Balancing Incentive Program State Medicaid Director Letter and Application

September 26, 2011

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On September 12, 2011, the Centers for Medicare and Medicaid Services (CMS) released guidance on the Balancing Incentive Program.  The Balancing Incentive Program, authorized by Section 10202 of the Affordable Care Act, enables CMS to award additional federal funds to States to provide financial incentives to increase access to non-institutionally based long-term services and supports (LTSS).  Effective October 1, 2011, the Balancing Incentive Program offers a targeted increase in the Federal Medical Assistance Percentage (FMAP) to States that undertake structural reforms to increase access to non-institutional LTSS. 

The increased matching payments are tied to the percentage of a State's non-institutional LTSS spending, with lower FMAP increases going to States that need to make fewer reforms.  States in which 25-50% of the total expenditures for Medicaid long-term services and supports (LTSS) are for non-institutionally-based LTSS are eligible for a 2% enhanced FMAP. States in which less than 25% of total expenditures for Medicaid LTSS are for non-institutionally based LTSS, are eligible for 5% enhanced FMAP. 
Total funding is not to exceed $3 billion in federal matching payments and is available beginning October 1, 2011 and ending September 30, 2015 or until the full provision of the $3 billion has been expended.