Economic stimulus: How are Medicaid services affected?

Is your state crying lack of Medicaid funds?  Threatening to reduce Medicaid waivers?  Already reduced Medicaid programs? Telling the press […]

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Is your state crying lack of Medicaid funds?  Threatening to reduce Medicaid waivers?  Already reduced Medicaid programs? Telling the press that Medicaid funds must be reduced because of a state budget crisis?

Here are some possible answers:
You’ve read about the recently enacted American Recovery and Reinvestment Act, also known as the Economic Stimulus Act. It has an entire section regarding “federal medical assistance percentage” (FMAP). This explains the federal money used to match your state’s funds for Medicaid programs in your state.

The FMAP has been significantly increased. States’ Medicaid programs will have a large increase in federal funds without having to increase their state funds whatsoever.

• The stimulus package provides states with enormous FLEXIBILITY. Each state can decide how to allocate the new Medicaid funds. The federal statute imposed virtually no requirements. Therefore, how your state spends its new Medicaid funds depends on political decisions at your state level—not because of the stimulus package. If your state tells you that it must spend its Medicaid funds on certain programs or cannot do other programs, they’re selling you a lemon!

Advocates must ensure that stimulus funds increase integration of people with disabilities in the community and do not increase the institutional biases. This is a great opportunity to “End the Waiting Lists” and to move people from institutions to the community. You must know how your Medicaid office, governor and legislature want to allocate these funds. IF there is a potential Americans with Disabilities
Act (ADA) violation, it should be stopped, either by direct actions and court orders.

• A state is NOT eligible for increased FMAP if any of the increased federal funds will go “directly or indirectly” to “any reserve or rainy day fund of the state.”

• With regards to the “eligibility” of persons and “methodologies or procedures” under a state’s Medicaid plan, any person who was eligible on, as well as Medicaid programs’ methods and procedures in effect on, July1, 2008, must be maintained in order for your state to be eligible for the increased FMAP.

This is a very important handle. if your state has imposed restrictive eligibility criteria since July 1, 2008, or changed its Medicaid programs’ methods and procedures since July 1, 2008, and IF your state wants to receive the increased FMAP, then eligibility, methodologies, and procedures must be reinstated to what they were on July 1, 2008. Therefore, if  your state has, since July 1, 2008, restricted eligibility of programs or changed Medicaid programs’ procedures, hold them accountable.

• States can increase eligibility to persons whose incomes are higher than the income standards [sometimes known as “medically needy”] and receive increased FMAP for these people. “Power concedes nothing without a struggle.” Steve Gold, The Disability Odyssey continues.

Steve Gold is an attorney who writes extensively about disability issues. Back issues of his other information bulletins are available online at

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