Level playing field for Medicare, Medicaid sought for territories

A comprehensive bill that would eliminate or mitigate nearly all of the disparities that the territories, including the CNMI, face under the Medicaid and Medicare programs was introduced in Congress last week.

The 26-page H.R. 2635, titled “Improving the Treatment of the U.S. Territories Under Federal Health Programs Act of 2015,” addresses what the Commonwealth Healthcare Corp. had been seeking support for.

Resident Commissioner Pedro Pierlusi (D-PR) introduced the bill. This amends titles XVIII and XIX of the Social Security Act “to make improvements to the treatment of the U.S. territories under the Medicare and Medicaid programs.”

The bill would create new federal rules governing Medicaid in the territories. Medicaid, the health program for low-income individuals, is funded in part by the federal government and in part by the state or territory government. 

In the U.S. mainland, there is no limit on the amount of funding the federal government will provide for Medicaid as long as the state provides its share of matching funds. The federal contribution—known as Federal Medicaid Assistance Percentage—can range from 50 percent for the wealthiest states to 83 percent for the poorest states. In contrast, the amount of funding that the federal government provides to support the Medicaid program in each territory is capped.

Currently, Medicaid gives a little over $6 million each year to the CNMI, which is not enough for the over 15,000 Medicaid-eligible residents of the islands. The current FMAP is 55 percent, largely due to the Affordable Care Act.

In 2010, Congress enacted the Patient Protection and Affordable Care Act. The bill provided $7.3 billion in additional Medicaid funding, with the CNMI receiving only $109 million in ACA funds for the Medicaid program in the Commonwealth.

As of April 30, 2015, CHCC has already received a total of $46.1 million of that amount, according to Delegate Gregorio Kilili C. Sablan’s (Ind-MP) chief of staff Bob Schwalbach.

The current rate of use of these ACA funds is about $1 million per month until fully expended at the end of fiscal year 2019. These funds were made available starting in July 2011 when CHCC became the main beneficiary with its creation in October 2011. There is only $63 million left in ACA funds.

If this funding is not replenished, the territories will go back to receiving Medicaid funds under the old formula. After 2019, the FMAP will return to 50 percent.

Starting in fiscal year 2017, the bill would provide the territories with state-like treatment within well-defined parameters. Specifically, each territory’s Medicaid program could cover individuals—whether they are children, pregnant women, disabled or elderly individuals, parents, or adults without children—whose family income is equal to or less than 100 percent of the federal poverty level, with the federal government providing state-like funding for that purpose.

As long as a territory government covers individuals whose household income is within these limits, the federal government would fund the territory’s Medicaid program as if it were a state Medicaid program. That means that the annual funding cap would be eliminated. Each territory would receive an FMAP based on its per capita income. However, the limiting principle is that if a territory wants to cover individuals earning above 100 percent of the federal poverty level, it will generally be required to use territory dollars, not federal dollars.

“The congressional act that places a cap on Medicaid funding and places a flat FMAP for the territories needs to be amended and treat territorial residents the same as residents in the U.S. states,” CHCC chief executive officer Esther Muña said.

“The regulations imposed on our hospital are tough considering there is inconsistency in the law when it comes to territorial hospitals. …On top of that, we are the sole hospital in the CNMI and a rural hospital as well,” she added.

She also said that unlike the U.S. mainland, territories have a cap. “Because 55 percent is federal, local is 45 percent. Basically we can’t touch all the funding we receive, because in reality is you have to match the cap.”

Sablan announced in his weekly e-newsletter that the local Medicaid match drops to about 20 percent, compared to 45 percent now. And insular area hospitals could be compensated for the disproportionate share of uninsured and Medicaid patients served, as are hospitals in the States.

“The local match for Medicare drug benefits would be waived and a tax paid to the U.S. Treasury by local insurers, as part of the Affordable Care Act, would go to insular governments instead. I worked with Pierluisi on details of the bill and am an original cosponsor,” Sablan said.

The bill is co-sponsored by territorial delegates Madeleine Z. Bordallo (D-Guam), Sablan, and Stacey Plaskett (D-VI). It was jointly referred to the House Energy and Commerce and Ways and Means committees.