Medicaid and the Indian Health Service: New Guidance Explains How States May Secure Additional Federal Funds

Prepared for the Robert Wood Johnson Foundation State Health Reform Assistance Network

States with a significant American Indian and Alaska Native (AI/AN) population stand to benefit from increased federal Medicaid funding under new guidance released in February 2016. When Medicaid-eligible AI/ANs receive services through a facility operated by the Indian Health Service (IHS), an Indian Tribe or a Tribal Organization, the federal matching rate is 100 percent. The new policy announced by the Centers for Medicare & Medicaid Services (CMS) increased the range of Medicaid services and providers for which states may claim full federal funding, conditional upon states and healthcare providers fulfilling certain procedural requirements. These additional funds reduce the cost of Medicaid expansion for states, and remain in place over time, even as the federal matching rate declines for other beneficiary populations.

In a new issue brief prepared for the State Health Reform Assistance Network, Manatt Health summarizes the new policy expanding funding for state Medicaid services provided to AI/AN populations and explains the ways in which these additional funds reduce the cost of Medicaid expansion to states. The issue brief—a follow-up to our November report on Medicaid and the Indian Health Service—is the latest release in an ongoing series examining the fiscal implications of Medicaid expansion. Earlier briefs have analyzed the budget savings and revenue gains realized in expansion states, as well as investigated the impact of expansion on uncompensated care and criminal justice-related costs.

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