To provide for an emergency increase in Federal funding to State Medicaid programs for expenditures on home and community-based services.
- Sponsor
- Rep. Dingell, Debbie [D-MI-6]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Jun 17, 2025
Bottom line
States can receive a significant federal funding boost for Medicaid home and community-based services if they commit to enhancing services, supporting the direct care workforce, and expanding access for eligible individuals.
What it actually does
This bill proposes an emergency 10 percentage point increase in the Federal Medical Assistance Percentage (FMAP) for state Medicaid expenditures on home and community-based services (HCBS) during fiscal years 2026 and 2027. To receive this enhanced funding, states must submit an application outlining how they will use the funds to improve HCBS, including increasing reimbursement rates for providers, boosting compensation for direct care workers, reducing waiting lists, and supporting family caregivers. The bill aims to strengthen the HCBS workforce and expand access to services, with a cap ensuring no state's FMAP exceeds 95%.
Proponents argue
Proponents argue this bill addresses critical and long-standing needs within the home and community-based services sector, which allows vulnerable individuals to live independently. They contend it will alleviate workforce shortages by improving compensation and benefits for direct care workers, reduce extensive waiting lists for services, and provide much-needed support for family caregivers, ultimately improving the quality of life for millions of Americans.
Opponents contend
Opponents may raise concerns about the significant increase in federal spending and its potential impact on the national deficit. They might also question the effectiveness of temporary federal funding increases for addressing systemic issues, suggesting it could create a 'fiscal cliff' for states once the enhanced FMAP expires. Some may also express reservations about federal mandates on state Medicaid programs and private sector wage practices.
The bill is relatively short and clearly structured, making it accessible for a quick but thorough review by an informed reader.
Sec. 2(a)(1)
Emergency Increase in Federal Medical Assistance Percentage (FMAP)
This provision increases the federal share of Medicaid funding for home and community-based services (HCBS) by 10 percentage points for states that qualify. This enhanced FMAP applies to expenditures made during fiscal years 2026 and 2027. However, the total federal share for any state's HCBS expenditures cannot exceed 95%, ensuring states still contribute a portion of the cost.
Supporters argue
Supporters argue that this FMAP increase provides essential financial relief and capacity to states, enabling them to expand and improve critical HCBS, which are often underfunded and in high demand. This temporary boost can help states address backlogs and workforce issues exacerbated by recent public health emergencies.
Critics contend
Critics may contend that a 10-percentage point FMAP increase represents a substantial unfunded commitment for the federal government, contributing to the national debt. They might also argue that temporary increases can lead to fiscal instability for states once the enhanced funding expires.
Tradeoffs
The provision balances the immediate need for federal support for HCBS with concerns about federal fiscal responsibility and the long-term sustainability of state programs once the temporary increase ends.
Sec. 2(b) and (c)
State Eligibility Conditions and Application Process
To receive the increased FMAP, states must submit an application to the Secretary of Health and Human Services. This application must detail how the state plans to use the funds for specific HCBS improvement activities, assure that the federal funds will supplement (not supplant) existing state funds, be expended by September 30, 2029, and increase reimbursement rates for HCBS to support workforce recruitment and retention. Applications are automatically approved if certified complete by the Secretary within 90 days.
Sec. 2(d)
Required Activities to Improve HCBS Delivery
States receiving enhanced FMAP must work with community partners to implement a range of activities aimed at improving HCBS. These activities include increasing reimbursement rates for agencies and direct support professionals, with a mandate that agencies pass these increases on as higher worker compensation. Other activities include providing paid leave, hazard pay, improving job stability for workers, reducing waiting lists for services, purchasing emergency supplies, supporting family caregivers, funding training, utilizing assistive technologies, and assisting individuals to transition from institutional settings back to their homes.
Sec. 2(e)
State Reporting and HHS Evaluation Requirements
States that receive the enhanced FMAP must submit a report to the Secretary by December 31, 2029, detailing the activities funded and the number of eligible individuals served. The Department of Health and Human Services (HHS) is then required to conduct an aggregate evaluation of the program's implementation and outcomes, using an external evaluator. This evaluation will assess changes in the access, availability, and quality of HCBS across states and identify promising practices. Findings will be disseminated to states, Congress, and made publicly available.
The bill caps the total Federal Medical Assistance Percentage (FMAP) for any state's home and community-based services (HCBS) expenditures at 95%, even with the 10 percentage point increase. This means no state can receive more than 95% federal funding for these services.
Sec. 2(a)(1)
Why it matters:This is standard legislative practice to include fiscal limitations or caps within the main provision they modify, rather than in a separate section, to ensure clarity on the maximum federal contribution.
Case for: Proponents argue that this cap ensures all states, regardless of their existing FMAP, maintain some level of financial responsibility for their HCBS programs, promoting prudent spending and preventing complete federalization of costs. It's a fiscal safeguard.
Case against: For states that already have a very high FMAP, this cap might limit the full intended benefit of the 10-point increase if their base FMAP plus 10 points would exceed 95%. This could disproportionately affect states with lower per capita incomes.
Estimated impact: This provision limits federal outlays for states that would otherwise exceed 95% FMAP, ensuring a minimum state contribution to HCBS costs.
States must provide assurances that all federal funds attributable to the FMAP increase will be expended by September 30, 2029. This sets a clear deadline for states to utilize the enhanced funding.
Sec. 2(b)(2)(A)
Why it matters:It is common practice for federal funding programs to include expenditure deadlines to ensure timely use of funds and prevent states from holding onto federal money indefinitely. Placing it within the assurances is a standard legislative technique.
Case for: Supporters argue that this deadline promotes efficient and timely use of federal funds, ensuring that the intended benefits for HCBS are realized within a reasonable timeframe. It prevents states from delaying implementation.
Case against: Critics might contend that a strict expenditure deadline could pressure states to rush implementation or spending, potentially leading to less effective or well-planned programs. Complex initiatives, especially those involving workforce development or infrastructure, may require more time.
Estimated impact: This provision creates a firm timeline for states to utilize the enhanced federal funding, impacting their planning and implementation schedules for HCBS improvements.
When states increase reimbursement rates for home health agencies and agencies employing direct support professionals, the bill explicitly mandates that any agency or individual receiving such increased payment must, in turn, increase the compensation it pays its home health workers or direct support professionals.
Sec. 2(d)(2)(A)
Why it matters:While a crucial mechanism for achieving the bill's workforce goals, it's presented as a condition of a broader activity rather than a standalone mandate. This could be standard drafting or an attempt to integrate it seamlessly into the program's objectives.
Case for: Proponents argue this is a vital safeguard to ensure that the federal investment directly benefits the frontline direct care workforce, addressing low wages and improving recruitment and retention, rather than simply increasing provider profits. It ensures the intended impact reaches those who deliver care.
Case against: Critics might view this as federal overreach into private sector wage setting, potentially creating administrative burdens for agencies to track and demonstrate compliance with the pass-through requirement. It could also be challenging for states to monitor and enforce effectively.
Estimated impact: This provision directly impacts the wages and benefits of a significant portion of the direct care workforce, potentially leading to substantial improvements in their compensation.