In response to the COVID-19 pandemic and the expected economic downturn, Section 6008 of the Families First Coronavirus Response Act of 2020 (Families First) established a temporary 6.2% increase in the Medicaid federal medical assistance percentage (FMAP), effective January 1, 2020, to last through the last day of the calendar quarter in which the COVID-19 public health emergency (PHE) ended. One condition of the FMAP increase was a prohibition on Medicaid disenrollment during the PHE.

The Consolidated Appropriations Act of 2023 (Pub. L. 117-328) – enacted over the holidays – makes several notable changes to the FMAP increase and related Medicaid eligibility redetermination and disenrollment requirements. Although these FMAP changes are obviously important to States, they are also important to providers and local government entities that may be funding the non-federal share of Medicaid payments through intergovernmental transfers or provider taxes. 

FMAP Increase Transition Period

Section 5131 of Division FF of the Consolidated Appropriations Act of 2023 establishes a “transition period” for the Families First FMAP increase:

New Conditions

Section 5131 also imposes new conditions on States’ receipt of the enhanced FMAP during the transition period beginning April 1, 2023.  In particular:

Eligibility Redeterminations.— A State that fails to meet any of the following conditions will not qualify for the FMAP increase for the applicable calendar quarter:

• Eligibility redeterminations must be in accordance with all Federal requirements.
• The State must attempt to ensure up-to-date contact information (including a mailing address, phone number, and email address) for each eligibility redetermination using the National Change of Address Database Maintained by the United States Postal Service, State health and human services agencies, or other reliable sources of contact information.
• The State may not disenroll any individual based on returned mail unless the State first undertakes a good faith effort to contact the individual using more than one modality.

Note that these requirements do not prohibit a State from initiating renewals, post-enrollment verifications, and redeterminations over a 12-month period for all individuals who are enrolled in the State’s Medicaid program as of April 1, 2023.

Reporting Requirements.—The FMAP for a State that does not satisfy new reporting requirements will be reduced by 0.25 percentage points times the number of fiscal quarters for which the State has failed to satisfy such requirements, although the reduction can be no greater than 1 percentage point. Specifically, beginning April 1, 2023 and lasting through June 30, 2024, each State will be required to submit monthly reports to the Department of Health and Human Services (HHS) on the State’s activities relating to eligibility redeterminations, including, but not limited to, the number of eligibility renewals initiated and the number of individuals whose Medicaid coverage was terminated. These reports will be publicly available.

In addition, if HHS determines that a State did not comply with eligibility redetermination and reporting requirements during the April 1, 2023 to June 30, 2024 period, HHS may, in addition to other remedies, require that the State submit and implement a corrective action plan. If a State fails to submit or implement an approved corrective action plan, HHS may require the State suspend making all or some eligibility terminations and may impose civil money penalties of up to $100,000 per day.