MACPAC wants Congress to automatically boost FMAP during recessions

The Medicaid and CHIP Payment and Access Commission on Friday voted to recommend that Congress automatically increase the federal share of Medicaid spending during recessions.

Under the policy, the federal government would temporarily raise the Federal Medical Assistance Percentage based on increases in state unemployment and reductions in total wages and salaries, rather than requiring Congress to approve each increase as it does now.

Experts have said the policy would bolster state Medicaid programs, which struggle to deal with enrollment and spending increases during economic downturns—changes caused by people working fewer hours and losing their jobs and employer-sponsored insurance. States often turn to provider rate cuts to rein in their Medicaid spending during recessions, which could force safety-net providers to close and reduce beneficiaries’ access to care.

MACPAC’s recommendation builds on an approach developed by the Government Accountability Office. The commission’s analysis found GAO’s model would have—in many instances—triggered financial help for states months before Congress acted and seemed “sufficiently sensitive to respond to major recessions but not minor economic fluctuations.”

Congress approved a 6.2% FMAP increase tied to the public health emergency in March’s COVID-19 relief package. And the House subsequently passed a 14% increase that would have lasted through September, but the Senate never approved it. President Joe Biden will likely work with the Democratically controlled Congress to boost the federal match rate, but automatic increases would give states more certainty and provide faster relief.

MACPAC also approved new recommendations for Medicaid postpartum coverage and estate recovery.

The commission will ask Congress to extend postpartum coverage to one year, regardless of changes to Medicaid and CHIP beneficiaries’ income. It will also recommend that Congress provide 100% federal matching funds for the extended postpartum coverage period. MACPAC hopes the changes will address poor maternal and infant health outcomes by providing ongoing medical care after birth, leading to improvements in health equity. The additional federal funding would help offset costs for states.

MACPAC expects the changes to increase federal spending up to $40 billion over 10 years. About 123,000 new mothers without insurance would gain coverage—most of them would be people of color.

Maternal health is an ongoing concern among public health experts. According to the Centers for Disease Control and Prevention, reported pregnancy-related deaths gradually rose from 7.2 deaths per 100,000 live births in 1987 to 16.9 deaths per 100,000 live births in 2016. While improvements in reporting accuracy and disease classification changes account for some of the increase, most experts agree social determinants of health are driving a significant amount of the change. Medicaid beneficiaries are 82% more likely to experience severe maternal morbidity and mortality than women with private health coverage, according to MACPAC research.

Congress could make several changes to Medicaid estate recovery too. MACPAC voted to make estate recovery wholly optional for states. It also voted to allow states providing long-term care services and supports through managed care to base estate recovery on the services used by a beneficiary instead of the capitation payment made to a managed care plan. In addition, MACPAC will recommend HHS set minimum standards for hardship waivers to block states from going after “the sole income-producing asset of survivors,” inexpensive homes or any estate below a given threshold. States could still have additional hardship waivers under the recommendations.

A 1993 law to limit Medicaid spending growth created estate recovery, which requires states to claw back the costs of nursing home care and other services from Medicaid beneficiaries’ estates. Experts say the current policy has disproportionately adverse effects on people of color and those with low incomes, which raises equity concerns.

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