Arizona’s Share of Enhanced FMAP at Risk

Arizona may be ineligible for $1.6 billion in enhanced FMAP funding through the economic recovery package due to state program changes prohibited in the recovery package rules. The state passed legislation in June 2008 that requires some Medicaid recipients to requalify for benefits every six months, rather than annually, beginning in September of 2008. CMS has determined that this rules change violates a recovery package maintenance of effort provision which prohibits states from receiving enhanced FMAP funds if the state tightened eligibility rules or procedures after July 1, 2008. Arizona has until July of this year to change the law and receive the enhanced FMAP. State officials say they will contest CMS’s determination because the new rules were passed into law before the July 2008 deadline. Arizona has already budgeted for $500 million of stimulus money and spent $300 million.