California Risks Losing Enhanced FMAP, Seeks $20 Billion Loan

California is in danger of losing billions of dollars in enhanced FMAP if it does not restore wage cuts to home healthcare workers. According to a May 5 opinion by CMS, the cuts, which were passed in February, violate provisions of the ARRA prohibiting states receiving enhanced FMAP from making certain changes to Medicaid programs. In the opinion, CMS determined that California’s proposed cuts to home healthcare workers violate ARRA maintenance of efforts rules by increasing the local government’s share of Medicaid costs. Governor Schwarzenegger sent a letter to HHS Secretary Sebelius urging the government to reconsider rescinding California’s $6.8 billion in FMAP. California will also need to borrow more than $20 billion dollars to close its budget deficit unless voters accept a budget ballot measure on May 19. Without loans and a budget overhaul, the state is expected to run out of cash in July but polls indicate that voters are likely to reject the budget ballot measure.