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Currently, States Have No Limit on the Amount of Federal Funding Provided for Medicaid, However, Funding for Territories—like Puerto Rico—is Capped;  Following Financial Woes, Puerto Rico’s Remaining $3.5B in Medicaid Funding is Expected to Deplete by 2018 & if Not Replenished, Could Then Be Reduced To Less than $400M/Year

Schumer’s Legislation Provides Puerto Rico Additional Medicaid Funding for Hospitals that Treat Low-Income Patients; Improves Treatment Under Medicare DSH Program & Eliminates Current Disparity That Currently Provides Puerto Rico Hospitals With Less Money Than in the States

Schumer: Puerto Rico Should Be Offered Same Treatment Under Federal Health Programs As States 

U.S. Senator Charles E. Schumer today announced legislation that will create new federal rules governing Medicare and Medicaid in U.S. territories, like Puerto Rico. The “Improving the Treatment of the U.S. Territories under Federal Health Programs Act of 2015” will treat U.S. territories more like states by eliminating the current territorial monetary limit on Medicaid. The legislation will also provide federal funding to territory hospitals that serve a large number of Medicaid or uninsured users. The legislation was also introduced by Resident Commissioner Pedro Pierluisi in the House of Representatives.

Schumer has long supported Puerto Rico, and also introduced legislation to grant Puerto Rico the ability to declare bankruptcy for its municipalities and public utilities in order to avoid a growing fiscal crisis. A large part of Puerto Rico’s financial obligations are health care-related and this bill allows for more equitable treatment for Puerto Rico’s health care programs, which will infuse much-needed funding for the care of Puerto Rico’s citizens.

In 2010, Congress enacted the Patient Protection and Affordable Care Act (ACA), which provided $7.3 billion in additional Medicaid funding that expires at the end of FY2019; Puerto Rico receives $6.4 billion of that amount and right now, has only $3.5 billion leftover. Puerto Rico’s funding is expected to deplete by 2017 or 2018, and if this funding is not replenished, the territories will go back to receiving Medicaid funds under the old formula—which for Puerto Rico means less than $400 million a year.  Schumer said that would negatively impact residents of Puerto Rico who rely on governmental health care, like Medicaid.

“Residents of Puerto Rico are American citizens and deserve access to quality health-care so it is essential that we provide it with the resources to fairly fund its Medicaid and Medicare programs. The bottom-line is: Puerto Rico should be offered the same treatment under federal health program as states, and that’s why Congress should pass this critical piece of legislation,” said Senator Schumer.

Medicaid, the governmental health program for low-income individuals, is funded in part by the federal government and, in part, by the state or territory government.  Currently, for states, there is no limit on the amount of federal funding provided for Medicaid as long as the state provides its share of matching funds. However, for U.S. territories like Puerto Rico, the amount of federal funding for the Medicaid program is capped. 

In addition to Medicaid, this legislation would fix some of the Medicare Policies that have proven either unfair or unworkable for Puerto Rico, such as money to help low income citizens afford medicines, hospital and physician payments as well as Medicare Advantage rates.

The “Improving the Treatment of the U.S. Territories under Federal Health Programs Act of 2015 will:

  • Include the territories in the Medicaid disproportionate share hospital (DSH) program, which, in the past, have excluded territories. The bill could provide Puerto Rico with approximately $130 million in additional Medicaid funding to help hospitals that treat a high percentage of low-income and uninsured patients. 
  • Improve Puerto Rico’s treatment under the Medicare DSH program. Currently, the formula hurts Puerto Rico because it calculates payments based on the number of patients enrolled in the federal Supplemental Security Income program, which Congress has not extended to the territory. 
  • Eliminate a disparity involving Medicare hospital payments. Right now, the federal government pays hospitals who serve Medicare patients a base rate, which can then be adjusted upwards based on a variety of factors.  Hospitals in the states are paid the same base rate, but Puerto Rico hospitals are paid a base rate that is about 14 percent lower. 
  • Eliminate the exclusion of Puerto Rico hospitals from the Medicare component of the HITECH Act, which authorizes bonus payments for hospitals that become meaningful users of electronic health records.
  • Includes a provision that would address one of the main challenges facing Puerto Rico physicians, which is inadequate payments under traditional Medicare.  The current formula used to compensate doctors seeks to account for variations in the cost of practicing medicine in different areas of the country by using a system called the geographic practice cost index, or GPCI.  There is strong evidence that the current GPCI formula disadvantages Puerto Rico and results in insufficient payments to physicians.  Therefore, the bill establishes a reasonable floor on Medicare payments to Puerto Rico doctors so they will be fairly compensated for their work.
  • Seeks to assist the 560,000 Medicare Advantage (MA) beneficiaries in Puerto Rico, by establishing a payment floor to ensure that MA plans on the island receive adequate compensation from the federal government.