CARES Act Refines Medicaid Changes From the Families First Coronavirus Response Act

April 29, 2020

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This alert is part of a series of alerts discussing CARES Act provisions that are most important to the healthcare industry.

The CARES Act, which provides more than $2 trillion in stimulus benefit for the economy, includes specific provisions to support the healthcare industry, including revisions to Medicaid support. These include clarifications and revisions to Medicaid enhancements made by the earlier Families First Coronavirus Response Act (FFCRA) to support state Medicaid programs in response to the 2019 novel coronavirus (COVID-19) pandemic. With respect to Medicaid, the FFCRA:

  • increases temporarily the Federal Medicaid Matching rate (FMAP) by 6.2 percentage points for all states and the territories, and increases the allotments to Puerto Rico and the territories to cover the increased FMAP (but does not apply to Medicaid expansion populations);
  • requires states to cover COVID-19 testing in Medicaid and CHIP without cost-sharing; and
  • allows states to extend Medicaid coverage for testing to the uninsured.

These changes have two broad purposes: 1) to increase the ability of Medicaid and CHIP to provide COVID-19 testing for their 71 million beneficiaries and an estimated 6 million uninsured individuals at risk for serious COVID-19 illness; and 2) to provide immediate fiscal relief to states and territories to help them navigate the economic downturn that the pandemic has triggered.

The CARES Act made additional refinements to these Medicaid changes:

Ensuring States Receive FMAP Increase: Section 6008 of FFCRA implemented a 6.2 percent increase in the Medicaid matching rate, retroactive to Jan 1, 2020. The CARES Act amended FFCRA to provide that a state that increased premiums before March 18, 2020, was not precluded from accessing the increased FMAP if, within 30 days after enactment of FFCRA, the state restored recipient premiums to the level in effect as of Jan. 1, 2020.

No Cost-Sharing for COVID-19 Testing for the Uninsured: Section 3716 of the CARES Act clarifies FFCRA section 6004 to ensure that uninsured individuals can receive COVID-19 test and related services with no cost-sharing in any state Medicaid program that elects to offer coverage for this new limited optional group. The FFCRA defines an uninsured individual as one who is not enrolled in a federal healthcare program or in a plan in the group or individual market. The CARES Act clarifies that the term “uninsured persons” also includes individuals who are enrolled for benefits under a state program or another federal health program, but whose benefits under such a program do not provide for no cost-sharing coverage of a COVID-19 vaccine or in vitro diagnostic testing product.

The CARES Act additionally clarifies that FFCRA section 6004 provides that COVID -19 diagnostic products during the emergency period are Medicaid-covered services without cost-sharing even if they have not been approved, cleared or authorized by the U.S. Food and Drug Administration.

Delay of Disproportionate Share Hospital (DSH) Reductions: Section 3813 of the CARES Act (1) eliminates the fiscal year 2020 Medicaid DSH allotment reductions, and (2) delays fiscal year 2021 allotment reductions from taking effect until Dec. 1, 2020, and lowers that reduction to $4 billion from the prior $8 billion. The DSH allotment reductions of $8 billion remain for succeeding years.

Additional Medicaid Provisions: The CARES Act allows state Medicaid programs to pay for direct support professionals trained to help with activities of daily living to assist disabled individuals in the hospital to reduce the length of their hospital stay. The CARES Act also revises additional changes for Medicaid programs. Specifically, the CARES Act extended Medicaid demonstration programs, including the Medicaid Money Follows the Person demonstration project and the Medicaid Community Mental Health Services demonstration. In both cases, the extension is through the end of November 2020. Section 3812 of the CARES Act similarly extends the Medicaid spousal impoverishment protections program through the end of November 2020.

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The various Medicaid provisions described above may assist states in caring for their Medicaid populations during the COVID-19 pandemic and strengthen their programs in the years to come. The CARES Act also included provisions supporting hospitals, rural health, the healthcare workforce and home health and hospice providers, and revised the law surrounding over-the-counter prescription drug regulations and substance abuse disorder records, among other changes.

Please contact the authors for additional information on how the CARES Act could affect state Medicaid programs and providers that are enrolled in them. McGuireWoods has published additional thought leadership related to how companies across various industries can address crucial coronavirus-related business and legal issues, and the firm’s COVID-19 response team stands ready to help clients navigate urgent and evolving legal and business issues arising from the COVID-19 pandemic.