How Medicaid Is Financed By The Federal Government

868 WordsMar 22, 20154 Pages
How Medicaid is Financed The Medicaid program is jointly funded by the federal government and each individual state. To offset costs for struggling state budgets, the federal government will fully finance new enrollees in 2014, gradually reducing its contribution over time (Sederstrom, 2012). The federal government pays each state for a particular percentage of program expenditures. These expenditures are call the Federal Medical Assistance Percentage (FMAP). Per capita income, from each state, is one of the criteria that FMAP is based on. FMAP can range from 50%-75% based on the per capita incomes. Every 3 years, FMAPs are adjusted for each state to account for variations in the economy. Each state must ensure that they can fund their share of Medicaid expenses for the services and care available under their state plan. Generally, each state pays for services through managed care arrangements or fee-for-service arrangements. Each state can establish their own Medicaid provider payment rates, as long as they are within federal requirements. Under the managed care arrangements, each state has a contract with organizations to deliver care through networks and pay providers. Providers are paid on a monthly payment rate. Under a fee-for-service arrangement, each state pays providers directly for services. Payment rates may be based on the cost of providing the services, a percentage of what Medicare pays for services, and/or an assessment of what commercial

More about How Medicaid Is Financed By The Federal Government

Open Document