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Medicaid Financing: The Basics

Issue Brief
  1. Kaiser Family Foundation, State Health Facts. Federal and State Share of Medicaid Spending, FY 2015. http://kff.org/medicaid/state-indicator/federalstate-share-of-spending/.

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  2. Katherine Young, Robin Rudowitz, Saman Rouhani, and Rachel Garfield, Medicaid Per Enrollee Spending: Variation Across States (Washington, DC: Kaiser Family Foundation, January 28, 2015), http://kff.org/medicaid/issue-brief/medicaid-per-enrollee-spending-variation-across-states/.

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  3. To assist states with these investments and system upgrades, federal regulations provided for an increase in the administrative match rate - 90 percent federal funding for necessary investments in information technology, along with 75 percent federal match for operating expenses. The 90 percent match rate for initial eligibility-related IT investments was initially set to expire at the end of 2015, but CMS recently released a proposal to extend the higher federal match rate permanently. Centers for Medicare & Medicaid Services (CMS). Notice of Proposed Rulemaking: Medicaid Program; Mechanized Claims Processing and Information Retrieval Systems (90/10.) (Washington, DC: Federal Register,) April 16, 2015. https://www.federalregister.gov/articles/2015/04/16/2015-08754/medicaid-program-mechanized-claims-processing-and-information-retrieval-systems-9010#h-9.

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  4. Urban Institute estimates based on data from CMS (Form 64) (as of 9/16/13).

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  5. To qualify as a DSH hospital a hospital must meet two minimum qualifying criteria. The first criterion is that the hospital has at least two obstetricians who have staff privileges at the hospital and who have agreed to provide obstetric services to Medicaid patients (except when the hospital predominantly serves children under 18 years or the hospital does not offer obstetric services to the general public). The second criterion is that the hospital has a Medicaid inpatient utilization rate (MIUR) of at least 1 percent. A hospital is deemed as a DSH if the hospital’s MIUR is at least one standard deviation above the mean MIUR in the state, or if the hospital’s low-income utilization rate exceeds 25 percent.

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  6. Kaiser Family Foundation, State Health Facts. Distribution of Medicaid Spending by Service, FY 2015. http://kff.org/medicaid/state-indicator/distribution-of-medicaid-spending-by-service/.

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  7. Young, Rudowitz, Rouhani, and Garfield, op. cit.

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  8. Ibid.

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  9. In some states that had expanded coverage to adults prior to the ACA, the new adult group includes some adults that were previously eligible through these pre-ACA expansions. These adults may be matched at a rate lower than the 100% rate for 2014-2016.

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  10. Robin Rudowitz, Allison Valentine, and Vernon K. Smith, Medicaid Enrollment & Spending Growth: FY 2016 & 2017 (Washington, DC: Kaiser Family Foundation, October 13, 2016), http://kff.org/medicaid/issue-brief/medicaid-enrollment-spending-growth-fy-2016-2017/.

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Appendix
  1. Enhanced Federal Medical Assistance Percentages (eFMAPs) are for the Children's Health Insurance Program (CHIP) under Title XXI of the Social Security Act. Section 2105(b) of the Act specifies the formula for calculating Enhanced Federal Medical Assistance Percentages. For FFY 2015, the eFMAPs range from a floor of 65 percent to 81.51%. These rates do not take into account the increase included under Section 2101(a) of the Affordable Care Act amended which would increase eFMAPs by 23 percentage points (not to exceed 100 percent) this increase is scheduled to begin in FFY 2016.

    State Health Facts, Enhanced Federal Medical Assistance Percentage (FMAP) for CHIP, (Washington, DC: Kaiser Family Foundation), downloaded March 2015. http://kff.org/other/state-indicator/enhanced-federal-matching-rate-chip/.

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  2. Section 402(e) of the Indian Health Care Improvement Act of 1976, P.L. 94-437.

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