HEROES Act Includes Other Provisions Strengthening Medicaid and CHIP

The HEROES Act bill (H.R. 6800), which the House will likely consider Friday, May 13, would provide a critically needed, additional one-year increase in the federal Medicaid matching rate (FMAP) and block the Trump Administration from finalizing the damaging Medicaid Financial Accountability Rule (MFAR) during the duration of the public health emergency.  It also includes several important provisions that improve and strengthen Medicaid and Children’s Health Insurance Program (CHIP) during this COVID-19-related health and economic crisis.  The bill:

Provides additional federal support for home- and community-based services (HCBS).

The bill would further increase the Medicaid matching rate for HCBS services by 10 percentage points (subject to a 95 percent limit) for one year starting July 1, 2020.  The support could be used by states to support financially stressed HCBS providers through “retainer” payments and higher reimbursement rates (including for self-directed care and family providers); address HCBS providers’ higher COVID-19 related costs such as hazard and overtime pay, emergency supplies and equipment, training, education and recruitment; and make other HCBS improvements.  States would be required to maintain their level of HCBS spending on the date of enactment. 

Requires state Medicaid and CHIP programs to cover COVID-19 vaccines and treatment without cost-sharing.

The bill would build on provisions in the Families First COVID-19 legislation (P.L. 116-127) that required Medicaid and CHIP coverage of COVID-19 testing without cost-sharing to explicitly require Medicaid and CHIP coverage of COVID-19 vaccines, treatment including prescription drugs and treatment of conditions that complicated COVID-19 treatment, without the imposition of cost-sharing charges.  (The Families First legislation indirectly required states to cover COVID-19 testing and treatment without cost-sharing in Medicaid as part of its FMAP maintenance-of-effort requirement but that provision did not apply to CHIP.)  The bill would also make any COVID-19 vaccines part of the Vaccines for Children (VFC) program, which provides vaccination to Medicaid-eligible, uninsured and Native American children free of charge.

Expands the state Medicaid option for coverage of COVID-19 testing for the uninsured to include coverage for COVID-19 vaccines and treatment.

Currently, 13 states — Alabama, Arizona, California, Colorado, Illinois, Louisiana, Maine, Minnesota, Montana, New Mexico, Rhode Island, South Carolina, and Washington — have taken up a Families First Medicaid option to cover COVID-19 testing for the uninsured.  The federal government picks up 100 percent of the cost.  The HEROES Act bill would expand the option to cover vaccines and treatment, including prescription drugs and treatment for complicating conditions.

The bill also includes several smaller Medicaid provisions.  It would temporarily increase states’ Medicaid Disproportionate Share Hospital (DSH) allotments by 2.5 percent in fiscal years 2020 and 2021, which would allow states to increase supplemental DSH payments to hospitals including those with a higher share of COVID-19 patients.  The HEROES Act would also finally restore Medicaid coverage for citizens of Freely Associated States (the Marshall Islands, Micronesia and Palau).  It would reiterate that state Medicaid programs must continue to provide non-emergency medical transportation, which the Trump Administration has previously indicated it plans to roll back through regulation.  It would also allow state Medicaid programs to cover incarcerated individuals 30 days before their release to ensure better care transitions and improved health outcomes.  The bill would also temporarily extend the 100 percent FMAP available to Indian Health Service providers to services furnished by Urban Indian Health Organizations.  Finally, the bill would allow states to temporarily extend expiring section 1115 waivers through the end of 2021.

Edwin Park is a Research Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.