[Federal Register Volume 74, Number 148 (Tuesday, August 4, 2009)]
[Notices]
[Pages 38630-38633]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18544]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary


Implementation of Section 5001 of the American Recovery and 
Reinvestment Act of 2009 (ARRA) for Adjustments to the Third Quarter of 
Fiscal Year 2009 Federal Medical Assistance Percentage (FMAP) Rates for 
Federal Matching Shares for Medicaid and Foster Care and Adoption 
Assistance

AGENCY: Office of the Secretary, DHHS.

ACTION: Notice with comment period.

-----------------------------------------------------------------------

SUMMARY: This notice with comment period describes the methodology for 
calculating the higher federal matching funding that is made available 
under Section 5001 of the American Recovery and Reinvestment Act of 
2009 (ARRA). Section 5001 of the ARRA provides for temporary increases 
in the Federal Medical Assistance Percentage (FMAP) rates to provide 
fiscal relief to States and to protect and maintain State Medicaid 
programs in a period of economic downturn. The increased FMAP rates 
apply during a recession adjustment period that is defined as the 
period beginning on October 1, 2008 and ending on December 31, 2010.

[[Page 38631]]


Effective Date:  The percentages listed are for the third quarter of 
Fiscal Year 2009 beginning April 1, 2009 and ending June 30, 2009.
    Comment Date: To be assured consideration, comments must be 
received at the address provided below, no later than 5 p.m. on August 
19, 2009.

ADDRESSES: Because of staff and resource limitations, we can only 
accept comments by regular mail. You may mail written comments (one 
original and one copy) to the following address only: Department of 
Health and Human Services, Room 447D, Attention: FMAP Notice--ARRA, 200 
Independence Ave., SW., Washington, DC 20201.
    Submitting Comments: We welcome comments from the public on the 
calculation methodology set forth in this notice with comment period to 
assist us in fully considering issues and developing policies. Please 
provide a reference to the section on which you choose to comment.

A. Background

    The Federal Medical Assistance Percentage (FMAP) is used to 
determine the amount of Federal matching for specified State 
expenditures for assistance payments under programs under the Social 
Security Act. Sections 1905(b) and 1101(a)(8)(B) of the Social Security 
Act (``the Act'') require the Secretary of Health and Human Services to 
publish the FMAP rates each year. The Secretary calculates the 
percentages, using formulas set forth in sections 1905(b) and 
1101(a)(8)(B), from the Department of Commerce's statistics of average 
income per person in each State and for the Nation as a whole. The 
percentages must be within the upper and lower limits given in section 
1905(b) of the Act. The percentages to be applied to the District of 
Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and 
the Northern Mariana Islands are specified in statute, and thus are not 
based on the statutory formula that determines the percentages for the 
50 States.
    Section 1905(b) of the Social Security Act specifies the formula 
for calculating FMAP as follows:
    The FMAP for any State shall be 100 per centum less the State 
percentage; and the State percentage shall be that percentage which 
bears the same ratio to 45 per centum as the square of the per capita 
income of such State bears to the square of the per capita income of 
the continental United States (including Alaska) and Hawaii; except 
that (1) the FMAP shall in no case be less than 50 per centum or more 
than 83 per centum, and (2) the FMAP for Puerto Rico, the Virgin 
Islands, Guam, the Northern Mariana Islands, and American Samoa shall 
be 50 per centum. Section 4725 of the Balanced Budget Act of 1997 
amended section 1905(b) to provide that the FMAP for the District of 
Columbia for purposes of titles XIX (Medicaid) and XXI (CHIP) shall be 
70 percent.
    Section 5001 of Division B of the American Recovery and 
Reinvestment Act of 2009 (ARRA) provides for a temporary increase in 
FMAP rates for Medicaid, Foster Care and Adoption Assistance programs. 
The purposes of the increases to the FMAP rates are to provide fiscal 
relief to States and to protect and maintain State Medicaid programs in 
a period of economic downturn, referred to as the ``recession 
adjustment period.'' The recession adjustment period is defined as the 
period beginning on October 1, 2008 and ending on December 31, 2010.

B. Calculation of the Increased FMAP Rates Under ARRA

    Section 5001 of the ARRA specifies that the FMAP rates shall be 
temporarily increased for the following: (1) Maintenance of FMAP rates 
for fiscal year 2009, fiscal year 2010, and first quarter of fiscal 
year 2011, so that the FMAP rate will not decrease from the prior year, 
determined by using as the FMAP rate for the current year the greater 
of any prior fiscal year FMAP rates between 2008-2010 or the rate 
calculated for the current fiscal year; (2) in addition to any 
maintenance increase, the application of an increase in each State's 
FMAP of 6.2 percentage points; and (3) an additional percentage point 
increase based on the State's increase in unemployment during the 
recession adjustment period. The resulting increased FMAP cannot exceed 
100 percent. Each State's FMAP will be recalculated each fiscal quarter 
beginning October 2008. Availability of certain components of the 
increased FMAP is conditioned on States meeting statutory programmatic 
requirements, such as maintenance of effort requirements, which are not 
part of the calculation process.
    Expenditures for which the increased FMAP is not available under 
title XIX include expenditures for disproportionate share hospital 
payments, certain eligibility expansions, services received through an 
IHS or tribal facility (which are already paid at a rate of 100 percent 
which is not subject to increase), and expenditures that are paid at an 
enhanced FMAP rate. The increased FMAP is also not available for 
payments under title XXI. The increased FMAP is available for 
expenditures under part E of title IV (Foster Care Maintenance 
payments) only to the extent of maintenance increase, if any, and the 
6.2 percentage point increase.
    For each qualifying State with an unemployment rate that has 
increased at a rate above a statutory threshold percentage, ARRA 
provides additional relief above the general 6.2 percentage point 
increase in FMAP through application of a different increase 
calculation. For those States, the FMAP for each qualifying State is 
increased by the number of percentage points equal to the product of 
the State matching percentage (as calculated under section 1905(b) and 
adjusted if necessary for the maintenance of FMAP without reduction 
from the prior year, and after applying half of the 6.2 percentage 
point general increase in the federal percentage) and the applicable 
percent determined from the State unemployment increase percentage for 
the quarter, in addition to the 6.2 percentage point increase.
    The unemployment increase percentage for a calendar quarter is 
equal to the number of percentage points (if any) by which the average 
monthly unemployment rate for the State in the most recent previous 3-
consecutive-month period for which data are available exceeds the 
lowest average monthly unemployment rate for the State for any 3-
consecutive-month period beginning on or after January 1, 2006 and 
preceding the most recent previous 3-consecutive-month period. A State 
qualifies for additional relief based on an increase in unemployment if 
that State's unemployment increase percentage is at least 1.5 
percentage points.
    The applicable percent is: (1) 5.5 percent if the State 
unemployment increase percentage is at least 1.5 percentage points but 
less than 2.5 percentage points; (2) 8.5 percent if the State 
unemployment increase percentage is at least 2.5 percentage points but 
less than 3.5 percentage points; and (3) 11.5 percent if the State 
unemployment increase percentage is at least 3.5 percentage points.
    If the State's applicable percent is less than the applicable 
percent for the preceding quarter, then the higher applicable percent 
shall continue in effect for any calendar quarter beginning on January 
1, 2009 and ending before July 1, 2010.
    Puerto Rico, the Virgin Islands, Guam, the Commonwealth of the 
Northern Mariana Islands, and America Samoa can make a one-time 
election between (1) A 30 percent increase in their cap on Medicaid 
payments (as determined under subsections (f) and (g) of section 1108 
of the Social Security Act), or (2)

[[Page 38632]]

applying the increase of 6.2 percentage points in the FMAP plus a 15 
percent increase in the cap on Medicaid payments. There is no quarterly 
unemployment adjustment for Territories. As a result, we are not 
addressing the Territories or Commonwealth in this document, and will 
instead work with them separately and individually.

C. Methodology Utilized in the Calculation of Increased FMAP Rates for 
the Third Quarter of Fiscal Year 2009 and Subsequent Quarters During 
the Recession Adjustment Period

    This notice sets forth increased FMAP rates for the third quarter 
of Fiscal Year 2009 that have been calculated pursuant to the ARRA and 
are set forth in the table at the end of the notice. The rates set 
forth in this notice are effective from April 1, 2009 through June 30, 
2009. The table gives figures for each of the 50 States and the 
District of Columbia. Adjusted figures are not shown for Puerto Rico, 
the Virgin Islands, Guam, American Samoa, and the Commonwealth of the 
Northern Mariana Islands. Under ARRA, the application of an increased 
FMAP calculation for the Territories and Commonwealth depends upon a 
one-time election of a higher FMAP and 15 percent increase in their cap 
on federal Medicaid payments, or a 30 percent increase in their cap. 
Moreover, there is no quarterly unemployment adjustment for the 
Territories or Commonwealth. As a result, we will instead work with the 
Territories and Commonwealth separately and individually.
    The maintenance of FMAP calculation and the general 6.2 percentage 
point increase are non-discretionary calculations, and were included in 
a prior notice issued April 21, 2009, at 74 FR 18235. This notice 
specifically adjusts FMAP rates for States qualifying for additional 
increase based on currently available information on unemployment rates 
in the States as obtained from the Department of Labor's Bureau of 
Labor Statistics, and describes the methodology we intend to use 
throughout the recession adjustment period.
    The methodology that we have used to calculate the unemployment 
adjustment is to utilize the final unemployment rate for the most 
recent previous 3-month period for which data are available prior to 
each quarter to calculate that quarter's FMAP. The unemployment rate 
for the most recent previous 3-month period includes final unemployment 
rates for all three months.
    The timing of the availability of final State unemployment data for 
the month just prior to the start of the fiscal quarter prevents the 
publication of the FMAP rates until after the fiscal quarter has begun. 
For example, State unemployment data for the month of March, the month 
just prior to the start of the fiscal quarter beginning April 1, 
becomes available during the month of April on a preliminary basis. 
State unemployment data for March does not become final until May with 
the release of preliminary April state unemployment data and so forth 
for subsequent months and quarters.
    Because States rely on timely publication of the percentages for 
their use in budget planning activities, HHS will calculate preliminary 
quarterly FMAP rates at the time preliminary monthly data for the month 
prior to the start of the quarter is available. HHS will provide these 
rates to the Centers for Medicare and Medicaid Services (CMS) for the 
purpose of calculating preliminary quarterly adjustments, as specified 
by ARRA, for States' federal matching amounts. HHS will calculate final 
quarterly FMAP rates at the time final monthly data for the month prior 
to the start of the fiscal quarter is available. HHS will provide these 
rates to CMS for the purpose of calculating the final quarterly 
adjustments, as specified by ARRA, for States' final quarterly federal 
matching amounts and publish these final quarterly rates in a Federal 
Register notice.
    As an example of the methodology, HHS will calculate preliminary 
FMAP rates for the fiscal quarter beginning April 1, using State 
unemployment data from final January, final February, and preliminary 
March unemployment rates, in April when preliminary March data become 
available, and supply these to CMS. HHS will calculate final FMAP rates 
for the fiscal quarter beginning April 1, using State unemployment data 
from final January, final February, and final March unemployment rates, 
in May when final March data become available and supply these to CMS 
and publish these final quarterly rates in a Federal Register notice. 
The methodology and timing for the calculations and their release will 
proceed similarly for subsequent quarters during the recession 
adjustment period.
    We intend to utilize annual updates to the historical BLS data to 
make changes in the States' lowest unemployment rate. Revised 
historical unemployment rates are part of the currently available data 
used at the time of calculating third quarter FMAP rates each year. 
These revisions to the historical data will remain current until the 
following third quarter FMAP rate is calculated, when new historical 
data becomes available.
    Using data for the final State unemployment rates for the 3-
consecutive-month period prior to the start of the fiscal quarter 
beginning April 1, 2009 and historical periods of each 3-consecutive-
months beginning on or after January 1, 2006, differences in States' 
unemployment rates were calculated to determine if a State qualifies 
for an adjustment in its FMAP due to changes in its unemployment rate. 
For the third quarter of fiscal year 2009, we compared each State's 
final unemployment rate for the 3-month period ending in March 2009 to 
the lowest average unemployment rate for the State for any 3-
consecutive-month period from January 1, 2006 through February 2009. A 
State received an additional FMAP increase if the State's unemployment 
increase percentage was at least 1.5 percentage points.
    ARRA adjustments to FMAP are shown by State in the accompanying 
table. The hold harmless FY09 FMAP is the higher of the original FY08 
or FY09 FMAP. The 6.2 percentage point increase is added to the hold 
harmless FY09 FMAP. The unemployment tier is determined from the 
comparison of the 3-month average unemployment rate ending March 2009 
and the lowest 3-month unemployment rate during January 2006 to 
February 2009. The unemployment adjustment is calculated according to 
the unemployment tier and added to the hold harmless FY09 FMAP with the 
6.2 percentage point increase.
    We are requesting public comment on the calculation methodology 
described above, which we have used in developing the third quarter 
increased FMAP rates. We will address any public comments in the next 
quarterly notice of increased FMAP rates.

FOR FURTHER INFORMATION CONTACT: Thomas Musco or Rose Chu, Office of 
Health Policy, Office of the Assistant Secretary for Planning and 
Evaluation, Room 447D--Hubert H. Humphrey Building, 200 Independence 
Avenue, SW., Washington, DC 20201, (202) 690-6870.

(Catalog of Federal Domestic Assistance Program Nos. 93.558: TANF 
Contingency Funds; 93.563: Child Support Enforcement; 93.596: Child 
Care Mandatory and Matching Funds of the Child Care and Development 
Fund; 93.658: 93.659: Adoption Assistance; 93.769: Ticket-to-Work 
and Work Incentives Improvement Act (TWWIIA) Demonstrations to 
Maintain Independence and Employment)

    Dated: July 27, 2009.
Kathleen Sebelius,
Secretary.

[[Page 38633]]



                                                                                ARRA Adjustments to FMAP Q3 FY09
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Hold
                                                                                               harmless    1st and 2nd    3-Month                                                   3nd quarter
                                                                   FY08      FY09      Hold      FY09     quarter FY09    average    Minimum    Unemploy-              Unemploy-     FY09 FMAP
                             State                               original  original  harmless    FMAP      FMAP Adjust   unemploy-  unemploy-     ment     Unemploy-     ment      adjust (incl
                                                                   FMAP      FMAP      FY 09     with     (incl HH-6.2-     ment       ment    difference  ment tier  adjustment      HH-6.2-
                                                                                                6.2%pt   unemploy-ment)    ending                                      Q3  FY09   unemploy-ment)
                                                                                               increase                   Mar 2009
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama........................................................     67.62     67.98     67.98     74.18        76.64           8.4        3.3        5.1        11.5       3.33         77.51
Alaska.........................................................     52.48     50.53     52.48     58.68        58.68           8.0        6.0        2.0         5.5       2.44         61.12
Arizona........................................................     66.20     65.77     66.20     72.40        75.01           7.4        3.6        3.8        11.5       3.53         75.93
Arkansas.......................................................     72.94     72.81     72.94     79.14        79.14           6.4        4.8        1.6         5.5       1.32         80.46
California.....................................................     50.00     50.00     50.00     56.20        61.59          10.6        4.8        5.8        11.5       5.39         61.59
Colorado.......................................................     50.00     50.00     50.00     56.20        58.78           7.1        3.6        3.5        11.5       5.39         61.59
Connecticut....................................................     50.00     50.00     50.00     56.20        60.19           7.4        4.3        3.1         8.5       3.99         60.19
Delaware.......................................................     50.00     50.00     50.00     56.20        60.19           7.2        3.3        3.9        11.5       5.39         61.59
District of Columbia...........................................     70.00     70.00     70.00     76.20        77.68           9.6        5.4        4.2        11.5       3.09         79.29
Florida........................................................     56.83     55.40     56.83     63.03        67.64           9.4        3.3        6.1        11.5       4.61         67.64
Georgia........................................................     63.10     64.49     64.49     70.69        73.44           8.9        4.3        4.6        11.5       3.73         74.42
Hawaii.........................................................     56.50     55.11     56.50     62.70        66.13           6.6        2.2        4.4        11.5       4.65         67.35
Idaho..........................................................     69.87     69.77     69.87     76.07        78.37           6.8        2.8        4.0        11.5       3.11         79.18
Illinois.......................................................     50.00     50.32     50.32     56.52        60.48           8.5        4.4        4.1        11.5       5.36         61.88
Indiana........................................................     62.69     64.26     64.26     70.46        73.23           9.6        4.4        5.2        11.5       3.75         74.21
Iowa...........................................................     61.73     62.62     62.62     68.82        68.82           5.0        3.7        1.3         0.0       0.00         68.82
Kansas.........................................................     59.43     60.08     60.08     66.28        66.28           5.9        4.0        1.9         5.5       2.03         68.31
Kentucky.......................................................     69.78     70.13     70.13     76.33        77.80           9.3        5.4        3.9        11.5       3.08         79.41
Louisiana......................................................     72.47     71.31     72.47     78.67        80.01           5.6        3.5        2.1         5.5       1.34         80.01
Maine..........................................................     63.31     64.41     64.41     70.61        72.40           7.9        4.4        3.5        11.5       3.74         74.35
Maryland.......................................................     50.00     50.00     50.00     56.20        58.78           6.6        3.4        3.2         8.5       3.99         60.19
Massachusetts..................................................     50.00     50.00     50.00     56.20        58.78           7.6        4.4        3.2         8.5       3.99         60.19
Michigan.......................................................     58.10     60.27     60.27     66.47        69.58          12.1        6.7        5.4        11.5       4.21         70.68
Minnesota......................................................     50.00     50.00     50.00     56.20        60.19           7.9        3.9        4.0        11.5       5.39         61.59
Mississippi....................................................     76.29     75.84     76.29     82.49        83.62           9.1        6.0        3.1         8.5       1.75         84.24
Missouri.......................................................     62.42     63.19     63.19     69.39        71.24           8.4        4.7        3.7        11.5       3.88         73.27
Montana........................................................     68.53     68.04     68.53     74.73        76.29           5.9        3.2        2.7         8.5       2.41         77.14
Nebraska.......................................................     58.02     59.54     59.54     65.74        65.74           4.5        2.8        1.7         5.5       2.05         67.79
Nevada.........................................................     52.64     50.00     52.64     58.84        63.93          10.0        4.2        5.8        11.5       5.09         63.93
New Hampshire..................................................     50.00     50.00     50.00     56.20        56.20           5.7        3.4        2.3         5.5       2.58         58.78
New Jersey.....................................................     50.00     50.00     50.00     56.20        58.78           7.9        4.2        3.7        11.5       5.39         61.59
New Mexico.....................................................     71.04     70.88     71.04     77.24        77.24           5.5        3.5        2.0         5.5       1.42         78.66
New York.......................................................     50.00     50.00     50.00     56.20        58.78           7.5        4.3        3.2         8.5       3.99         60.19
North Carolina.................................................     64.05     64.60     64.60     70.80        73.55          10.4        4.5        5.9        11.5       3.71         74.51
North Dakota...................................................     63.75     63.15     63.75     69.95        69.95           4.2        3.0        1.2         0.0       0.00         69.95
Ohio...........................................................     60.79     62.14     62.14     68.34        70.25           9.3        5.3        4.0        11.5       4.00         72.34
Oklahoma.......................................................     67.10     65.90     67.10     73.30        74.94           5.5        3.3        2.2         5.5       1.64         74.94
Oregon.........................................................     60.86     62.45     62.45     68.65        71.58          10.8        5.0        5.8        11.5       3.96         72.61
Pennsylvania...................................................     54.08     54.52     54.52     60.72        63.05           7.5        4.3        3.2         8.5       3.60         64.32
Rhode Island...................................................     52.51     52.59     52.59     58.79        63.89          10.4        4.8        5.6        11.5       5.10         63.89
South Carolina.................................................     69.79     70.07     70.07     76.27        78.55          10.9        5.5        5.4        11.5       3.09         79.36
South Dakota...................................................     60.03     62.55     62.55     68.75        68.75           4.6        2.7        1.9         5.5       1.89         70.64
Tennessee......................................................     63.71     64.28     64.28     70.48        73.25           9.1        4.5        4.6        11.5       3.75         74.23
Texas..........................................................     60.56     59.44     60.56     66.76        68.76           6.5        4.4        2.1         5.5       2.00         68.76
Utah...........................................................     71.63     70.71     71.63     77.83        77.83           5.0        2.5        2.5         8.5       2.15         79.98
Vermont........................................................     59.03     59.45     59.45     65.65        67.71           7.0        3.5        3.5        11.5       4.31         69.96
Virginia.......................................................     50.00     50.00     50.00     56.20        58.78           6.4        2.8        3.6        11.5       5.39         61.59
Washington.....................................................     51.52     50.94     51.52     57.72        60.22           8.4        4.4        4.0        11.5       5.22         62.94
West Virginia..................................................     74.25     73.73     74.25     80.45        80.45           6.0        4.2        1.8         5.5       1.25         81.70
Wisconsin......................................................     57.62     59.38     59.38     65.58        65.58           7.8        4.4        3.4         8.5       3.19         68.77
Wyoming........................................................     50.00     50.00     50.00     56.20        56.20           4.0        2.8        1.2         0.0       0.00         56.20
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[FR Doc. E9-18544 Filed 7-31-09; 11:15 am]
BILLING CODE 4210-01-P