Averting a government shutdown and Puerto Rico’s Medicaid cliff

Averting a government shutdown and Puerto Rico's Medicaid cliff

Published on November 19, 2019

Rosanna close-up
Director, Washington D.C. Office

On the brink of federal government funding

Last night the House unveiled a continuing resolution (CR) that would fund the government through December 20.  The House Amendment to the Senate Amendment to H.R. 3055 – the Further Continuing Appropriations Act, 2020, and Further Health Extenders Act of 2019 – authored by Rep. Nita Lowey, Chairwoman of the House Appropriations Committee, seeks to avert a federal government shutdown as negotiations continue on appropriations for fiscal year 2020 (the federal fiscal year starts on October 1st, as opposed to July 1st as is the case in Puerto Rico). This would be the second CR to be considered after negotiations on adequate funding levels failed in late September.  A summary of the CR can be found here.

The new text has garnered opposition from Rep. Alexandria Ocasio-Cortez, Senators Rand Paul and Ron Wyden (an unusual trio) given the extension of the government surveillance programs embedded in the USA Freedom Act, the Foreign Intelligence Surveillance Act (FISA) and the Terrorism Prevention Act.  But given the short timeframe, it is unlikely their opposition will diminish the chances of passing the CR before Thursday.

The House just took a vote to move forward (231-192).  The measure now goes to the Senate for final passage before it reaches the President’s desk.

What does this mean for Puerto Rico?

The temporary increase in Federal Medical Assistance Percentage (FMAP) for U.S. territories is extended until December 20, which means that for Puerto Rico, the Medicaid funding cliff will be punted once again.  CNE has been closely involved in these negotiations and has had a chance to weigh in with congressional staff on the proposals – both on the House and Senate side. 

Here’s what’s at stake:

The federal share of the cost of the program for Puerto Rico, or the FMAP, has been arbitrarily set at 55%; if Puerto Rico were treated using the same formula as U.S. states, that percentage would increase to at least 83%.  In addition to the FMAP, the federal cost share is applicable only until a mandatory ceiling amount is reached. This cap, applied under section 1108, is set at a very low level. The combination of the low FMAP and arbitrary ceiling means the effective FMAP for Puerto Rico has been 15% or less.

The underfunding of the island’s Medicaid program has recurrently prompted federal action. During the last decade, Congress has enacted legislation to provide limited, temporary supplemental funding and avoid a massive healthcare crisis. The latest short-term funding extension will expire soon. Absent Congressional action, Puerto Rico will likely be forced to make drastic cuts, reduce payment rates, and/or decrease the number of beneficiaries. The entire healthcare sector is at risk.

In order to avoid this scenario, the Energy and Commerce Committee of the U.S. House of Representatives passed H.R. 2328, which would set the FMAP for Puerto Rico at 83% for fiscal years 2020 and 2021 and at 76% for fiscal years 2022 and 2023, subject to no cap.  To curb concerns of funding mismanagement, Ranking Member Walden introduced targeted accountability measures for Puerto Rico.  These program integrity measures include:

  1. instructing the Human and Health Services (HHS) Office of the Inspector General (OIG) to submit audits for programs they consider to be at risk of fraud, waste and abuse;
  2. requiring the HHS OIG to develop a plan to audit and investigate contracting practices;
  3. requesting a report from the Government Accountability Office (GAO) on contracting practices in the health care sector;
  4. instructing HHS to reevaluate any existing program waivers; and
  5. establishing a federal funding tracking system, to include quarterly reports to the Centers for Medicaid and Medicare Services (CMS).

A draft bill from Senate Republicans will counter the House proposal with a substantial package tied to extreme program integrity measures.  The bill is expected to increase funding levels contingent on additional program controls.  The language being considered could put up to 50% of Puerto Rico’s funding at risk; while the determination of compliance with the additional measures would be at the discretion of HHS Secretary.  Many of the proposed provisions also seem duplicative, as there are requirements for multiple OIG audits, forensic audits, and annual reports.  Puerto Rico would also be required to submit for CMS’ review every contract it engages in; 15% of funding could be withheld if the HHS secretary does not certify requirements as being met.

These requirements are punitive and will end up costing Puerto Rico a significant share of the funding provided in order to achieve compliance.  In other words, funds appropriated for Puerto Rico will likely end up in the hands of external consultants, instead of the most vulnerable populations that lack access to adequate healthcare services.

Further, Puerto Rico has already implemented several federally required program integrity measures including:

  1. creating a Medicaid Fraud Control Unit (MFCU) and a program integrity unit that focuses on detecting eligibility fraud;
  2. reporting to the Transformed Medicaid Statistical Information System (T-MSIS);
  3. implementing provider screening and enrollment measures;
  4. establishing a system for income and eligibility verification; and
  5. enhancing program integrity expectations for MCOs in its latest managed care restructuring.

With these actions, Puerto Rico has demonstrated that it cares deeply about accountability.  But compliance, undoubtedly, is expensive.  It is disingenuous to increase program requirements without extending the necessary resources to fulfill program integrity measures, some of which are not required in other U.S. jurisdictions.

Given the political environment in DC, it is doubtful lawmakers will address the structural issues of Puerto Rico’s Medicaid funding and provide a comprehensive fix. At the very least, Congress must work to prevent hundreds of thousands of Puerto Ricans from losing critical healthcare coverage. A complete report on Puerto Rico’s Medicaid funding can be found here.