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Billions of dollars in federal Medicaid funding for Puerto Rico are scheduled to sunset in September and December, leaving the island's program underfunded by as much as $1 billion and threatening the healthcare coverage of nearly half a million people.
The U.S. House of Representatives Energy and Commerce Committee advanced legislation July 17 that would give Puerto Rico's Medicaid program approximately $12 billion in extra funds over the next four years and increase the percentage of spending the federal government will match, moves that healthcare experts have applauded. But as the deadline quickly approaches, the House has yet to schedule a full vote, and the Senate has so far not taken up the matter.
Furthermore, Congress is focused on negotiating a stopgap funding bill before a Sept. 30 deadline to avoid a government shutdown.
Edwin Park, research professor at Georgetown University's McCourt School of Public Policy, told S&P Global Market Intelligence that some changes may be made to the House's Puerto Rico bill when it gets to the U.S. Senate, but he believes that ultimately some form of funding will be passed.
"I think that there is an understanding on a bipartisan basis that Puerto Rico's funding shortfall, [and] the other territories' funding shortfall, needs to be addressed," Park said. "There's always uncertainty about what that means."
Park said the "last wild card" will be how the Trump administration responds. President Donald Trump has publicly clashed with Puerto Rican officials in the past and criticized the U.S. territory for needing extra federal funding in the aftermath of hurricanes Irma and Maria, both of which struck the island in September 2017.
Michael Melendez, the former associate regional administrator for the Centers for Medicare and Medicaid Services' New York regional office, which oversees Puerto Rico and the Virgin Islands, said in an interview that if Congress does not approve some form of additional funding, Puerto Rico could face a healthcare crisis.
Funding differences
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Medicaid is the dual state and federally run health insurance program for people with low incomes, a large population including children and the elderly. About 47% of Puerto Rico's population, or 1.6 million people, were enrolled in Medicaid in 2017, according to the Medicaid and CHIP Payment and Access Commission, or MACPAC, a congressional Medicaid adviser.
Puerto Rico's Medicaid program operates similarly to state programs, but with several key differences, such as an annual capped funding amount and a federal match rate that is well below what Puerto Rico would receive if it were a state.
The federal government caps Puerto Rico's federal spending each year through a block grant. Total spending for the program totaled $2.49 billion in fiscal year 2018, according to a July report from MACPAC. With $203 million in funding coming from Puerto Rico and the federal block grant of $359.5 million, the difference had to be covered by additional federal funds allocated by Congress.
Puerto Rico receives additional Medicaid dollars from three primary funding lines: two lines allotted by the Affordable Care Act that total about $6.3 billion, and one allotted by the 2018 Bipartisan Budget Act for about $4.8 billion, according to MACPAC.
The Bipartisan Budget Act funding and the majority of the ACA funding are scheduled to expire Sept. 30, and the second line of ACA funding will sunset Dec. 30. If these funds are not replaced, Puerto Rico's program will be underfunded by approximately $1 billion in fiscal year 2020 and is projected to run out of money by March 2020, according to MACPAC.
To adjust for this lack of funding, MACPAC projected in a separate July report to Congress that Puerto Rico could be forced to kick 455,475 people off the program if no benefits are cut.
Park said Puerto Rico's block grant has always been inadequate considering the needs of the program, which was stretched even further after hurricanes Irma and Maria. The storms caused hospitals and clinics to close and even led to physicians leaving the island, according to Park.
Need for long-term solution
Judith Solomon, a senior fellow for the Center on Budget and Policy Priorities, said in an interview that if the funding is approved, increasing the rates Medicaid pays providers and physicians should be a top priority. Solomon explained that Puerto Rico pays providers a much lower rate than states, which has contributed to the loss of numerous providers and physicians.
About 500 physicians left Puerto Rico in 2015 and 72 of Puerto Rico's 78 municipalities are considered to be medically underserved, according to a January 2017 report from the Office of the Assistant Secretary for Planning and Evaluation, an adviser to the U.S. Department of Health and Human Services.
"We're continuing to see this inability to address the underlying problems," Solomon said. "I would assume that providers in Puerto Rico are watching this closely and the longer it goes, the more likely they begin to explore their opportunities elsewhere."
Melendez, who now works as a healthcare consultant specializing in health insurance programs for U.S. territories, said the House's bill is great for Puerto Rico and other territories over the next four years, but a long-term solution is needed.
Rep. Nydia Velázquez, D-N.Y., introduced legislation June 19 that outlines what a longer-term solution would look like for the island. However, the bill has garnered little attention, and Melendez does not expect it to move forward.
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Corruption charges
Puerto Rico's Medicaid program has also been flagged for corruption issues amid the funding crisis. The U.S. Department of Justice announced July 10 that it has indicted six individuals from the government and private sector on fraud and corruption charges, including Ángela Ávila-Marrero, the former executive director of the Puerto Rico Health Insurance Administration.
Ávila-Marrero left her position June 25, just five days after she testified before the Energy and Commerce Committee where she outlined the challenges facing the Medicaid program and requested more federal funding.
Rep. Greg Walden, R-Ore., led efforts to add extra oversight mechanisms into the House bill after the charges were made public.
Melendez said the oversight mechanisms are needed, adding that CMS should examine "every contract that has any Medicaid dollar attached to it." However, he said the corruption charges should not overshadow the necessity of keeping the Medicaid program funded.
"Congress and the Senate should not punish the population in Puerto Rico for what some of their people who are responsible for the program have done," Melendez said. "Help the population out by making sure they have access to healthcare."

Puerto Rico's Medicaid program could become $1 billion short in funding in fiscal year 2020 if additional federal dollars are not approved by Congress.
Ángela Ávila-Marrero, the former executive director of the Puerto Rico Health Insurance Administration, was arrested on charges of corruption July 10.