Wednesday, August 10, 2022

U.S. House Committee holds hearing on territories’ looming Medicaid Cliff

By on May 23, 2019

Puerto Rico Health Insurance administrator says ‘425,000 children, 305,000 elderly and disabled individuals, and more than 17,000 pregnant women at any given time’ face uncertainty

SAN JUAN — The U.S. House Committee on Natural Resources was holding Thursday a full committee oversight hearing to explore alternatives ahead of the expiration this year of Patient Protection and Affordable Care Act (ACA) funds for the U.S. territories.

The dire state of the health care systems and Medicaid programs in Puerto Rico and the U.S. Virgin Islands (USVI) was worsened in the aftermath of hurricanes Irma and Maria in 2017. The other territories (American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam) also face challenges ahead of the expiration of ACA funds.

Presided by committee Vice Chairman Gregorio Kilili Camacho Sablan of the Northern Mariana Islands, the hearing, titled “The Insular Areas Medicaid Cliff,” includes testimony by the executive director of the Puerto Rico State Health Insurance Administration (Ases by its Spanish acronym), Ángela Ávila.

“We need to keep Congress focused on the ‘cliff,’” Marianas Variety quoted Sablan as saying. “The hearing is one way to do that.”

In her written testimony, Ávila called on Congress to act ahead of a funding cliff that threatens Medicaid access for 1.5 million citizens enrolled in the program in Puerto Rico, which will expire Sept. 30.

The executive director of the Puerto Rico State Health Insurance Administration, Ángela Ávila. (Screen capture of

“Congress must act before September 30, 2019, to avert catastrophic damage to our healthcare system and the health and well-being of the people of Puerto Rico. If no action is taken for fiscal year 2020, the FMAP will revert back to the statutorily mandated 55% FMAP (established in 1968) for most of our Medicaid program, up to the Federal Medicaid funding cap of approximately $380 million. This level of Federal support for Puerto Rico’s Medicaid program is not sustainable as that funding is projected to only cover 19% of the Federal funding needed during fiscal year 2020 for the Medicaid expenditures supported by that capped federal allotment. If Puerto Rico only receives its statutory cap of $380 million at the fixed FMAP of 55% for FY20, federal funding of Puerto Rico’s Medicaid will only last three months,” Ávila stated.

“Due to the disproportionately low level of Federal Medicaid funding historically available to Puerto Rico, we have been forced to limit Medicaid eligibility to income levels well below the federal poverty level used by the states. For example, Puerto Rico covers individuals with income up to 138 percent of the Puerto Rico poverty level, which is $11,736 annually for a family of four or approximately 46 percent of the federal poverty level for a family of the same size in 2019 on the mainland,” Ávila added. “Once the cap is exhausted, Puerto Rico would have to fully fund the deficit in Federal Medicaid funding, as it has in the past, and pay for its Medicaid services with 100% local funding.

“Given the island’s current financial situation, local funding is not available. Come October, if Congress fails to act, nearly 1.5 million U.S. citizens may lose the essential healthcare they need, our already fragile healthcare infrastructure would be further destabilized, and the island’s recovery would be further delayed.”

On May 1, Puerto Rico Gov. Ricardo Rosselló submitted a letter to Congress requesting $15.1 billion in federal Medicaid funds at an 83% FMAP over the next five years. In addition, governors of the territories have also called for more adequate and permanent federal Medicaid support, and the territories’ nonvoting elected delegates to Congress have introduced legislation that would allow the territories to receive similar treatment for Medicaid as the states without a statutory Medicaid financing cap and with an FMAP calculation based on per capita income as in the states.

The executive director of Puerto Rico’s Financial Oversight and Management Board, Natalie Jaresko, issued a statement ahead of the hearing, saying that the board “is very concerned that come September 2019, when that additional funding from the Bipartisan Budget Act and Affordable Care Act expires, Puerto Rico will revert back to the statutorily capped federal funding that it receives for Medicaid, which is a small fraction of what similar states receive. Not only does Puerto Rico have a predefined 55% as its federal matching assistance percentage, but also Section 1108 of the Social Security Act imposes an additional hard, lower cap on Puerto Rico’s Medicaid share.”

A Kaiser Family Foundation (KFF) study on the implications of the health funding expiration, found that “some health care infrastructure, particularly USVI’s hospitals and Department of Health clinics and the facilities on Puerto Rico’s offshore islands, still have not recovered fully from the hurricanes. In addition to physical health care facilities, the storms exacerbated long-standing issues with provider recruitment and retention. Both territories struggle to address residents’ mental health needs, which worsened and remain elevated after the hurricanes. While still working on hurricane recovery, the territories are also moving ahead with delivery system reforms. Puerto Rico is engaged in major managed care and delivery system reforms, which have caused challenges for managed care organizations (MCOs), providers, and enrollees in their rollout period. Initiatives to focus on “high-need, high-cost” populations typically require upfront investments and greater standardization by plans and providers to generate long-term results. In USVI, territory leaders are engaged in ongoing efforts to improve care, particularly behavioral health services and care coordination.”

A brief of the study further states that: “The local governments in Puerto Rico and USVI would not be able to make up for lost federal funds and therefore would not be able to sustain current service levels. Some territory officials and providers described the potential effects of the funding expiration as “devastating,” “catastrophic,” and “scary.” Assuming a return to federal funding limited to the statutory cap and a 55% FMAP after remaining ACA funds expire, Puerto Rico could experience a shortfall of $1 billion in FY [fiscal] 2020 and $1.5 billion in FY 2021 (representing 36% and 52% of projected total spending, respectively). Estimates prepared by the Medicaid and CHIP Payment and Access Commission (MACPAC) show that such funding shortfalls could trigger coverage losses of one-third to one-half of current enrollment levels in Puerto Rico of about 1.2 million people. Federal shortfalls could reach $31.3 million in USVI, or 40% of program spending. USVI Medicaid officials assert that such shortfalls could put the 18,000 enrollees added under the ACA expansion at risk for loss of coverage (out of nearly 28,000 total enrollees).”

KFF’s analysis shows that, for Puerto Rico, additional federal funding of $2.8 billion in FY 2021 “could help address the projected shortfall ($1.5 billion), increase the FMAP [Federal Medical Assistance Percentages] to 83%, and increase per member per month (PMPM) rates by 50% (an additional $1.3 billion for the FMAP and PMPM increases). For USVI, KFF analysis shows that addressing the shortfall and raising the FMAP to 83% could provide $45.9 million in federal funds, while additional funds could support an increase in the statutory cap.”

The following are the hearing’s witnesses and their written testimony:

  • Ms. Esther L. Muna, Chief Executive Officer, Commonwealth of the Northern Mariana Islands Healthcare Corporation (testimony)
  • Ms. Helen C. Sablan, Director, Commonwealth of the Northern Mariana Islands State Medicaid Agency (testimony)
  • Ms. Maria Theresa Arcangel, Chief Administrator, Guam Division of Public Welfare (testimony)
  • Ms. Michal S.A. Rhymer-Browne, Assistant Commissioner, U.S. Virgin Islands Department of Human Services (testimony)
  • Ms. Sandra King Young, Medicaid Director, American Samoa Government (testimony)
  • Ms. Angela Avilá, Executive Director, Puerto Rico State Health Insurance Administration (testimony)

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