prepared by Jane Perkins
March 27, 2009
The Centers for Medicare & Medicaid Services (CMS) recently issued a guidance
document, entitled American Recovery and Reinvestment Act of 2009 Section 5001: Increased
Federal Medical Assistance Percentage.1
Section 5001 offers states temporary increases in their federal medical assistance
percentage (FMAP) between October 1, 2008 and December 31, 2010. The CMS guidance
addresses increased FMAP methodology and grant issuance; reinstatement processes when states
reverse disqualifying policies; frequently asked questions from states; and Section 5001?s
maintenance of effort (MOE) provision.
Increased FMAP is specifically conditioned on states maintaining ?eligibility standards,
methodologies, and procedures? in effect on July 1, 2008. See ARRA, § 5001(f)(1)(A). This
memorandum summarizes the CMS guidance regarding MOE.2
According to CMS, states/territories must actively review a number of factors when
considering acceptance and use of increased FMAP, including:
1. The state/territorymust not have eliminated any eligibility groups or sub-groups
under the state plan. For example, states with medically needy programs cannot
eliminate one or more categorical subgroups (e.g. the aged or the disabled) from
coverage;
2. The state/territory must not have eliminated coverage of any eligibility group or
subgroup in any Home and Community Based Services (HCBS) waiver under 42
U.S.C. § 1396n (Social Security Act, § 1915(c)); and
3. Improper restrictions on eligibility include, but are not limited to:
? Instituting or increasing premiums that may restrict, limit or delay eligibility;
? Increasing the stringency of the level of care determination process that results
in individuals losing actual or potential eligibility for institutional care or the
HCBS waiver under 42 U.S.C. § 1396n;
? Adjusting the cost neutrality calculation under an HCBS waiver from
aggregate to individual caps, such that individuals lose waiver coverage or are
hindered in moving out of an institutional setting;
? Reducing the ?occupied waiver capacity? of an HCBS waiver;
? Reducing or eliminating HCBS waiver slots approved but not filled as of July
1, 2008;
? Introducing restrictive adjustments in financial criteria, including: reducing
income or resource standards; implementing income or resource standards that
had not been imposed on a group or individual within a group; eliminating or
reducing income or resource methodologies favorable to applicants or
beneficiaries (including more liberal methodologies under section 1902(r)(2)
of the Social Security Act); and, in 209(b) states, restricting criteria for the
aged, blind or disabled, including changing in the definition of blindness or
disability; and
? Changing eligibility determination or redetermination processes or procedures
including: increasing the frequency of redeterminations (e.g. from annually to
every six months); reducing the amount of time an individual has to respond
to requests for information; revoking or otherwise restricting a policy under
which eligibility is decided based on an attestation by the individual of the
amount and/or type of their resources. However, this does not include a
program to verify assets of aged, blind or disabled individuals required by 42
U.S.C. § 1396w (effective June 30, 2008).
CMS gives a couple of examples of modifications that are not subject to MOE:
? Eliminating or reducing eligibility groups whose services are funded entirely
through CHIP funding (including through a Section 1115 demonstration); and
? Post-eligibility treatment of income determinations.
The MOE requirement applies to eligibility standards, methodologies or procedures
under a state plan under Title XIX of the Social Security Act, including any waiver under Title
XIX or under Section 1115 of the Social Security Act (42 U.S.C. § 1315). The requirement
appliesto all demonstration-eligible individuals funded through Title XIX, including those
demonstrations with budget neutrality based on DSH funds. Demonstrations using a
combination of Title XIX and Title XXI (CHIP) funds are also affected. The only
demonstrations not subject to the MOE requirements are those funded entirely through Title XXI
(CHIP) funding.
The guidance clarifies that a state cannot require a political subdivision to pay a greater
percentage of the non-federal share of expenditures than the political subdivision would have
been required to pay prior to the increased FMAP (October 1, 2008). Thus, this provison would
be violated if the state required a political subdivision to contribute the same dollar amount after
the application of the increased FMAP because the state would, in effect, be requiring the
subdivision to pay an increased percentage of the non-federal share of expenditures.
ARRA prohibits a state from depositing or crediting increased FMAP directly or
indirectly to any reserve or rainy-day fund of the state. According to CMS, this applies ?except
to the extent of any increase based on maintenance of the prior year FMAP levels.?
1 Source: Georgetown University Health Policy Institute Center for Children and
Families.
2 For additional background, see Randy Boyle and Jane Perkins, National Health Law
Program, State Maintenance of Effort Requirements for Enhanced FMAP (Mar. 10,
2009), available at www.www.healthlaw.org.
