How were States able to use the Balancing Incentive Program enhanced FMAP?

According to Section 10201 of the Patient Protection and Affordable Care Act:

(c)(4) USE OF ADDITIONAL FUNDS.—The State agrees to use the additional Federal funds paid to the State as a result of this section only for purposes of providing new or expanded offerings of non-institutionally-based long-term services and supports described in subsection (f)(1)(B) under the State Medicaid program.

CMS developed a 3-part test to help States assess whether the use of enhanced FMAP met legislative requirements. If a State could answer “Yes” to all 3 of the following questions, its proposed use of funds was acceptable.

1. Does the proposal increase offerings of or access to non-institutional LTSS?

Increased offerings of or access to non-institutional LTSS can be direct or indirect. Proposals for directly increasing offerings to non-institutional LTSS may include increasing rates to attract community LTSS providers; increasing the number of waiver slots or otherwise clearing waitlists; or funding new types of community LTSS. Proposals for indirectly increasing offerings to non-institutional LTSS may include developing additional No Wrong Door (NWD) entities; hosting stakeholder meetings; supplementing staff or contractor salaries; or developing an IT system for referrals and coordination across waiver agencies.

2. Does the proposed expansion/enhancement of offerings/access benefit Medicaid recipients?

It is possible that non-Medicaid beneficiaries also benefit from an initiative funded through the enhanced FMAP. For example, States may choose to utilize funds to expand the number of ADRCs or increase their capacity. These ADRCs may also serve non-Medicaid covered individuals. However, Medicaid recipients should be the focus of the funding.

3. Is the proposal something that Medicaid funds can typically be spent on (i.e., the proposal does not involve a prohibited use of Medicaid funding)? 

Unallowable uses of the Program FMAP include, but are not limited to:

  • Construction of brick and mortar NWD entities 
  • State contribution to services and supports that already exist
  • Nursing home capacity building
  • Supplementing a State's general fund