CMS Releases Letter on ARRA Political Subdivision Requirement - June 30, 2010

On June 21, the Centers for Medicare and Medicaid Services (CMS) released a State Medicaid Director (SMD) letter providing clarification on the "political subdivision" requirement in the American Reinvestment and Recovery Act (ARRA), which prohibits states that receive enhanced FMAP funding from requiring political subdivisions to fund a greater percentage of the non-federal share of Medicaid expenditures. Voluntary contributions are not considered to be required. States may show that the increased local funding is voluntary by submitting a letter from the political subdivision certifying that the contribution is voluntary, that the State is in no way requiring the subdivision to provide the funding, and describing any relevant contribution parameters. Otherwise, States must demonstrate, either on a program-wide or expenditure-specific basis, that the percentage of the non-Federal share required to be funded by political subdivisions during the enhanced FMAP period is no greater than the percentage funded on September 30, 2008. CMS will release future guidance on a similar provision in the health reform legislation. In addition to the political subdivision letter, CMS released two other SMD letters: one on the Public Assistance Reporting Information System, and the other providing further guidance regarding Medicaid Third Party Liability.