Increasing Federal support to State Medicaid programs during economic downturns

(a)

In general

Section 1905 of the Social Security Act (42 U.S.C. 1396d) is amended—(1)in subsection (b), by striking and (ff) and inserting (ff), and (hh); and(2)by adding at the end the following new subsection:

(hh)

Increased FMAP during economic downturns

(1)

In general

If a fiscal quarter that begins on or after January 1, 2020, is an economic downturn quarter (as defined in paragraph (2)) with respect to a State, then the Federal medical assistance percentage determined for the State and quarter under subsection (b) shall be equal to the percentage determined for the State and quarter under paragraph (3).(2)

Economic downturn quarter

(A)

In general

(i)

In general

In this subsection, the term economic downturn quarter means, with respect to a State, a fiscal quarter during which the State’s unemployment rate for the quarter exceeds the percentage determined for the State and quarter under clause (ii).(ii)

Threshold percentage

The percentage determined under this clause for a State and fiscal quarter is the percentage equal to the lower of—(I)the State unemployment rate at the 20th percentile of the distribution of the State’s quarterly unemployment rates for the 60-quarter period preceding the quarter involved, increased by 1 percentage point; and(II)the State’s average quarterly unemployment rate for the 12-quarter period preceding the quarter involved, increased by 1 percentage point.(B)

Unemployment data

(i)

In general

Except as provided in clause (ii), for purposes of determining unemployment rates for a State and a quarter under this paragraph, the Secretary shall use data from the Local Area Unemployment Statistics from the Bureau of Labor Statistics. (ii)

Application to certain territories

In the case of the Virgin Islands, Guam, the Northern Mariana Islands, American Samoa, or any other jurisdiction for which suitable data from the Local Area Unemployment Statistics from the Bureau of Labor Statistics are unavailable, the Secretary shall use data from the U–3 unemployment measure of the Bureau of Labor Statistics to make any necessary determinations under subparagraph (A).(3)

Increased FMAP during economic downturn quarter

(A)

In general

During a fiscal quarter that is an economic downturn quarter with respect to a State, the Federal medical assistance percentage for the State and quarter determined under subsection (b) shall be equal to—(i)the Federal medical assistance percentage determined for the State and quarter under subsection (b) without regard to this subsection (but including any increase to such percentage for such quarter made pursuant to section 6008(a) of the Families First Coronavirus Response Act); increased by(ii)the number of percentage points (rounded to the nearest tenth of a percentage point) equal to the product of—(I)the number of percentage points (rounded to the nearest tenth of a percentage point) by which the unemployment rate for the State and quarter exceeds the percentage determined for the State and quarter under paragraph (2)(A)(ii); and(II)4.8. (B)

Rules of application

The following rules shall apply with respect to the Federal medical assistance percentage determined for a State and an economic downturn quarter under this subsection:(i)

Scope of application

Such Federal medical assistance percentage shall not apply for purposes of—(I)disproportionate share hospital payments described in section 1923; (II)payments under part D of title IV; or(III)any payments under this title that are based on a Federal medical assistance percentage determined for a State under subsection (aa) (but only to the extent that such Federal medical assistance percentage is higher than the economic recovery FMAP).(ii)

Limitation

In no case shall— (I)the Federal medical assistance percentage determined for a State and quarter pursuant to this subsection exceed 95 percent; or(II)any increase to the Federal medical assistance percentage determined for a State and quarter pursuant to this subsection result in the application of a Federal medical assistance percentage that exceeds 95 percent.(iii)

Application to CHIP

Notwithstanding the first sentence of section 2105(b), the application of this subsection may result in the enhanced FMAP of a State for a fiscal year under such section exceeding 85 percent, but in no case may the application of this subsection before application of the second sentence of such section result in the enhanced FMAP of the State exceeding 95 percent. (4)

Advance payment; retrospective adjustment

(A)

In general

Prior to the beginning of each fiscal quarter that begins on or after July 1, 2020, the Secretary shall, with respect to each State— (i)make an initial determination, based on the projections made for the State and quarter under subparagraph (B), as to— (I)whether the application of this subsection is expected to result in the application of a higher Federal medical assistance percentage for the State and quarter than the percentage that would otherwise apply without regard to this subsection; and— (II)if the application of this subsection is expected to result in such a higher Federal medical assistance percentage for the State and quarter, what such higher percentage is expected to be; and (ii)if the Secretary determines under clause (i) that the application of this subsection is expected to result in the application of a higher Federal medical assistance percentage for the State and quarter than the percentage that would otherwise apply without regard to this subsection—(I)apply such higher Federal medical assistance percentage of the State for purposes of making payments to the State for amounts expended during such quarter as medical assistance under the State plan; and(II)take into account such higher Federal medical assistance percentage of the State for purposes of calculating the enhanced FMAP for the State and quarter under section 2105(b).(B)

Projection of State unemployment rates

Prior to the beginning of each fiscal quarter that begins on or after July 1, 2020, the Secretary, acting through the Chief Actuary of the Centers for Medicare & Medicaid Services, shall, using the most recently available data described in paragraph (2)(B), make projections with respect to—(i)the unemployment rates for each State for such quarter;(ii)the threshold percentages described in paragraph (2)(A)(ii) for each State for such quarter; and(iii)the national unemployment rate for such quarter.(C)

Retrospective adjustment

As soon as practicable after final unemployment data becomes available for a fiscal quarter that begins on or after July 1, 2020, the Secretary shall, with respect to each State— (i)make a final determination with respect to the application of this subsection for purposes of determining the Federal medical assistance percentage and enhanced FMAP of the State for the quarter; and(ii)in accordance with section 1903(d)(2) and section 2105(e), reduce or increase the amount payable to the State under section 1903(a) or section 2105 for a subsequent fiscal quarter to the extent of any overpayment or underpayment under either such section which the Secretary determines was made as a result of an incorrect initial determination under subparagraph (A)(i) with respect to the application of this subsection for purposes of determining the Federal medical assistance percentage and enhanced FMAP of the State for such prior fiscal quarter. (5)

Retrospective application of over-the-limit FMAP increases

(A)

In general

If a State has excess percentage points with respect to an economic downturn quarter and an applicable FMAP (as determined under subparagraph (B)), the State may elect to apply such excess percentage points to increase such applicable FMAP for one or more quarters during the look-back period for the State and economic downturn quarter in accordance with this paragraph.(B)

Excess percentage points

For purposes of this paragraph, the number of excess percentage points for a State, economic downturn quarter, and an applicable FMAP shall be equal to the number of percentage points by which— (i)the applicable FMAP for the State and quarter (after application of paragraph (3) but without regard to subparagraph (B)(ii) of such paragraph); exceeds(ii)95 percent.(C)

Effect of application of excess percentage points

If a State elects to apply excess percentage points to an applicable FMAP to a quarter during a look-back period under this paragraph, the Secretary shall determine the additional amount of payment under section 1903(a) to which the State would have been entitled for such quarter if the applicable FMAP (as so increased) had been in effect for such quarter, and shall treat such additional amount as an underpayment for such quarter.(D)

Distribution of excess percentage points

A State that has excess percentage points with respect to an economic downturn quarter and applicable FMAP may elect to divide such points among more than 1 quarter during the look-back period for such State and quarter provided that no excess percentage point (or fraction of an excess percentage point) is applied to the applicable FMAP of more than 1 quarter.(E)

Limitations

(i)

No increases over 100 percent

A State may not increase an applicable FMAP for any quarter during a look-back period under this paragraph if such increase would result in the applicable FMAP for such quarter exceeding 100 percent.(ii)

Scope of application

Any increase to an applicable FMAP of a State for a fiscal quarter under this paragraph— (I)shall only apply with respect to payments for amounts expended by the State for medical assistance for services furnished during such quarter to which such applicable FMAP is applicable; and (II)shall not apply with respect to payments described in paragraph (3)(B)(i).(F)

Definitions

In this paragraph: (i)

Applicable FMAP

The term applicable FMAP means, with respect to a State and fiscal quarter—(I)the Federal medical assistance percentage determined for the State and quarter under subsection (b); (II)the Federal medical assistance percentage applicable under subsection (y); (III)the Federal medical assistance percentage applicable under subsection (z)(2); (IV)the Federal medical assistance percentage determined for the State and quarter under subsection (ff); or(V)the enhanced FMAP determined for the State and quarter under section 2105(b).(ii)

Look-back period

The term look-back period means, with respect to a State and a fiscal quarter that is an economic downturn quarter for the State, the period of 4 fiscal quarters that ends with the fourth quarter which precedes the most recent fiscal quarters that was not an economic downturn quarter for the State.(6)

Requirement for all States

This subsection shall not apply to a State with respect to a fiscal quarter, if—(A)eligibility standards, methodologies, or procedures under the State plan or a waiver of such plan are more restrictive during such quarter than the eligibility standards, methodologies, or procedures, respectively, under such plan (or waiver) as in effect on the last day of the most recent fiscal quarter that was not an economic downturn quarter for the State;(B)the amount of any premium imposed by the State pursuant to section 1916 or 1916A during such quarter, with respect to an individual enrolled under such plan (or waiver), exceeds the amount of such premium as of the date described in subparagraph (A); or(C)the State fails to provide that an individual who is enrolled for benefits under such plan (or waiver) as of the date described in subparagraph (A) or enrolls for benefits under such plan (or waiver) during the period beginning with such date and ending with the day before the first day of the next quarter that is not an economic downturn quarter for the State shall be treated as eligible for such benefits for not less than 12 months after such date or (if later) the date that such individual so enrolls unless the individual requests a voluntary termination of eligibility or the individual ceases to be a resident of the State.

(b)

Exclusion of economic downturn FMAP increases from territorial caps; special rule for CHIP allotments

(1)

Exclusion from territorial caps

Section 1108 of the Social Security Act (42 U.S.C. 1308) is amended—(A)in subsection (f), in the matter preceding paragraph (1), by striking subsection (g) and section 1935(e)(1)(B) and inserting subsections (g) and (h) and section 1935(e)(1)(B); and(B)by adding at the end the following:

(h)

Exclusion from caps of amounts attributable to economic downturn FMAP

Any payment made to a territory for a fiscal year in which the Federal medical assistance percentage for the territory is determined under section 1905(hh) shall not be taken into account for purposes of applying payment limits under subsections (f) and (g) to the extent that such payment exceeds the amount of the payment that would have been made to the territory for the year if the Federal medical assistance percentage for the territory had been determined without regard to such section.

(2)

CHIP allotments

Section 2104(m) of the Social Security Act (42 U.S.C. 1397dd(m)) is amended— (A)in paragraph (2)(B), in the matter preceding clause (i), by striking paragraphs (5) and (7) and inserting paragraphs (5), (7), and (12); and (B)by adding at the end the following new paragraph:

(12)

Special rule for adjusting allotments during fiscal years with economic downturn quarters

(A)

In general

If a fiscal quarter occurring during fiscal year 2020 or any succeeding fiscal year is determined to be an economic downturn quarter with respect to a State (as determined under section 1905(hh)) then, as soon as practicable after such determination, the Secretary shall increase the allotment for the State and fiscal year in accordance with subparagraph (B).(B)

Amount of increase

(i)

In general

The amount of an increase to the allotment of a State described in subparagraph (A) for a fiscal year shall be equal to the amount by which Federal payments made to the State for the preceding fiscal year under this title would have been increased (without regard to whether such payments would exceed the amount of the State’s allotment for such preceding fiscal year) if the enhanced FMAP determined for the State for such preceding fiscal year had been increased to the same extent that the State's enhanced FMAP for the fiscal year involved is expected to be increased as a result of the application of section 1905(hh) relative to the enhanced FMAP that would apply to the State for the fiscal year involved without the application of such section.(ii)

Inclusion of projected increases

In increasing the allotment of a State for a fiscal year under this paragraph, the Secretary may base the calculation of such increase on projections made by the Secretary with respect to—(I)the number of fiscal quarters during such fiscal year that will be economic downturn quarters; and(II)the effect that the application of section 1905(hh) is expected to have on the enhanced FMAP of the State for such fiscal year.(C)

Disregard of increased payments for purposes of future allotments

Any Federal payment made to a State under this title for a fiscal year in which the Federal medical assistance percentage for the State is determined under section 1905(hh) shall be disregarded when determining the allotment of the State for any subsequent year, including for purposes of applying this paragraph, to the extent that such payment exceeds the amount of the payment that would have been made to the State for the year if the Federal medical assistance percentage for the State and year had been determined without regard to such section.

(c)

Conforming amendments

Section 1905(cc) of the Social Security Act (42 U.S.C. 1396d(cc)) is amended—(1)by striking and section 6008 of the Families First Coronavirus Response Act and inserting , section 6008 of the Families First Coronavirus Response Act, and subsection (hh) of this section; and(2)by inserting , and, in applying such treatments to an increase in the Federal medical assistance percentage of a State under subsection (hh) with respect to a fiscal quarter that is an economic downturn quarter for the State, the reference to December 31, 2009 shall be deemed to be a reference to March 11, 2020, or, if later, the last day of the most recent fiscal quarter that was not an economic downturn quarter for the State before the period.