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September 2010 St@teside

Federal Update

On August 18, the Centers for Medicare & Medicaid Services (CMS) announced that states had until September 24 to request the $16 billion extension in enhanced federal Medicaid matching funds. The extension provides states a 3.2 percent increase over the base rate in the second quarter of Fiscal Year 2011 and a 1.2 percent increase in the third quarter of Fiscal Year 2011. States currently receive a 6.2 percent increase over the base rate; that increase expires at the end of calendar year 2010.

CMS required the governor of each state to submit a request to continue receiving the increased federal matching funds through June 2011. CMS provided a template for states to use for their requests, and outlined additional requirements that each state must meet in order to be eligible for the enhanced funds.

Some additional announcements related to health reform that will affect states include:

  • August 17: The proposed form that health insurers will be required to use to report financial information and determine their compliance with the medical loss ratio requirement in federal health reform has been approved by the National Association of Insurance Commissioners (NAIC). Starting in 2011, insurers will have to make refunds to consumers if they do not spend at least 80 percent of premiums on medical care or quality improvement measures in the large employer market, and at least 85 percent of premiums on medical care or quality improvement measures in the small group and individual markets.
  • August 17: CMS issued guidance on how states can qualify for a 90 percent federal matching rate for administrative expenses that support health information technology. CMS released a letter to state Medicaid directors detailing the three requirements states must meet in order to be eligible. States must:
    • Administer Medicaid incentive payments to eligible professionals and hospitals for electronic health record adoption;
    • Conduct oversight of the Medicaid electronic health record (EHR) program; and
    • Pursue initiatives that encourage EHR adoption and the electronic exchange of health information.
  • August 20: President Obama requested $400 million in funding for several high impact programs. The funding increase will not add to the previously proposed budget, as it will financed by reductions in programs identified as lower priority and from excess funds. If approved by Congress, the additional money will go toward:
    •  Health care workforce enhancement ($250 million);
    • HIV/AIDS treatment and prevention ($65 million);
    • State health insurance consumer assistance programs ($30 million); and
    • State high-risk health insurance pools ($55 million).