Q & A: State Maintenance of Effort Provisions in the American Recovery and Rein
State Maintenance of Effort Requirements for Enhanced FMAP
Prepared by Randy Boyle and Jane Perkins
March 10, 2009
The Federal Medical Assistance Percentage (FMAP) is a federal payment to the state for
Medicaid services covered by the state. The amount of the state?s FMAP is adjusted annually
and depends on the per capita income of the state. States with lower per capita incomes receive a
higher FMAP, which can range from 50 percent to 83 percent. See 42 U.S.C. § 1396b(a).
The American Recovery and Reinvestment Act of 2009 (ARRA), Pub. L. No. 111-5,
augments states? FMAPs for a ?recession adjustment period? that will run from October 1, 2008
through December 31, 2010. ARRA, § 5001.
States can obtain the enhanced FMAP only if they meet specified conditions. For
example, to qualify for any enhanced FMAP, states and territories must maintain the ?eligibility
standards, methodologies, and procedures? in effect on July 1, 2008. ARRA, § 5001(f)(1)(A).
The Secretary of DHHS cannot waive this provision. Id. at § 5001(f)(4).
ARRA grace period. ARRA provides a grace period for states that have recently enacted
restrictive provisions. If a state implemented more restrictive eligibility standards,
methodologies or procedures after July 1, 2008 but before February 17, 2009 (the date of
ARRA?s enactment), it has until July 1, 2009 to return to the July 1, 2008 standards. If it makes
this change, the state can obtain the full increased FMAP for expenditures back to October 1,
2008. Id. at § 5001(f)(1)(C). If a state otherwise reinstates eligibility standards as they were on
July 1, 2008, the state becomes eligible for the full increased FMAP beginning in the quarter in
which the state has reinstated eligibility. Id. at § 5001(f)(1)(B).
States have an incentive to reinstate coverage as soon as possible in order to obtain the
increased FMAP payments at the earliest possible date. Indeed, the states initially cited by the
Obama administration as not qualifying for the enhanced FMAP due to post July 2008
restrictions (e.g. NC, VA) have already taken the steps needed to reinstate coverage. Department
of Health & Human Services, American Recovery and Reinvestment Act (PL 111-5) Sec. 5001
Grant Award Summary, at http://hhs.gov/recovery/statefunds.html (accessed March 8, 2009).
Application to Medicaid. The maintenance of effort requirement applies to Medicaid
standards, methodologies and procedures, including any waiver under Title XIX or under section
1115 of the Social Security Act. Id. For example, the requirement applies to managed care and
home and community-based services waivers approved under section 1915 of the Social Security
Act (42 U.S.C. §§ 1396n) and to all demonstration projects operating pursuant to any authority
under section 1115 of the Social Security Act (42 U.S.C. § 1315).
The ?in effect? requirement. The maintenance of effort requirement applies to eligibility
standards, methodologies and procedures ?in effect? on July 1, 2008. Thus, ARRA is worded to
include requirements contained in state statute; Medicaid agency regulation, written policy or
practice; and binding court orders and/or consent/settlement agreements.
Eligibility standards, methodologies and procedures. Finally, the requirement applies to
?eligibility standards, methodologies, and procedures? in effect on July 1, 2008. In assessing
state actions, the maintenance of effort provision must be read in conjunction with the purpose of
ARRA. That purpose is to ?protect and maintain State Medicaid programs during a period of
economic downturn, including by helping to avert cuts to provider payment rates and benefits or
services, and to prevent constrictions of income eligibility requirements for such programs, but
not to promote increases in such requirements.? ARRA, § 5000 (emphasis added). The
following are examples of eligibility standards, methodologies, and procedures:
? categorically and/or medically needy options selected by the state, for example noninstitutionalized disabled children (Katie Beckett), women with breast and cervical
cancer, medically needy;
? income eligibility cut offs, such as the percentages of the federal poverty level at
which the state covers children, pregnant women, and/or the aged, blind and disabled;
? medically needy income levels;
? state definitions of disability;
? countable income and income disregards when determining financial eligibility;
? countable resources and resource disregards when determining financial eligibility;
? exemptions of property for estate recovery purposes;
? medically needy spend down (aka accounting or budget) period;
? look back periods for purposes of assessing transfers of assets;
? income and resource protections used to determine eligibility of an institutionalized
spouse (spousal impoverishment provisions);
? the number of waiver slots in a Medicaid home and community-based care waiver;
? individual verses aggregate cost neutrality caps in home and community based
waivers under title XIX;
? premiums and other cost sharing levels;
? continuous eligibility periods, such as 12-month continuous eligibility for children
regardless of changes in income;
? mail-in and/or face-to-face interviews;
? outstationing locations for accepting and processing applications;
? timeframes for making eligibility determinations and redeterminations;
? qualifying entities for purposes of making presumptive eligibility determinations.
A pressing question involves changes in the amount, duration and scope of covered services that
also affect eligibility. For example, some states use assessment tools to determine individuals?
limitations in activities of daily living, and the scoring of those assessment tools, in turn,
determines their level of care needs and Medicaid coverage. By altering the scoring
methodology, a state can make fewer people eligible for institutional care and/or home and
community based waivers. The outer parameters of the maintenance of effort requirement await
clarification from the Department of Health and Human Services.
If your state is considering implementing a Medicaid policy that is more restrictive than
its July 1, 2008 rules, please contact us. In particular, we understand that members of Congress
are monitoring the extent to which states are proposing service cutbacks. Please contact us if
service cutbacks are being proposed or implemented. We are also interested in hearing from
advocates in states that may obtain enhanced FMAP for the medical assistance that has been
provided but use it for non-Medicaid purposes, i.e. on highways or other infrastructure projects.
Close monitoring by advocates will help ensure accurate reporting by states, which must report
to the Secretary of the Department of Health and Human Services on how the increased FMAP
funds were expended by the end of September 2011. See ARRA, § 5001(g)(1).
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