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House Subcommittee to Consider Puerto Rico Medicaid Proposal Tomorrow

A bipartisan agreement among U.S. House of Representatives Energy and Commerce Committee leaders to grant Puerto Rico $12 billion for Medicaid during Federal Fiscal Years 2020-23 was announced last night.

It is expected to be approved in the Health Subcommittee tomorrow and subsequently by the full Committee.

Under the proposal, Puerto Rico would get $2.823 billion during Fiscal Year (FY) 2020 and $2.919 billion during FY21 if it matches the amounts on an 17% territorial/83% Federal basis, which is the more generous Federal matching rate Puerto Rico would have if it were a state.  It would get $3.012 billion in FY22 and $3.114 billion in FY23 on a 76% Federal/24% territorial matching basis.

The bill was introduced late yesterday by Representatives Darren Soto (D) and Gus Bilirakis (R), both of Florida, and has the vocal support of the Chairs of the full Committee and Subcommittee, Frank Pallone (D-NJ) and Anna Eshoo (D-CA), respectively. The proposal is also said to have the support of their Republican counterparts, Greg Walden (OR) and Michael Burgess (TX).

The PROMESA Financial Oversight and Management Board’s Fiscal Plan counts on just over half as much Federal funding in FY20 as would be provided by the Soto-Bilirakis bill and about one-eighth as much in the succeeding years.

The Fiscal Plan also calls for the Government of Puerto Rico to spend $992 million of local revenue on Medicaid in FY20, $2.124 billion in FY21, $2.199 billion in FY22, and $2.283 billion in FY23.

Under the Fiscal Plan, the billions of dollars of savings to the territorial government would increase the Government’s surplus. Creditors could claim the surplus but PROMESA Board Executive Director Natalie Jaresko recently said that surpluses would be saved for deficits that the Fiscal plan projects beginning in FY38 as well as for payments to creditors of reduced debt amounts and for a trust to ensure slightly reduced government employee pension payments.

Governor Ricardo Rossello Nevares’ representative to the Board, now Government fiscal chief Christian Sobrino Vega, additionally, said that “the Board would change the Fiscal Plan in five minutes” to prevent creditors from getting greater recoveries of what they are due if the territory received substantially more Federal money for Medicaid.

The bill would provide six years of Medicaid funding increases for the U.S.’ four other — much less populated — territories. It is believed that additional funding for Puerto Rico was only included for four years because the amounts for Puerto Rico are considerably larger.

Gov. Rossello had asked for $15.1 billion over five years. The four years of funding at the same amounts was a Democratic compromise with Republicans, who had proposed a two-year funding increase.

Nydia Velazquez (D-NY), an influential member of Congress on Puerto Rico issues, had proposed legislation for five years as Rossello requested, adding a phase-in to equal funding with the States after that. She is believed to be supportive of the Soto bill.

Soto’s father was born in Puerto Rico and Soto has more constituents of Puerto Rican origin than any other member of the House of Representatives. Velazquez was born in Puerto Rico and also has many people of Puerto Rican heritage in her district. People of Puerto Rican origin are also numerous in Bilirakis’ district.

President Trump has opposed past congressional increases for more Medicaid funding in Puerto Rico. His main argument is that it would indirectly benefit Government creditors.

He has also cited fraud and mismanagement in the territory’s Medicaid program.

The last congressional increase for Medicaid funding for Puerto Rico, $4.8 billion for Fiscal Years 2018 and ’19 that did not require territorial matching, included program integrity requirements. $1.2 billion of the $4.8 billion was made contingent upon those safeguards being implemented.

They were.

The Soto-Bilirakis bill would require additional program integrity requirements.

This morning, Federal agents arrested the recently-resigned head of Puerto Rico’s Health Insurance Administration, which administers the Medicaid funds, Angela Avila; the President of BDO Puerto Rico, Fernando Scherrer; and BDO’s main Puerto Rico consultant, Alberto Velazquez Pinol. The arrests were made in connection with the Medicaid program.

Among other things, Velazquez and Avila were said to have tried to delay of the anti-fraud requirements for the $1.2 billion.

This morning, Puerto Rico’s Resident Commissioner to the U.S., who has a seat in the House and was a key figure in the Soto-Bilirakis bill compromise, Jenniffer Gonzalez Colon (R), said that the arrests and others related to Federal education funds “are going to create a shadow over the requests for funds for Puerto Rico.”

Yesterday, the Governor’s former Counsel, Alfonso Orona, testified before a Federal grand jury regarding the contracting of Velazquez Pinol.


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