The temporary financial boost in the federal share of Medicaid costs, referred to as federal medical assistance percentage payments, was included in the American Recovery and Reinvestment Act of 2009. It granted a significant, yet temporary, increase in the amount states receive from the federal government to help pay for their Medicaid programs.
"We believe today's action will help states as they struggle to maintain Medicaid and other budget priorities in these difficult economic times," said Ms. Sebelius in the release. "This relief will help states continue to provide critical health care services to the nearly 60 million beneficiaries who depend upon it."
According to the HHS, the ARRA increased FMAP will be applied to so-called clawback payments — the amount states pay to the federal government as required by the Medicare Prescription Drug Improvement and Modernization Act of 2003. States make clawback payments monthly, and CMS is currently reprogramming its billing system to calculate the new, reduced payments owed by states. The savings, which are retroactive to Oct. 2008, will be deducted from what they otherwise would have owed going forward, according to the release.
The temporary adjustment in the clawback payments will be applied for the period Oct. 1, 2008 through Dec. 31, 2010.
Read HHS's release on Medicare Part D funding.