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U.S. Senators Offer Proposal to Treat Puerto Rico Equally in Federal Health Care Programs

A group of U.S. Senators has introduced legislation (S. 1961) to improve treatment of the U.S. territories in federal health care programs.  The Senate proposal, a companion to Resident Commissioner Pedro Pierluisi’s bill in the House of Representatives (H.R. 2635), was introduced by Senators Charles Schumer (D-NY), Kirsten Gilllibrand (D-NY),  Richard Blumenthal (D-CT) and Robert Menendez (D-NJ).  Puerto Rico has no representation in the U.S. Senate.

The Senate and House legislation is designed to give U.S. territories equal treatment under Medicaid, Medicare, and Medicare Advantage.

Medicaid, the health program for low-income individuals established in 1965, is funded in part by the federal government and in part by the state or territory government. In the 50 states and the District of Columbia, Medicaid is an individual entitlement. There is no limit on the amount of funding the federal government will provide so long as the state provides its share of matching funds. The federal contribution—known as the Federal Medical Assistance Percentage (FMAP)—can range from 50 percent of all Medicaid expenditures in the wealthiest states to 83 percent in the poorest states.  The FMAP for each territory is set by statute at 50 percent, the same as the wealthiest states.

In addition, there is a “ceiling” or “cap” on the total amount of  funding that the federal government annually provides to support the Medicaid program in each U.S. territory. In Fiscal Year 2008, the funding caps in the territories were extraordinarily low according to data provided by Pierluisi’s office: Puerto Rico ($260.4 million). USVI ($13.0 million). Guam ($12.76 million), CNMI ($4.76 million), American Samoa ($8.62 million).

Because of the annual statutory cap, Puerto Rico’s effective FMAP—the actual federal contribution to the island’s Medicaid program—was between 15 and 20 percent a year. Puerto Rico was spending upwards of $1.4 billion in territory funds to provide health care services to about 1.2 million low-income beneficiaries, and receiving less than $300 million from the federal government for this purpose.

To place that in context, in FY 2014, Mississippi had a 73 percent FMAP and received $3.6 billion in federal funds and Oregon had a 63 percent FMAP and received $5.0 billion in federal funds.

Starting in 2009, federal law was amended to substantially improve the treatment of the territories under Medicaid, but this treatment—especially in the case of Puerto Rico—is nowhere near as generous in the states.

The first funding increase was a result of the 2009 American Recovery and Reinvestment Act, which temporarily raised each territory’s annual ceiling by 30 percent. That increase lasted from the first quarter of Fiscal Year 2009 (October 1, 2008) through the third quarter of Fiscal Year 2011 (June 30, 2011).

In 2010, Congress enacted the Patient Protection and Affordable Care Act (ACA). The territories were excluded from major provisions of the bill, but were provided $7.3 billion in additional Medicaid funding. In addition, each territory’s FMAP was modestly increased from 50 percent to 55 percent. Of the $7.3 billion, each territory received the following: Puerto Rico ($6.40 billion), USVI ($298.75 million), Guam ($292.78 million), CNMI ($09.26 million), American Samoa ($197.82 million).  This funding, which is on top of the ceiling amount that each territory receives annually under Section 1108 of the Social Security Act, is available to be drawn down between the fourth quarter of Fiscal Year 2011 (July 1, 2011) and the end of Fiscal Year 2019 (September 30, 2019). The result is that each territory annually receives the following in federal Medicaid funds, including funding under the Children’s Health Insurance Program (CHIP) and the
Enhanced Allotment Program (which applies in the territories in lieu of the Medicare Part D low-income subsidies and helps low-income seniors purchase prescription drugs): Puerto Rico: ($1.1 to $1.3 billion), USVI ($75 to $78 million), Guam ($53 to $59 million), CNMI ($20 to $21 million), and American Samoa ($34 to $38 million).

The $7.3 billion in additional Medicaid funding that the territories received under the ACA expires at the end of the Fiscal Year 2019—the only coverage provision in the law that sunsets in this manner. This has been called the Medicaid funding “cliff.” As of this writing, the Puerto Rico government has only $3.57 billion of its $6.3 billion in ACA funding remaining. It is projected that the ACA funding for Puerto Rico will be depleted by mid-2018 or even late 2017. If this pool of funding is not seamlessly replenished, each territory will go back to receiving Medicaid funds solely
based on its FMAP formula—which, for Puerto Rico, means annual federal funding of less than $400 million a year.

The ACA perpetuated Puerto Rico’s discriminatory treatment under Medicaid in another respect. The states and the District of Columbia are permitted to expand eligibility for Medicaid to certain population groups (in general, non-elderly adults with incomes up to 133 percent of the federal poverty level). If a state elects to expand eligibility for Medicaid to individuals within these groups, the federal government covers 100 percent of the cost of covering this newly-eligible population from 2014 to 2016, 95 percent of the cost in 2017, 94 percent of the cost in 2018, 93 percent in 2019, and 90 percent in 2020 and beyond. While the territories are authorized to expand eligibility for Medicaid to these new population groups, the territories are not eligible for the enhanced federal contribution to finance their care.

In light of this background, suggested Medicaid related reforms in the bills include:

  • Elimination of the “cap” on the amount of annual funding the federal government provides to support the Medicaid program in each territory so that they are treated more like the states, which do not have a limit on federal funding,
  • Equalization of the Medicaid reimbursement formula in the territories so that territories receive the same percentage of federal reimbursement that states do.  (Puerto Rico’s federal matching reimbursement rate could go as high as 90%; it is currently set at 55%,
  • Repeal of upcoming Medicaid “cliff” in which federal funds allocated under the Affordable Care Act are set to expire, which could be reached as early as 2017,
  • Expansion of coverage to Medicaid benefits to people with incomes at or below the U.S. federal poverty level, just as it is done in the States,
  • Payments to hospitals treating low income patients under the Medicaid disproportionate share hospital (DSH) formula, which states receive

With respect the Medicare, the legislation would increase payments to doctors and hospitals under federal reimbursement formulas and authorize bonus payment for doctors and hospitals that become “meaningful users” of electronic health records – resources currently available in states but not territories.  The proposal would also automatically enroll individuals enrolled in Medicare Part A  into Part B.  Under current law, Part B enrollment is automatic only in the states, and severe penalties apply if a Medicare beneficiary delays signing up for Part B after they are eligible to do so.

The legislation also ensures that Medicare Advantage (MA) plans in Puerto Rico receives more adequate per-member, per-month payments from the federal government by establishing a floor on these payments.

Pierluisi, in his speech upon introducing the House bill, made this point:

If the will exists among officials in the legislative and executive branches to improve the treatment of the territories under federal health programs, as I believe it does, then my bill provides a way forward. After today, no federal policymaker can say: “I want to help, but I don’t know how.”

Watch the speech above. Read the text of the speech.

Click on the following link for a detailed Summary of H.R. 2635 the Improving the Treatment of the U.S. Territories under Federal Health Programs Act of 2015.

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