Issue Briefs

Final FY 2010 Fourth Quarter ARRA FMAPs

The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) contained provisions that increase Medicaid grants to states for 27 months by increasing their Federal Medical Assistance Percentages (FMAPs), the share of state programs paid by the federal government. A recently enacted law (P.L. 111-226) provides a two-quarter extension, from January 1, 2011-June 30, 2011, of the increased FMAPs included in ARRA. The new law also modifies the calculation of the fourth quarter ARRA FMAPs for federal fiscal year (FY) 2010 (July 1, 2010-September 30, 2010) and the first quarter ARRA FMAPs for FY 2011 (October 1, 2010-December 31, 2010). This Issue Brief estimates the final fourth quarter FMAPs based on the new law and final state unemployment data for June 2010 published by the Bureau of Labor Statistics (BLS) on August 20, 2010. Issue Brief 10-32 provides a detailed analysis of the ARRA FMAP extension.

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New Law Extends ARRA FMAPs to June 2011

On August 10, 2010, the president signed a bill (P.L.  111-226) that  provides a two-quarter extension of the increased Federal Medical Assistance Percentages (FMAPs) included in the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). The provisions in the new law are slightly different from those in ARRA and include a phased-down across-the-board increase, modifications to the unemployment bonus, and a new governor- certification requirement. This Issue Brief provides a detailed description of the extension.

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HHS Releases FY 2010 Bioterrorism Awards

On July 7, 2010, the Department of Health and Human Services (HHS) announced $391 million in federal fiscal year (FY) 2010 funds for the Hospital Preparedness Program (HPP). This is in addition to $688 million in funding for the Public Health Emergency Preparedness (PHEP) program, which was released in May 2010. These grants are awarded to states, the District of Columbia, territories, and three local governments (New York, Chicago, and Los Angeles County).

Table 1 shows the allocations for the two programs from FYs 2007–2010. Relative to FY 2007 levels, these new awards represent a reduction in funding of almost 6% for HPP and 23% for PHEP. The funding loss for PHEP is intensified by one-time funding provided in FY 2007 for pandemic influenza preparedness and to improve the capabilities of poison control centers. Through the FY 2009 supplemental appropriations process, Congress did provide funds to upgrade state and local pandemic influenza preparedness and response capacity. However, unlike FY 2007, it did so through a new grant program. 

In FY 2010, the matching requirement for both programs increased to 10% of the grant amount, up from 5% in FY 2009. FY 2009 marked the first year of a matching requirement for grantees as well as the ability of the secretary of HHS to withhold funds from grantees that failed to meet evidence-based benchmarks. Both changes were included in the Pandemic and All-Hazards Preparedness Act (P.L. 109-417).

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DOJ Announces New John R. Justice Grant Program

The Department of Justice (DOJ), Bureau of Justice Assistance (BJA) released federal fiscal year (FY) 2010 John R. Justice Student Loan Repayment Program (JRJ) grant allocations and application details on May 26, 2010.  This new program provides loan repayment assistance for local, state, and federal public defenders, and local and state prosecutors who agree to remain employed as public defenders and prosecutors for at least three years.Designated state agencies are eligible to apply for the funds. The application deadline has been extended to July 27, 2010.

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DHS Announces FY 2010 Preparedness Grant Program Awards

The Department of Homeland Security (DHS) released final allocations for nine preparedness grant programs on May 13, 2010. Preparedness grant programs fund a wide range of activities, including planning, organization, equipment purchase, training, and exercises. Four programs are targeted directly to states: the Interoperable Emergency Communications Grant Program (IECGP), Driver’s License Security Grant Program (DLSGP), Buffer Zone Protection Program (BZPP), and Emergency Operations Center Grant Program (EOC) all of which will provide states with $202 million in federal fiscal year (FY) 2010.

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TANF Emergency Fund Update

The Administration for Children and Families (ACF) at the Department of Health and Human Services (HHS) recently updated information on the Temporary Assistance for Needy Families (TANF) emergency contingency fund (ECF). As of June 3, 2010, 45 states, the District of Columbia, and the Virgin Islands have successfully applied for emergency funds. Overall, states have accessed $2.7 billion of the $5 billion available in the fund. The remaining funds are available for obligation by HHS until September 30, 2010, when the program expires. However, the House recently passed legislation to extend the fund and appropriate $2.5 billion in federal fiscal year (FY) 2011

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FY 2010 Highway Funding Update

On April 30, 2010, the Federal Highway Administration (FHWA) published revised state federal-aid highway obligation limitations for federal fiscal year (FY) 2010. FHWA also published FY 2010 program apportionments and issued a notice restoring more than $8.7 billion in rescinded contract authority (CA) on April 20, 2010. All three announcements are based on the Surface Transportation Extension Act of 2010 (P.L. 111-147), which temporarily extends the authorization for highway programs through December 31, 2010.

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Bill to Create Jobs, Close Tax Loopholes Would Extend ARRA FMAPs

The American Jobs and Closing Tax Loopholes Act of 2010, is slated for consideration by the House of Representatives shortly and is expected to move to the Senate for consideration next week. The bill is structured as an amendment to H.R. 4213, and represents a compromise between House and Senate legislation that had passed both chambers previously. The compromise was struck in lieu of a conference committee to hammer out differences between the two bills.

This Issue Brief outlines the components of H.R. 4213 of most interest to states, including the extension of additional Federal Medical Assistance Percentages (FMAPs) enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5), unemployment insurance provisions, the Temporary Assistance for Needy Families (TANF) emergency fund, and expanded bonding opportunities that were included in ARRA.

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Medicaid DSH Ceilings Published

The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) increased ceilings for disproportionate share hospital (DSH) payments in fiscal years (FYs) 2009-2010. Specifically, the law increased FY 2009 ceilings by 2.5%. FY 2010 ceilings were increased by 2.5% over the new FY 2009 levels, but only for states whose ceilings would grow more slowly than 2.5%.

On April 23, 2010, the Centers for Medicare and Medicaid Services (CMS) published a notice in the Federal Register that provides revised preliminary FY 2009 and preliminary FY 2010 DSH allotments, which reflect the ARRA provisions. The notice also provides final FY 2008 DSH celings. Separate limits are included for DSH payments to institutions for mental disease (IMDs) and other mental health facilities.

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Preliminary FY 2010 Third Quarter ARRA FMAPs

The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) contains provisions that increase Medicaid grants to states for 27 months by increasing their Federal Medical Assistance Percentages (FMAPs), the share of state programs paid by the federal government. The bonus increases can change each quarter based on recent state unemployment rates compared to a base rate. The preliminary quarterly unemployment bonuses are calculated when preliminary unemployment data for the month prior to the start of the quarter are released by the Bureau of Labor Statistics (BLS). Those quarterly FMAPs are recalculated once final unemployment data for the month are available.  

On April 16, 2010, BLS published preliminary state unemployment data for March 2010. Publication of these data permit calculation of the preliminary third quarter ARRA FMAPs for federal fiscal year (FY) 2010 and, as a result, preliminary Medicare Part D clawback multipliers for the same period. In the third quarter bonus calculation, the annual update to the historical unemployment data released by BLS last month is used to adjust the base rate (states’ lowest three-month average unemployment rate since January 2006). Even with this change, FFIS estimates show that third quarter ARRA FMAPs are identical to second quarter FMAPs.  

FFIS also uses the new data to estimate ARRA FMAPs for the last two quarters of the adjustment period (July 1, 2010-December 31, 2010). ARRA requires that the bonus increases for these quarters rely on data for the three consecutive-month period beginning with December 2009 or January 2010, whichever results in a higher FMAP increase. At the same time, the hold-harmless period for the unemployment bonuses expires on July 1, 2010. According to FFIS calculations, 41 states and the District of Columbia will remain at the highest tier during the last two quarters, while two states could drop to a lower tier.

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CMS Releases Initial Guidance on Health Care Reform Law

On April 9, 2010, the Centers for Medicare and Medicaid Services (CMS) released a State Medicaid Director letter on health care reform—the first in a series of letters intended to provide guidance on implementation of the new health care reform law. Specifically, this letter provides information on the new state option for providing Medicaid coverage to low-income individuals at or below 133% of the federal poverty level (FPL). This option is available until January 1, 2014, when Medicaid eligibility is mandatory for this group. States that elect this option can provide assistance as of April 1, 2010, and receive federal reimbursement at their regular Federal Medical Assistance Percentage (FMAP). States that currently provide coverage to low-income adults through a Medicaid waiver or state-funded program could see state savings as a result of this option.

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FY 2012 FMAP Projections

The release of preliminary personal income data for calendar year 2009 and revised estimates for 2007 and 2008 permits projection of federal fiscal year (FY) 2012 federal Medicaid matching rates (Federal Medical Assistance Percentage—FMAP). Based on new data published by the Bureau of Economic Analysis (BEA), 16 states would receive increased FMAPs in FY 2012 and 21 would see decreases.

Personal income in the United States declined by an average of 1.7% in 2009. The annual percentage change ranged from -4.8% in Nevada to 2.1% in West Virginia. In fact, only six states saw an increase in personal income in 2009. Per capita personal income growth fell by 2.6% nationally.  

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Most States Meet TANF Work Participation Rates

On February 17, 2010, the Administration for Children and Families (ACF) released data on state Temporary Assistance for Needy Families (TANF) work participation rates for federal fiscal year (FY) 2008. The data revealed that 10 states and two territories failed to meet one or both of their required FY 2008 work participation rates. This represents a slight improvement over FY 2007, when 13 states and three territories failed to meet one or both of the required work participation rates. While failing to meet these rates can result in financial penalties for states, there are several courses of action that states can undertake to avoid fines.

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FY 2010 Second Quarter ARRA FMAPs; Related Medicaid Issues

The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) contained provisions that increase Medicaid grants to states for 27 months by increasing their federal medical assistance percentages (FMAPs), the share of state programs paid by the federal government. Bonus adjustments, one component of the FMAP increases, can change each quarter based on state unemployment rates. The preliminary quarterly unemployment bonuses are calculated when preliminary unemployment data for the month prior to the start of the quarter are released by the Bureau of Labor Statistics (BLS). Those quarterly FMAPs are recalculated once final unemployment data for the month are available.  

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HHS Reverses ARRA Policy on Medicare Clawback

The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) provides states with an increase in their federal medical assistance percentages (FMAPs) from October 1, 2008 through December 31, 2010. The Department of Health and Human Services (HHS) initially determined that the increased FMAPs would not apply to the Medicare Part D clawback provisions. As such, clawback payments have been determined using a state’s regular FMAP.

On February 18, 2010, HHS announced a change in this interpretation and notified states it would apply the ARRA FMAPs to clawback payments. This change is estimated to save states $4.3 billion over the 27-month period. The savings to states will be retroactive to October 1, 2008, with prior savings applied as a credit to states' future clawback payments.

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HHS Releases LIHEAP Funds

On January 20, 2010, the Department of Health and Human Services (HHS) released $490 million of the $590 million appropriated in federal fiscal year (FY) 2010 for Low-Income Home Energy Assistance Program (LIHEAP) emergency contingency funds. These funds are in addition to the $4.5 billion in regular block grant funds. To date, HHS has distributed $3.9 billion in block grant funds to states.

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2009 Population Data; Bond Caps and SSBG Allocations

On December 22, 2009, the U.S. Census Bureau released resident state population estimates for July 2009. The new data identify population shifts and affect certain grant-in-aid and other formulas. Overall, the U.S. population continues to grow at just less than 1% per year. Wyoming was the fastest-growing state, supplanting Utah in 2008 and Nevada in 2007.

This Issue Brief summarizes the new Census population estimates and calculates their effect on 2010 tax-exempt private-activity bond limitations and Social Services Block Grant (SSBG) allocations.

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