By Martha Heberlein

Back in early April, CMS released the final rule on FMAP claiming under the the Affordable Care Act. As covered in a previous blog by my colleague, Jocelyn Guyer, the rule describes the new threshold method that states will use to claim the appropriate matching funds for newly-eligible adults. It also provides more information on the FMAP for “expansion states.”

Under the ACA, states that begin covering childless adults for the first time will be getting full federal funding for their expenses. So in an attempt at fairness, Congress decided to provide a higher matching rate to leader states that had expanded coverage to adults prior to the enactment of the ACA (the aptly named “expansion states”). This phased-in matching rate for childless adults starts out lower than the rate paid for those adults considered newly eligible; but by 2019, the rates are equal. (For details on how this works, see the piece we did with KFF on Medicaid financing under the ACA.)

To be considered an expansion state, a state must have provided coverage to both parents and childless adults up to at least 100% of the FPL, as of March 23, 2010. Additionally, this coverage must include inpatient hospital care; cannot be limited to people with access to employer-based insurance; and cannot provide hospital-only benefits or be a high deductible health plan. While there are 12 states that meet this broader definition, we believe that 7 states (Arizona, Delaware, Hawaii, Maine, Massachusetts, New York, and Vermont) will likely rely on this special expansion state match rate. (The other states are likely to be able to secure the higher, newly-eligible matching rate because despite meeting the definition of an expansion state, they do not provide full, benchmark, or benchmark-equivalent benefits.)

Prior to issuing the final rule, CMS also released an FAQ on the newly-eligible and expansion state FMAPs, which had some important updates. In case you missed it –

• States seeking to confirm whether they are considered an expansion state must provide CMS with an analysis of the scope of coverage.
• Both the newly-eligible matching rate and the expansion state matching rate are only available to states that adopt the new adult group. An expansion state that decides not to expand coverage will continue to receive their regular matching rate for any existing coverage.
• If there are individuals that meet the definition of “newly eligible” within an expansion state, they will receive the higher, newly-eligible matching rate for them. For example, if an expansion state covered adults up to 100%, they will receive the newly-eligible matching rate for those adults between 100% and 133%.