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December 2017

Medicaid and Federal Funding

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How is Medicaid funded and what are the funding rules?

States are not required to accept federal funding for Medicaid; however, if they chose to participate in the Medicaid program, they are required to comply with federal statutory and regulatory requirements. Camacho v. Texas Workforce Com’n., [326 F.Supp. 2d 794 (W.D.Tx. 2008)].

States must submit their proposed Medicaid plans for approval from the Centers for Medicare and Medicaid Services (CMS). CMS does not automatically approve state Med

icaid plans and has the final say in approving or denying a proposed amendment to a state Medicaid plan. For instance, in Md. Dept. of Health and Mental Hygiene v. CMS, [592 F.3d 424, 427 (4th Cir. 2008)], the CMS rejected Maryland’s proposed amendments to its state Medicaid plan because those amendments would have unreasonably limited the deductibility of medical expenses incurred by Medicaid enrollees after being determined eligible for Medicaid in contravention of federal requirements.

The CMS may approve a state’s waiver application through a section 1115 waiver application. The 2017 National Academy Elder Law Attorneys Summit highlighted a current trend of CMS allowing a state to forgo the three months of retroactive Medicaid coverage. Recently, Arkansas and Maine have submitted 1115 demonstration waiver applications doing away with the three months of retroactivity and Iowa is also seeking to forgo this option. It is anticipated that CMS will continue to relax the three month retroactive coverage in future state demonstration waiver applications.

Understanding how the funding for the Medicaid program works is a step in understanding the rules to qualifying for Medicaid and where those rules originate. The State of Rhode Island has the Department of Human Services as overseeing the administration of the Medicaid program. Applications for Medicaid are submitted to DHS where they review and advise as to the applicants approval for the program.