Medicaid stands as a critical healthcare safety net in the United States, Which Is A Health Care Payment Program Jointly Funded by the federal and state governments. This collaborative financial structure is fundamental to how Medicaid operates, ensuring states have the resources to provide essential health services to eligible populations. The federal government plays a significant role by providing matching funds to states, covering a predetermined percentage of Medicaid expenditures. This mechanism, known as federal financial participation (FFP), is calculated using a state-specific Federal Medical Assistance Percentage (FMAP). To access these crucial federal funds, states are required to contribute the non-federal share of Medicaid costs, utilizing public funds generated at the state or local government level.
In states like Texas, local funding sources are particularly vital, supporting a substantial portion of the non-federal share, especially for supplemental and directed payment programs within Medicaid. It’s a universal requirement across all states participating in Medicaid to secure and provide the non-federal portion of funding to unlock the federal matching funds. In Texas, the Health and Human Services Commission (HHSC) receives these non-federal share funds from governmental entities through two primary methods: Intergovernmental Transfers (IGTs) and the Certified Public Expenditures (CPE) process.
Intergovernmental Transfers (IGTs) as a Funding Mechanism
Intergovernmental Transfers, or IGTs, represent a key mechanism for securing the non-federal share of Medicaid funding. These are essentially transfers of public funds from a governmental entity directly to the state. By utilizing IGTs as the non-federal share, the state becomes eligible to receive federal matching Medicaid funds. Crucially, the transfer of these funds must precede any Medicaid payment disbursement. This timing ensures compliance and proper accounting within the program’s financial framework.
Several significant Medicaid payment programs in Texas rely on IGTs as their non-federal share funding source. These include programs designed to bolster hospital reimbursements and support essential healthcare services. Examples of these programs are the Comprehensive Hospital Reimbursement Increase Program (CHIRP), designed to enhance hospital funding; the Disproportionate Share Hospital (DSH) program, which supports hospitals serving a high volume of low-income patients; Graduate Medical Education (GME) programs, which fund the training of future physicians; and payments addressing uncompensated care provided by hospital providers.
Certified Public Expenditures (CPEs) and Local Contributions
Another critical pathway for states to secure the non-federal share of Medicaid funding involves Certified Public Expenditures, or CPEs. CPEs are defined as expenditures certified by a governmental entity as their public fund contribution towards services eligible for federal Medicaid matching funds. Governmental entities report these CPEs to the state. Subsequently, the state leverages these certified expenditures to claim the corresponding federal matching funds. Importantly, states possess the flexibility to retain a portion of these federal matching funds, allowing for strategic allocation within their Medicaid programs.
Similar to IGTs, CPEs underpin the non-federal share for several important Medicaid payment programs. These programs often focus on public health and essential community services. Examples in Texas include the Public Health Provider – Charity Care Program (PHP-CCP), supporting healthcare providers offering charity care; School Health and Related Services (SHARS), which funds health-related services within school settings; and coverage for uncompensated care provided by governmental ambulance providers, ensuring emergency medical services are financially sustainable.
The Role of the Local Funding Team in Texas Medicaid
The Texas Health and Human Services Commission (HHSC), acting as the state’s Medicaid agency, bears the responsibility of rigorously ensuring the legitimacy and permissibility of all funds received from governmental entities as sources for the non-federal share. Recognizing the importance of this oversight, the Texas Legislature in 2021 authorized the allocation of additional staff to HHSC. This expansion of the Local Funding Team was specifically aimed at enhancing monitoring and oversight concerning the utilization of local funds within the Medicaid program. This proactive measure underscores the state’s commitment to maintaining the integrity and proper functioning of Medicaid funding mechanisms.
For further information and resources regarding local funding within Texas Medicaid, the Provider Finance Department Local Funding Information portal provides valuable details.
Diverse Sources of Local Funding in Texas Medicaid
Federal law establishes a framework that empowers local governmental entities to actively participate in supporting the Medicaid program through the utilization of eligible public funds. In Texas, numerous local governmental entities choose to contribute to Medicaid, driven by a commitment to ensuring community members have access to vital healthcare services, irrespective of their financial capacity to pay.
A wide array of eligible public funds can be leveraged by local governmental entities to support Medicaid. However, a fundamental principle is that no federal funding can be used to generate the non-federal share. For instance, federal grant funds received by a local governmental entity cannot be re-purposed as eligible local public dollars for the non-federal share. Permissible sources, however, encompass state-appropriated funding, revenues from ad valorem taxes, funds transferred from other local governmental entities, patient revenue (provided no federal payor program funds are involved), tuition and fees from state institutions of higher education, and revenue generated through healthcare-related taxes.
In Texas, a notable mechanism for local funding is the Local Provider Participation Fund (LPPF). This represents a healthcare-related tax implemented at the local level, administered by an existing unit of local government, and specifically structured to meet federal requirements pertaining to eligible local funds. Under an LPPF, the local government collects mandatory payments, effectively taxes, from non-public hospitals situated within its jurisdiction. The LPPF funding collected by the local governmental entity is then channeled to HHSC through an IGT. This process mirrors other eligible local funding sources, designating these funds for use as the non-federal share in Medicaid payments.
Currently, 32 jurisdictions in Texas are authorized to operate an LPPF. Recognizing the potential benefits of this mechanism, House Bill 4289 in 2019 extended the authority to operate an LPPF to any local government not currently utilizing this option. Local governmental entities in Texas seeking to implement an LPPF or with inquiries regarding the operation of existing LPPFs are encouraged to contact the Local Funding Team (LFM) for guidance and support at [email protected].
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