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Home Coronavirus Medicaid Provisions in the American Rescue Plan Act

Medicaid Provisions in the American Rescue Plan Act

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The American Rescue Plan Act, the COVID-19 relief package that became law on March 11, 2021, contains a number of provisions designed to increase coverage, expand benefits, and adjust federal financing for state Medicaid programs. These provisions are briefly described below and summarized in Table 1. Separate briefs summarize provisions in the new law relating to the Marketplaces and public health.

Coverage provisions

The law provides an additional temporary fiscal incentive to encourage states that have not yet adopted the Affordable Care Act (ACA) Medicaid expansion to do so. In addition to the 90% federal matching funds available under the ACA for the expansion population, states also can receive a 5 percentage point increase in their regular federal matching rate for 2 years after expansion takes effect. The additional incentive applies whenever a state newly expands Medicaid and does not expire. The new incentive is available to the 12 states that have not yet adopted the expansion as well as Missouri and Oklahoma, which are expected to implement expansion in July 2021. The increase in the regular matching rate is estimated to more than offset the increased state costs of expansion in these states for the first two years.

States have a new option to extend Medicaid coverage for post-partum women from the current 60 days to a full year. States that elect this option must provide full state plan benefits throughout the enrollee’s pregnancy and post-partum period and cannot limit benefits to only those that are “pregnancy related.” The new option is available to states for 5 years, beginning April 1, 2022.

Benefit provisions

The new law clarifies that COVID-19 vaccines and administration are covered without cost-sharing for Medicaid enrollees and provides 100% federal matching funds for this coverage. CMS previously had interpreted the Families First Coronavirus Response Act (FFCRA) vaccine coverage requirement to exclude certain enrollees receiving limited benefit packages. The coverage provision applies to all enrollees, except those eligible only for Medicare cost-sharing assistance (partial duals) or COBRA premium assistance, from March 11, 2021 through the last day of the 1st calendar quarter that begins at least 1 year after the COVID-19 PHE ends. The financing provision applies from April 1, 2021 through the last day of the 1st quarter that begins at least 1 year after the PHE ends.

The new law adds coverage of COVID-19 treatment services, without cost-sharing, for enrollees in the COVID-19 uninsured testing group and enrollees who receive alternative benefit plans (ABPs). This coverage includes specialized equipment and preventive therapies and treatment (if otherwise covered under Medicaid) of a condition that may seriously complicate treatment of COVID-19 for those presumed to have or diagnosed with COVID-19. The COVID-19 uninsured testing group was created by the FFCRA and is available at state option, with 100% federal matching funds, during the PHE. The benefit package for this group previously was limited to COVID-19 testing and testing-related services. Enrollees receiving ABPs include the ACA expansion group and other enrollees at state option. ABPs allow states to provide a benefit package based on a private insurance plan instead of the traditional Medicaid state plan benefit package. COVID-19 treatment services are required in ABPs from March 11, 2021 through the last day of the 1st calendar quarter that begins at least 1 year after the PHE ends. States providing COVID-19 treatment services in ABPs would receive the 90% enhanced federal matching rate for expansion adults or their regular federal matching rate plus the additional 6.2 percentage points under the FFCRA (ranging from 56% to 85% across states) for other populations.

States can receive a 10 percentage point increase in federal matching funds for Medicaid home and community-based services (HCBS) from April 1, 2021 through March 30, 2022. The new funds must supplement, not supplant, the level of state HCBS spending as of April 1, 2021, and states must  implement or expand one or more activities to enhance HCBS. HCBS help seniors and people with disabilities live independently in the community by assisting with daily self-care and household activities.

States have a new option to provide community-based mobile crisis intervention services with 85% federal matching funds for the first 3 years. The additional funds must supplement, not supplant, the level of state spending for these services in the fiscal year before the 1st quarter that a state elects this option. Services must be otherwise covered by Medicaid and provided by a multidisciplinary team to enrollees experiencing a mental health or substance use disorder crisis outside a hospital or other facility setting. These services generally do not have to be offered statewide, do not have to be comparable for all enrollees, and can restrict enrollees’ free choice of provider. The new option is available to states for 5 years, beginning April 1, 2022. The law also authorizes $15 million for state planning grants, to be awarded by the HHS Secretary as soon as practicable. 

The new law provides $250 million for state strike teams to be deployed to Medicaid-certified nursing facilities with diagnosed or suspected cases of COVID-19 among residents or staff. The strike teams will assist with clinical care, infection control, or staffing during the PHE.

Other financing provisions

The new law contains some other provisions that affect Medicaid financing. It provides 100% federal matching funds for 2 years, beginning April 1, 2021, for services received through Urban Indian health care organizations and Native Hawaiian health systems. It also eliminates the cap on the amount of rebates that manufacturers pay to Medicaid in exchange for coverage of their FDA-approved drugs on December 31, 2023, resulting in federal savings of $14.5 billion. The law also requires the HHS Secretary to recalculate states’ annual disproportionate share hospital (DSH) allotments to ensure that these payments are equal to what they would have been without the 6.2 percentage point increase in federal matching funds provided under the FFCRA.

Finally, the new law provides $8.5 billion in FY 2021 for provider relief fund payments to rural Medicaid, CHIP, and Medicare providers. These funds are available to compensate for health care related expenses and lost revenues attributable to the pandemic for rural providers who diagnose, test, or care for individuals with possible or actual COVID-19.

Topic Section Summary
Mandatory coverage of COVID-19 vaccines and administration and treatment under Medicaid 9811 Vaccine coverage:  clarifies that COVID-19 vaccines and administration are covered without cost-sharing for Medicaid enrollees, from 3/11/21 through last day of 1st calendar quarter that begins at least 1 year after public health emergency ends. Applies to all Medicaid enrollees except for those eligible only for Medicare cost-sharing (partial duals) and those eligible only for COBRA premium assistance.
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Provides 100% federal matching funds for COVID-19 vaccine and administration coverage from 4/1/21 through last day of first quarter beginning at least 1 year after PHE ends.
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Treatment coverage:  adds coverage of treatment for COVID-19, without cost-sharing, to benefit package for COVID-19 uninsured testing group (during PHE) and to alternative benefit plans (from 3/11/21 through last day of 1st calendar quarter beginning at least 1 year after PHE ends). Coverage is defined as testing and treatment for COVID-19, including specialized equipment and preventive therapies, and treatment (if otherwise covered under Medicaid) of a condition that may seriously complicate treatment of COVID-19 for those presumed to have or diagnosed with COVID-19.
State option to extend post-partum coverage to 12 months 9812 Creates state option to extend coverage for post-partum women to 12 months, instead of 60 days. States that elect this option must provide full state plan benefits throughout the enrollee’s pregnancy and post-partum period.
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Available to states from 4/1/22-3/30/27.
State option to provide community-based mobile crisis intervention services 9813 Creates state option to cover community-based mobile crisis intervention services with 85% federal matching funds for 1st 12 fiscal quarters, provided that additional federal funds supplement, not supplant, the level of state spending for these services in the FY before the 1st quarter that a state elects this option.
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States can offer services using a state plan amendment, § 1915 (b) managed care waiver, § 1915 (c) HCBS waiver, or § 1115 demonstration waiver. Services do not have to be offered statewide (except if state offered services in a region in the FY before electing this option, it must continue services in that region while receiving enhanced matching funds), do not have to be comparable for all enrollees, and can restrict enrollees’ free choice of provider.
.
Available to states from 4/1/22-3/30/27. Also authorizes $15 million for state planning grants, to be awarded by the HHS Secretary as soon as practicable.
Temporary increase in regular FMAP for states newly adopting ACA expansion 9814 Increases regular federal matching rate by 5 percentage points for 8 quarters for states newly covering the ACA expansion group. States are eligible for the increase if they did not have spending for the entire ACA expansion group before 3/11/21, and must cover the entire group to receive the increase.
Extension of 100% FMAP to Urban Indian health organizations and Native Hawaiian health care systems 9815 Provides 100% federal matching funds for 8 fiscal quarters beginning 4/1/21 for services received through Urban Indian organizations with grants or contracts with Indian Healthcare Service, Native Hawaiian health centers, or Papa Ola Lokahi (Native Hawaiian health care system).
Sunset of limit on maximum rebate amount for single source prescription drugs and innovator multiple source drugs 9816 Eliminates federal rebate cap on the amount of rebates manufacturers pay to Medicaid in exchange for coverage of their FDA-approved drugs, effective 12/31/23; currently, the rebate cap is set at 100% of the average manufacturer price.
Additional support for Medicaid HCBS during COVID-19 emergency period 9817 Provides 10 percentage point increase in federal matching funds (capped at 95%) for HCBS from 4/1/21 through 3/31/22. States shall use increased funds to supplement, not supplant, the level of state HCBS spending as of 4/1/21, and to implement or expand one or more activities to enhance HCBS.
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Applies to state plan home health, personal care, PACE, primary care case management, § 1915 (i), self-directed personal assistance, Community First Choice, case management, and rehabilitative option, § 1915 (c) and § 1115 waivers, and alternative benefit plans.
Funding for state strike teams for resident and employee safety in nursing facilities 9818 Provides $250 million to increase capacity to respond to COVID-19 by implementing state strike teams deployed to nursing facilities with diagnosed or suspected cases of COVID-19 among residents or staff to assist with clinical care, infection control, or staffing during PHE.
Recalculate of DSH allotments 9819 Directs HHS Secretary to recalculate states’ annual DSH allotments to ensure that total payments that a state may make for a FY are equal to the total payments that the state could have made without receiving the 6.2 percentage point Families First Coronavirus Response Act (FFCRA) increase in federal Medicaid matching funds. Amendment is effective as if enacted in FFCRA, applies in any FY when the FFCRA increase is in effect, and ends beginning with the first FY after the PHE ends.
COVID-19 relief funds for rural providers 9911 Provides $8.5 billion in FY 2021 for payments to Medicaid, CHIP, and Medicare rural providers who diagnose, test, or care for individuals with possible or actual COVID-19, for health care related expenses and lost revenues attributable to COVID-19.
SOURCE:  American Rescue Plan Act, H.R. 1319. (March 11, 2021).
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