1.) For example, the Recovery Act does not prohibit  states from reducing optional services, or reducing provider payment  rates. Nearly every  state used the funds to cover increased Medicaid enrollment, which grew  by over 14 percent nationally between October 2007 and February 2010. States Have Accessed Most Available Increased FMAP Funds and Made Program Adjustments to Comply with the Act

Through the end of the third quarter of FFY 2010, states had drawn down a  total of $60.8 billion in increased FMAP funds—95 percent of the funds  available at that point, or 70 percent of the total estimated $87 billion in  increased FMAP that was provided through the Recovery Act. If current  spending patterns continue, we estimate that the states will draw down  $82 billion by December 31, 2010—about 94 percent of the estimated total  allocation of $87 billion. 2.) Enrollment growth across the states varied considerably—ranging from  about 1 percent in Tennessee and Texas to almost 38 percent in Nevada. Twenty-three states experienced a 10 to less than 20 percent enrollment  increase, with 16 states experiencing an enrollment increase of 20 percent  or greater. Across the states, most enrollment growth was attributable to children, a  population that comprises over half of total Medicaid enrollment, and is  sensitive to economic downturns. However, the highest rate of increase  during this period occurred among the nondisabled, nonaged adult  population. States’ Actions to Address Program Sustainability Include New or Altered Financing Arrangements and Reductions to Provider Payments

Forty-eight states reported concerns regarding the sustainability of their  Medicaid programs after Recovery Act funding is no longer available,  with most states reporting that the factors driving their concerns included  the increased share of the state’s Medicaid payments in 2011, and the  projection of the state’s economy, tax revenues, and Medicaid enrollment  growth for 2011. Four  states—Florida, Illinois, Mississippi, and Texas—and the District of  Columbia reported that they did not implement any changes in response to  their concerns about program sustainability; however, Medicaid officials  in most of those states and the District told us that they were considering  future changes. On August 10, 2010, Congress passed legislation amending § 5001 of the  Recovery Act to extend the increased FMAP through June 30, 2011, but at  a lower level. How states will fare as they return to  their regular FMAP rates will vary depending on each state’s unique  economic circumstances and the size of their Medicaid population. In addition, the recently enacted PPACA includes several provisions that  affect states’ Medicaid programs, and states will need to take into account  these provisions when considering additional adjustments to their  programs. Agency Comments

In commenting on a draft of this report, HHS provided technical  comments, which we incorporated as appropriate. Appendix I: Scope and Methodology

To examine the extent to which states have accessed increased Federal  Medical Assistance Percentage (FMAP) funds, we reviewed data provided  by two divisions within the Department of Health and Human Services  (HHS)—the Centers for Medicare & Medicaid Services (CMS) and the  Office of the Assistant Secretary for Planning and Evaluation—on  increased FMAP rates and Medicaid grant awards under the Recovery Act  for federal fiscal years (FFY) 2009 and 2010. To examine how states used the increased FMAP funds and how states  planned to sustain their Medicaid program once the increased FMAP funds  are no longer available, we administered a Web-based survey to the  Medicaid directors or their designated contacts in all states in August 2009  and in March 2010, and obtained a response rate of 98 and 100 percent,  respectively. State did not provide responses to this survey. State also reported using funds to expand Medicaid eligibility levels. Appendix VI: Estimated Changes in States’ FMAP Rates and Share of Medicaid Payments

Percentage  increase in state  share of Medicaid  For the portion of federal fiscal year 2011 not in the Recovery Act recession adjustment period (i.e.,  after December 31, 2010), the Patient Protection and Affordable Care Act (PPACA) will provide  Louisiana with an FMAP of 68.04 (rather than the current FMAP of 63.61).
Why GAO Did This Study

In February 2009, the American Recovery and Reinvestment Act of 2009 (Recovery Act) initially provided states and the District of Columbia (the District) with an estimated $87 billion in increased Medicaid funds through December 2010, provided they met certain requirements. Funds were made available to states and the District through an increase in the Federal Medical Assistance Percentage (FMAP), the rate at which the federal government matches state expenditures for most Medicaid services. In March 2010, Congress passed the Patient Protection and Affordable Care Act (PPACA), which prohibits states from adopting certain changes to program eligibility in order to receive federal reimbursement, and in August 2010, extended increased FMAP rates through June 2011. GAO was asked to examine issues related to Medicaid funds under the Recovery Act. GAO examined (1) states' and the District's access to and use of increased FMAP funds, and (2) states' and the District's plans to sustain their Medicaid programs once these funds are no longer available. To do this work, GAO surveyed state Medicaid officials in the 50 states and the District in August 2009 and March 2010 about their program enrollment, uses of funds, program adjustments, and program sustainability. GAO obtained responses from all states and the District. GAO also reviewed CMS data and guidance and interviewed CMS and state officials.

What GAO Found

States and the District are on pace to draw down about 94 percent--$82 billion of the estimated $87 billion--in increased FMAP funds provided by the Recovery Act. Most states adjusted their Medicaid programs to comply with the act's requirements, and nearly all states and the District reported using the increased FMAP to cover increased enrollment, which grew by 14.2 percent nationally between October 2007 and February 2010. Enrollment growth across the states and the District ranged from about 1 percent to 38 percent, with 22 states and the District experiencing a 10 to less than 20 percent increase. Although most enrollment growth was attributable to children, the highest growth rate was among the non-disabled, non-aged adult population. Forty-seven states and the District reported concern regarding the sustainability of their Medicaid programs without the increased FMAP, and 46 states took steps to address sustainability, including introducing financing arrangements, such as taxes on health care providers, or reducing provider payments. Most states and the District also reported proposed changes for the future. Congress passed legislation in August 2010 to extend the increased FMAP through June 2011, although at lower rates than provided by the Recovery Act. How the subsequent return to regular FMAP rates will affect states and the District will vary depending on their unique economic circumstances. GAO estimates that regular FMAP rates will be, on average, nearly 11 percentage points lower than increased FMAP rates available in December 2010. For future adjustments, states and the District will need to consider PPACA, which prohibits more restrictive eligibility standards, methods, or procedures until 2014, in order to receive federal Medicaid reimbursement. HHS provided technical comments to this report, which GAO incorporated as appropriate.