DEPARTMENT OF HEALTH &  HUMAN  SERVICES  
7500 Security Boulevard, Mailstop S2-26-12  
Baltimore, Maryland  21244-1850  
CENTERS FOR MEDICARE & MEDICAID SERVICES 
CENTER FOR MEDICAID & CHIP SERVICES 
 
 
 
SHO#  21-004  
RE:  Temporary increases to FMAP unde r  
sections 98 11, 9814, 9815, a nd 9 821           
of th e ARP and admin istrative   
claiming for vaccine incen tives 
 
August 30,  2021  
   
D  ear State Health Official: 
               
This letter provides guidance with respect tot empo rary i ncreases  to the  feder al med ical assist an ce 
percentage (FMAP) a vailable to states under  sectio ns 9811, 9 814, 9815, and 9821 of the   
America n Rescue Plan Act of 20 21 (A  RP) (P ub. L. 117-2), enacted  on Mar ch 11, 2021.1 S ections  
9811 and 9821 of th e ARP provide temporary increased FMAP and Enhanced FMAP (EFMAP) 
for state Medicaid and Ch ildrens  Health Insu rance Program  (CHIP)e xpenditures  o n CO VID-19    
vaccines and COV ID-19 vaccine  administr ation.  Section  9814 of t he A  RP pr ovides a temporary 
increase in F MAP for Medicaid ex pend itures for states that newly begin to expend amounts for   
coverage of t he entire  new adult  group  described  in section 1902 (a)(10)(A)(i)(VIII) of the Socia l   
Security Act ( A ct) under the state p lan  (or waiver  of the plan)  .Section 9 815 of the ARP pr ovides 
a temporary inc rease to 100 percent FMAP f or Medicaid service s received through cert ain Urban 
Indian Organizations  (UIOs) and ce rtain Native Hawaiian health care entities,  including   Native 
Hawaiian health care systems (NHHCSs). Ad ditional  de tailed background and i nforma tion  on 
 each of these provisions  is described within this letter. 
         
This letter in forms s tates of  appropria te methods for identify ing  Medicaid  and CHIP expenditrues 
eligible  for the relevant  ARP-incre ase d FM  A P and EFMAP under fee-for-service (FF S) and 
managed care  programs, as well as the process  for reporting the associ ated expenditrues through  
the Medica id an d CH IP Budget  and Expenditure  System  (MBES/CBES). In addition,  this letter  
includes  in formation  on claiming  federal  matching  funds under sections  1903(a)(7 ) and 2105( a)(1)
(D) of the Act for state a dministrative  costs re lated to beneficiary COVID-19 and influenza 
v  accine incentives. 
         
Section 1: Section s 9811 and 982 1 of the ARP  Temporary Increased FMAP and EFM  AP 
for Expenditures for COVID-19 Vaccine Administration under Medicaid and CHIP 
                                                             
1  References in this document to states include territories and the District of Columbia.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  Background   
Section 9811 of  the  ARP established a  new mandatory Medicaid  benefit at  section 1905(a)(4)(E)  
of the Act  and amended various  other  sections  of the Act, including  sections  1902(a)(10),  1916,  
1916A,  and 1937 of  the Act.  Under these changes to the statute,  nearly all  Medicaid  
beneficiaries  must  receive coverage of COVID-19 vaccines and their  administration,   without  
cost-sharing, including  beneficiaries  enrolled in  most groups with limited  benefits. This  new  
coverage requirement applies beginning  on  the date of enactment of  the ARP  (March 11,  2021)  
and (generally) ending on the last  day of  the first  calendar quarter that  begins  one year  after the 
last  day of the COVID-19 emergency period described in section 1135(g)(1)(B)  of the Act  (we  
refer to this  period below  as  the  ARP coverage period).2  Section 9821 of  the ARP  added a  
similar  mandatory benefit for  CHIP  at  section 2103(c)(11)(A)  of the Act and amended section 
2103(e)(2)  of the Act.  The changes require  coverage of COVID-19 vaccines and their  
administration,   without cost-sharing,  for  all  CHIP enrollees,  during the same ARP  coverage  
period that applies  in Medicaid.  
Additionally,   section 9811 of  the  ARP  added section 1905(hh)  to the Act, which establishes  a 
temporary Medicaid  FMAP of 100 percent  for  amounts  expended by a  state  for  medical  
assistance for  a  vaccine  described in section 1905(a)(4)(E)  of the Act (that is,  a COVID-19 
vaccine)  and its  administration.   The increased FMAP will  apply beginning  April  1,  2021 and will  
end on the  last  day of the  first quarter  that begins  one year after  the last  day of the COVID-19 
emergency period described in section 1135(g)(1)(B)  of  the Act  (we refer to this  period below  as 
the ARP  FMAP period).  Section 9821 of  the  ARP  also  provides a  temporary  100 percent  CHIP  
EFMAP  for state expenditures  for  vaccines  described in section 1905(a)(4)(E)  of  the Act  and 
their  administration   during the same time period,  through the addition  of section 2105(c)(12) of  
the Act.  Section 9821 of the ARP  also amends section 2104(m)  of the Act to make adjustments  
to CHIP  allotments   to account for  the increase in expenditures  due  to the temporary increase in 
EFMAP for COVID-19 vaccines  and  their  administration.   CMS interprets  sections  1905(hh)  and 
2105(c)(12)  of  the Act  to mean that  the 100 percent FMAP  or  EFMAP  authorized under  these 
sections  applies  to any services described in section 1905(a)(4)(E),  even if they  are billed  under  
other Medicaid or  CHIP  benefits  by providers  of those benefits.   That is,  the  100 percent match 
applies to all  state expenditures  for  COVID-19 vaccines and their  administration,   even when a  
COVID-19 vaccination is provided as  part  of a  benefit other than the benefit at  section 
1905(a)(4)(E), such as  when it  is provided as part of  Medicaid  nursing facility or  federally 
qualified  health center  (FQHC) services.   
During the  period when the  supply of  COVID-19 vaccines is  federally  purchased  (as  is  the case 
as  of the  date  of  this  SHO Letter), providers  should not  be billing  for the vaccine  doses  and states  
should not  make claims  to Medicaid or CHIP  for  federal  financial  participation  (FFP)  for 
COVID-19 vaccine  doses. Instead, providers  should be billing,   and states  should be  claiming,  for 
COVID-19 vaccine  administration.   Since  states  will  not  claim  FFP for COVID-19 vaccine  doses 
                                                             
2 The optional COVID-19  group at section 1902(a)(10)(A)(ii)(XXIII) of the Act receives this coverage only through  
the last day of the COVID-19 public health emergency (PHE).  No federal financial participation is available for any  
state expenditures on benefits for this group, including coverage of COVID-19  vaccinations, after the PHE ends.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  at  this  time, the  guidance below is  focused only on claiming  expenditures for  COVID-19 vaccine  
administration.   Should the federal  government  end purchase of COVID-19 vaccines  prior  to the  
end of  the ARP  coverage and FMAP periods,  CMS  intends  to provide  additional  guidance  on 
proper  claiming  for vaccine  doses during the ARP  FMAP period.  
Increases in Medicaid  Payment Rates for  COVID-19 Vaccine  Administration  
During the ARP  coverage  period, states  might  be interested  in  increasing payment  rates for  
COVID-19 vaccine  administration   to reflect  temporary  and unforeseen costs  associated with  
administering  COVID-19  vaccines  or  to improve  access to COVID-19 vaccines  for  Medicaid  
beneficiaries.  State Medicaid payment rate  increases  are generally governed by  section 
1902(a)(30)(A)  of  the Act,  which requires states  to  assure  that Medicaid  payments are 
consistent with efficiency, economy,  and quality  of  care  and are  sufficient to enlist enough 
providers  so that  care and services are available under  the [state]  plan  at least to  the extent that 
such care and services are available to  the general  population   in  the geographic area.  CMS has  
not typically  allowed states  to pay higher  rates  to providers  based  solely  on differences in the 
FMAPs  at  which CMS matches  state expenditures  for  different  Medicaid  eligibility  groups,  so as 
not to create incentives  for  providing   more extensive coverage or better care to  one  group  versus  
another, and so as  not to encourage states  to inflate payment  rates  solely  to maximize  FFP.  Such 
temporary inflation,   based only on an available  increased FMAP  and with no defined 
programmatic objective,  would not be  consistent  with section 1902(a)(30)(A)  and may cause  
program integrity and oversight  concerns.   However, an increase in  COVID-19 vaccine  
administration   payment  rates during the  ARP  coverage period may be consistent  with section 
1902(a)(30)(A)  if  the  state intends  the  increases to improve  access to COVID-19 vaccine 
administration  or if the state determines that  COVID-19 vaccination payment  rates are too low  to 
compensate  providers  based on changes in care  or delivery during the ARP  coverage  period.  We  
note  that such  payment  rate adjustments  may be  particularly relevant  in geographic areas  where 
providers  of COVID-19 vaccine administration   are not  widely  available.   
To change  Medicaid  provider  payment rates,  states should propose  to amend  the Medicaid  state 
plan  payment  methodology   through a  state plan  amendment  (SPA)  submission. As with  all  SPA 
requests,  CMS will review  vaccine administration   rate requests  to ensure  consistency  with  
efficiency,  economy,  and quality  of care.   States  that increase payment  rates  to  account for  
temporary  cost increases  or  to improve  access to COVID-19 vaccine  administration  may also  set 
an end  date within the state  plan payment  methodology  that  sunsets the rate  increases using a  
defined time period.  For  example,  a state could temporarily increase Medicaid COVID-19 
vaccine administration  payment  rates through a  SPA  during the ARP  coverage period,  and 
specify  that the increase ends  on the last  day of  the first  calendar quarter that  begins  one  year  
after  the last  day of  the COVID-19 emergency  period.   
Because  the ARP  coverage period began on March 11,  2021,  and will  generally extend beyond 
the end of  the COVID-19 Public  Health Emergency (PHE),  states  may need to  submit  both a  
Medicaid disaster  relief  SPA  and a  regular  SPA  if  they want to increase  payment  rates for the  
full  ARP coverage period.   A  state could use  the  Medicaid  disaster relief SPA  template to  
propose increasing  COVID-19 vaccine administration  payment  rates  retroactively to March 11,  
2021,  the  beginning  of  the  ARP coverage period,  through the end of the  COVID-19 PHE.   States  
that use the Medicaid  disaster  relief  SPA template can  also submit  a  request  under section 1135 
of the Act to waive,  or  modify,   certain Medicaid SPA submission  and notice  requirements  that 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  preclude  SPAs  from  taking  effect  before  the  state provides  public   notice under 42 CFR  447.205 
or  before  the first  day of the quarter in which the SPA  was  submitted.  See  
https://www.medicaid.gov/resources-for-states/disaster-response-toolkit/state-plan-
flexibilities/index.html   for more  details.  However, all  COVID-19 disaster relief SPAs  expire  at  
the end of  the  COVID-19 PHE, so a  state would also need to submit  a  SPA through the  regular  
(non-disaster  relief template)  SPA submission  process to  continue the rate increases  through the  
end of  the ARP  coverage period.3  States that use the regular  SPA  submission  process would need 
to issue public  notice  in accordance  with 42 CFR  447.205 and could  not  receive an effective date 
for  rate increases  that is  earlier than one day after  the notice is issued,  or the first  day of the  
quarter  in which the  SPA  is submitted to CMS (whichever is later).   
Please note that  while states are  generally  required to cover  COVID-19 vaccinations  for the  
entirety of the ARP  coverage period (which began March 11,  2021),  the  ARP FMAP period did 
not begin until  April  1, 2021  regardless  of whether a  state makes rate increases or develops  new  
rate  methodologies   prior to April 1, 2021.  Prior to the expiration of  any temporary rate increases  
for COVID-19 vaccinations,   states should re-visit their  state plan payment methodologies  for 
vaccine administration   to ensure that  rates  continue to be sufficient  to ensure access  to  care.    
We note the above  guidance  is specific  to Medicaid SPAs  and no SPA  is needed  to increase 
CHIP payment  rates.  
Properly Identifying  COVID-19 Vaccine Administration Expenditures for  Purposes of  
Claiming  FFP at the  Increased FMAP and EFMAP during  the ARP FMAP Period  
 
In certain  circumstances,  covered Medicaid  and CHIP  services, including  COVID-19 vaccine 
administration,   are  paid by states  using bundled payment  rates  when delivered on a  FFS  basis or  
using capitated payments when delivered through managed care.  Bundled FFS payments  
generally reflect  all  the costs of services and  procedures that  a beneficiary receives  (or is  
expected to receive)  over  a defined unit  of service  on average.  When  a state pays  a health care 
provider  using a  FFS  bundled payment  rate, it  makes a  single  payment to the  provider  for all  
services provided per encounter,  per day,  or per stay,  depending on the unit  of service a state  
uses to pay the provider  for the bundle  of services.  For purposes  of  this  discussion,  we are using  
the terms  bundled  payment  or  bundled  payment  rate  to  include  FFS rates  and payments  
under  prospective  payment systems  (PPS), per diem  rates,  and  other  rates that  make a single 
payment  per unit  of service for multiple   Medicaid  or CHIP  benefits  or for the transfer of risk  
associated with potentially  needing to provide  those benefits.  That is,  when we refer  to  bundled  
payment  rates,  we  describe  payment methodologies   used to  pay  providers one  payment  rate for 
multiple  services  or for the transfer of risk associated with potentially  providing  them,  regardless  
of whether all  the services  are delivered during every unit  of service. While we recognize that  
there may be inherent  differences between prospective  payments  and other multi-service 
payments,  the  guidance  within this letter applies  to all bundled  payment  rates that are meant  to  
pay providers  for a  range  of services including   COVID-19 vaccine  administration,  or that  are 
                                                             
3 As previously noted, the optional COVID-19 group at section 1902(a)(10)(A)(ii)(XXIII) of the Act receives this  
coverage only through the last day of the COVID-19 PHE.  No federal financial participation is available for any  
state expenditures on benefits for this group, including coverage of COVID-19  vaccinations, after the PHE ends.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  meant to pay for the  transfer  of risk for furnishing  a range of services  that includes  COVID-19 
vaccine administration.   
 
Capitation  payments  are payments  that states  make to  a contractor  for  each beneficiary  enrolled  
under  a managed  care contract and are based on  the actuarially  sound  capitation  rates  for the 
provision  of  specified  services  covered under the  state  plan.  States make capitation payments  to 
managed care  plans,  including  managed care  organizations   (MCOs), prepaid inpatient  health 
plans (PIHPs),  and prepaid ambulatory health plans (PAHPs),  regardless  of whether  a  particular  
beneficiary  receives services during  the  period covered by the payments.  Capitation payments  
are  typically  fixed,  prospective,  monthly  payments made  by states  to their contracted managed 
care plans.   
 
In both bundled payment  rates and  capitated  payments,  the portion of the payment  associated  
with  COVID-19 vaccine administration  could be co-mingled  with payment for  other services  and 
it  may  not  be  easy to identify   which portion of the  payment  is  eligible   for  the 100 percent  FMAP  
or EFMAP  during the ARP  FMAP period.   When  states pay  directly  for COVID-19 vaccine  
administration   on a FFS basis  (e.g.,  through a fee schedule),  the entire state payment  may be  
claimed  at the temporary 100  percent  FMAP  or EFMAP.  Although providing  100  percent  
FMAP  or EFMAP  may be administratively  simple  to implement  when  a state makes  a discrete 
FFS payment  for COVID-19  vaccine administration,  there are implementation   complexities  
when a state pays for vaccine administration  as part of  a  bundled or capitation payment that  is  
meant to account and pay  for other services, or  that is  meant to account and pay for the transfer 
of  risk for furnishing  other services.  For bundled FFS payments,  states  should use one of the two 
allocation  methods described below, or  an alternate method  that  CMS approves,  to appropriately 
identify and report expenditures  associated with COVID-19 vaccine administration   that are 
eligible  for the increased  FMAP  or EFMAP.    
 
Identifying State  Expenditures  for  COVID-19 Vaccine Administration under FFS during the ARP  
FMAP period  
 
In accordance  with 42 CFR 431.107(b),  457.236,   457.720,  and 457.980,  states and  enrolled 
Medicaid  providers  must  maintain  records,  such as  documentation  of the services furnished to 
beneficiaries,  to allow  the state and  the federal government  to ensure  that applicable federal  
requirements  are met.  Additionally,   42 CFR  430.30(c)  and 457.630(c)  require  states to submit  
the Forms  CMS-64  and CMS-21,  which are quarterly accounting statements  of the states actual  
recorded expenditures  that  serve  as  the primary basis for  Medicaid payments to states  under  
section 1903(a)(1)  of the Act, and for  CHIP  payments to states  under  section  2105  of the Act.  
To substantiate  claims at  the increased  FMAP  or EFMAP  for COVID-19 vaccine administration 
during the ARP  FMAP period  on the Forms  CMS-64  and/or CMS-21,  states must have access to  
and maintain  claims  data indicating   that a COVID-19 vaccine was administered  to an eligible 
Medicaid  or CHIP  beneficiary  in  accordance with  42 CFR 433.32  and  457.226, respectively.  
CMS recognizes  that  for certain bundled FFS payments,  such as those made through prospective  
payment systems,  health care provider claims may not  detail  when or  whether a COVID-19 
vaccine administration   is delivered,  and states  may need to work directly with  enrolled  providers  
and update  their  provider  manuals  to ensure the state  receives adequate documentation  of the  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  COVID-19 vaccine  administration  to support  a  claim  for 100  percent  FMAP  or EFMAP  during 
the ARP  FMAP period.  
 
CMS will  permit  states to  claim  the  increased FMAP and EFMAP available  during the ARP  
FMAP period for any bundled FFS payment  that the state makes  for a unit  of service  for which 
the state can document  that  COVID-19 vaccine administration   was  the only service provided,  for 
the following  reasons.  First, in this circumstance,  the  bundled payment is the  states  actual  
expenditure  for COVID-19 vaccine  administration.  Second,  this  approach is the most  
administratively  feasible  proxy for  capturing the vaccination costs built  into these types of  
bundled payments.   When a state  pays a bundled payment  per  unit  of service  that is  meant to  
reflect  the  providers  costs  of providing  all covered Medicaid or  CHIP  services, some portion of  
the  states  bundled payments  for units  of service that do not  include  a COVID-19 vaccination  
would likely   also be meant to reimburse  the provider  for its  anticipated costs of  administering 
COVID-19 vaccines. However,  because the state  could not  show  that  an actual  COVID-19 
vaccination was provided during  such units  of service, it would have  great  difficulty 
substantiating  a  claim for  100  percent  FMAP or EFMAP  in the  portion of the  payment  for such 
units  of service  that  is meant  to reimburse  the provider for all  COVID-19 vaccinations  it  
provides.    
 
However, when COVID-19  vaccine administration  is provided with other Medicaid  or CHIP  
services during a unit  of service  reimbursed with a  bundled payment, states  should  identify  the  
portion of  the  bundled payment  that can be attributed to  COVID-19  vaccine administration.    In 
this circumstance, states  should claim  only  the portion  of  the  bundled payment  associated with  
COVID-19 vaccine  administration  at the  100 percent  FMAP  or  EFMAP  for COVID-19 vaccine  
administration.   States  should  claim the  portion of  the bundled payment  that  is not associated 
with COVID-19 vaccine  administration  at the  FFP  rate applicable  to  those  service expenditures  
at the time of the states  claim  for FFP.   For example,  if a beneficiary  is administered  a COVID-
19 vaccine  and also receives  a screening and check-up  during a  unit  of service  for which the  
provider  is  paid a bundled payment,  states  would claim the  portion of the  payment  associated  
with  the COVID-19 vaccine administration  at  the 100 percent  FMAP or EFMAP,  and would 
claim  the portion of the  payment  attributed to  the screening  and check-up at the FMAP  or  
EFMAP  applicable to  those service expenditures.  
 
States  may  use one of  the two methodologies   below  to  properly  account for  expenditures  
associated with  COVID-19 vaccine  administration  when paid as  part of a bundled FFS payment  
for a unit  of service  during which  services  in addition  to a COVID-19 vaccination  are provided 
to a beneficiary:   
 
Allocation Method 1    A state may  use the state plan  payment  rates for COVID-19 
vaccine  administration  paid to professional  providers (e.g.,  physician services  rates) as  
the amount  claimed at 100  percent  FMAP  or EFMAP  for each  unit  of service  paid with  a 
bundled payment  that includes  COVID-19  vaccine administration  and other  Medicaid or  
CHIP  services.  If a state  pays different  rates  for COVID-19 vaccine  administration  based 
on the type of  professional  provider  that  administers  the vaccine,  the state  should use the  
Medicaid state plan rate  applicable   to the provider  type that  actually  administered  the  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  vaccine  as the allocable amount.  The state  would subtract the  state plan  COVID-19 
vaccine administration  payment  rate  from  the total bundled payment amount,  and claim  
that portion of  the  payment  at the 100 percent FMAP  or  EFMAP  for  COVID-19 
vaccination  expenditures. The  state  would  claim the remainder  of  the bundled payment  at 
the  FFP rate  applicable  for  the other  services  provided during the  unit  of service.  This  
approach would  reasonably approximate the  states  expenditures  associated with 
COVID-19 vaccine  administration  because  the  administering  provider  and associated  
cost  of administering  vaccines  to beneficiaries  would be the same  or similar  whether  
those services were reimbursed through a  bundled payment  or  paid discretely.   
 
Allocation Method 2    A state may  use cost  report  data  (this could be  Medicare cost  
report data,  or Medicaid or  CHIP  cost report data that is  reported using Medicare  cost  
reporting principles)   to  identify and  allocate the portion of  a bundled payment  associated  
with  COVID-19 vaccine  administration   costs when the  bundled payment is for  a  unit of  
service  that includes  COVID-19  vaccine  administration  and other Medicaid or CHIP  
services.  States,  with assistance  from  providers,  could use  cost  report  data (e.g.,  the  
Medicare 222 Clinic  Cost Report)  to determine  the reasonable  cost  associated with  
Medicaid  (or CHIP)  COVID-19 vaccine administration   on a per  unit  of service  basis. 
States  could claim this  cost  amount  at the  100 percent  FMAP or  EFMAP  for COVID-19 
vaccine administration   expenditures, for units  of service  that include  both a COVID-19 
vaccination and other  services. For this  approach to be feasible,  the  state  would have to 
be able  to obtain the  filed  cost report data in a reasonable  time  frame and,  using the data,  
properly identify the  amount  allocable to Medicaid  and/or CHIP  COVID-19 vaccine  
administration   for each  such unit  of service. The state would  subtract the allocated  
Medicaid  and/or CHIP  COVID-19 vaccine administration  cost  amount  for each  such unit  
of service  from  the  total bundled rate  payment amount  for that  unit  of service  and claim  
the  allocated amount at  the  100 percent  FMAP or EFMAP. The remainder  of  the bundled 
payment  for the  unit  of service  would be claimed at the  applicable  FFP rate  for the other  
services at the time the state makes  its claims  for  FFP  (see above example described  in  
Allocation   Method 1). This approach would reasonably approximate the states  
expenditures  associated with COVID-19 vaccine  administration   because  the cost data 
would be used to allocate  the actual  cost of providing  COVID-19 vaccine  administration 
to  Medicaid  and/or  CHIP beneficiaries  during a  unit  of service  that includes  both 
COVID-19 vaccination and other services.  
 
The  state could initially   claim the  increased FMAP  or EFMAP  available  for COVID-19 
vaccine administration  expenditures  using an  approach similar   to Allocation  Method 1:  
that is,  by claiming  an  interim  amount that is  the  same as  the COVID-19 vaccination 
payment rate  paid  to professional  providers  under  the  state plan  for the portion of  the  
bundled payment  associated with  COVID-19 vaccine administration.   Later, the states  
claim  for the increased  FMAP  or  EFMAP  could  be adjusted  to  reflect  actual cost data 
after  cost reports  are filed  with  the state.  While  claims  under both allocation  method 
options are  subject to the  2-year  claims  filing  limit  in  section 1132 of the  Act  and the  
implementing  regulations  at 45 CFR  part 95,  subpart  A,  states should  take particular  care 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  to ensure adequate time is  available to  receive and process cost report  data  when selecting 
Allocation   Method 2.  
 
States are also  welcome to propose  alternative  allocation  methodologies  for  CMSs  review and 
approval.  CMS is  available  to provide  technical  assistance to  help  states  determine an  
appropriate methodology   for identifying   Medicaid and/or CHIP  COVID-19 vaccine  
administration  expenditures  during the  ARP FMAP period.  
 
Identifying  Eligible  Expenditures for  COVID-19 Vaccine Administration under  Managed Care  
during the ARP FMAP Period  
 
In order  for states  to claim  the  temporary FMAP  or EFMAP  of 100 percent for amounts  
expended by a  state  in a managed care delivery system  for COVID-19 vaccine administration,  
COVID-19 vaccine  administration  for Medicaid  or CHIP  beneficiaries enrolled  in a managed  
care delivery  system  must be  a covered  benefit  under  the managed  care contract.  The portion of  
the capitation  rate that is  attributable  to COVID-19 vaccine  administration  and for  which the  
state may  claim  increased match should be determined based on  the data utilized  to develop the  
applicable capitation rates.  The portion  of the capitation  rate claimed  at  the increased FMAP  or  
EFMAP  must  be attributable  only  to COVID-19 vaccine administration.   The entire capitation  
rate cannot  be claimed  at the increased  FMAP  or EFMAP  even if  the administration  of a  
COVID-19 vaccine is the  only service  received by an enrollee  during the period covered by the  
capitation payment.  States may utilize   claiming  methodologies   to identify  a  reasonable  estimate  
(e.g., proxy)  of a portion of the capitation rate  attributable  only  to COVID-19 vaccine  
administration  that  is  eligible  for the increased  FMAP  or EFMAP.  The use of a  proxy 
methodology  is  solely for FFP claiming  purposes  and does not  negate the requirements  that  
Medicaid  and CHIP  capitation rates  be  actuarially sound and developed in compliance  with 
federal requirements  under  42 CFR part 438  for Medicaid  and 42 CFR part  457,  subpart  L for 
CHIP. States have  used similar  claiming  methodologies   for  FFP for  services  and populations  
such as  family planning,   section 1915(k) benefits, and the  adult group  described in section 
1902(a)(10)(A)(i)(VIII)  of the Act,  when such services are  delivered through managed care  and 
paid  as  part of a capitation  rate.  
 
States could also pay for the COVID-19 vaccine and its  administration  outside  of managed care  
capitation  rates as a non-risk payment arrangement  with the managed  care plan,  subject to the  
requirements  for non-risk contracts  specified under 42 CFR   438.2 and the  upper payment  
limits   outlined  in 42 CFR    447.362.  Alternatively,  states  can elect to carve the COVID-19 
vaccine and its administration  out of  the managed  care  program  and contracts and pay for it  
under their Medicaid FFS  programs. Both of these  options  would simplify  claiming  increased 
FMAP or EFMAP,  as neither  requires  a  state to determine  the portion of the capitation rate  that  
is  attributable  to COVID-19 vaccines  and their  administration.     
 
Section 2: Section 9814 of the  ARP   Temporary Increase in FMAP for States that Begin to  
Expend Amounts for  Certain Mandatory  Individuals  
Background  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  Section 9814 of the  ARP  adds  section 1905(ii)   to the Act. Section 1905(ii)   provides  an 8-quarter,  
5 percentage  point  increase to a qualifying  state or  territorys  FMAP  under  section 1905(b) of  the  
Act  for a  state  that newly expands its Medicaid program  by adopting  under its state  plan (or  
waiver  of such plan, including  a  section 1115 demonstration)  the  entire eligibility  group under  
section 1902(a)(10)(A)(i)(VIII)  of  the  Act (Adult  group).  A qualifying  state is  a state that  has  
not  expended amounts  for all  individuals   in the Adult  group before the March 11,  2021 
enactment date of  the  ARP.  Effective beginning  with the  first calendar quarter  during which a  
qualifying  state expends  amounts  for all  individuals   in the Adult  group,  the  5 percentage  point  
FMAP increase  is  available  to a  qualifying  state for each quarter occurring during the 8-quarter  
period except for any quarter (and each subsequent  quarter) during the 8-quarter period in  which 
a  state ceases  its Adult  group expansion (or limits   the  expansion to less than the entire  Adult  
group).  This  increased FMAP applies  to certain Medicaid expenditures  covered under  the state  
plan or waiver of  the plan  (including  a section 1115 demonstration),   as  described in the  
Appendix.   CMS  encourages  states considering  newly covering the Adult group to refer  to CMS  
regulations  regarding the Adult  group  and the methodology  for determining  the federal  share  of  
expenditures for  the  Adult group  at  42 CFR 435.119 and 42 CFR  part 433,  subpart E.  
Application Rules  
The 5 percentage point  FMAP  increase is  available for services, including  those  covered  under  
waivers  and section 1115 demonstrations,  if the  states  expenditures  for  those services  are 
matched  at the state-specific FMAP  defined in  the first sentence of  1905(b)  and the state  and the  
expenditures  otherwise  meet the requirements  in section 9814 of the ARP  and all  ordinarily 
applicable  requirements  for  federal matching of Medicaid expenditures.  As specified in section 
1905(ii)(1),  for applicable  expenditure  categories,  a state may receive both the 8-quarter, 5 
percentage point  FMAP increase and the temporary 6.2 percentage point  FMAP increase  
provided under  section 6008 of the Families   First  Coronavirus  Response Act (FFCRA) (Pub. L.  
116-127)  at  the same time,  for a state and an expenditure  that qualifies   for both  increases.   As a 
reminder,  the  temporary 6.2 percentage  point  FMAP  increase  under section 6008 of the  FFCRA 
is effective for  each qualifying  state  beginning  January 1,  2020 and extending through the last 
day of  the calendar quarter in which the PHE  declared by the Secretary of Health and Human
Services  for COVID-19, including  any extensions,  terminates.4   Please note that  while  both the 5
percentage point  FMAP increase and the 6.2 percentage  point  FMAP increase apply to many of 
the same expenditure categories,  there are  some  expenditure  categories  that may qualify for only 
one of  these two increases. See the  Appendix  for  more information  on  how  the 5- percentage
point  FMAP increase  applies  to  certain expenditure categories. 
 
Section 3: Section 9815 of the ARP  Extension of 100 percent FMAP to Urban Indian 
Health Organizations  and  Native Hawaiian  Health  Care Systems  
                                                             
4  For  more information on the criteria states must meet in order to qualify to receive the 6.2 percentage point FMAP  
increase under section 6008 of  the FFCRA, please refer to Section IV, Subsection F, entitled FFCRA Temporary  
FMAP Increase, of the COVID-19  Frequently Asked Questions (FAQs) for State Medicaid and Childrens Health  
Insurance Program (CHIP) Agencies (Link:  https://www.medicaid.gov/state-resource-center/downloads/covid-19-
faqs.pdf).  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  Section 9815 of  the  ARP amends  the third sentence of  section 1905(b)  of the Act  to provide  100 
percent FMAP  to states  for their medical  assistance expenditures for  services received through 
an Urban Indian Organization  (UIO), as defined at 25 U.S.C.  1603(29),  that has  a grant or  
contract with  the Indian  Health Service (IHS) under  title  V of  the Indian  Health  Care 
Improvement  Act  (IHCIA).   It also amends  section 1905(b)s  third sentence  to provide  100 
percent  FMAP to  states for  their  medical  assistance  expenditures  for services received through a  
Native Hawaiian Health Center  (NHHC)  as defined at 42 U.S.C. 11711(4)  or  a  qualified  entity as  
defined  at 42 U.S.C. 11705(b)  that has a  grant  or contract with the Papa  Ola Lokahi  under  42 
U.S.C. 11707.  Under 42 U.S.C.  11705(b),   a  qualified  entity  means a Native Hawaiian health 
care system  (NHHCS),  which must also meet  certain criteria as  defined in 42 U.S.C.  11711(6).5      
 
The 100 percent FMAP for  medical assistance expenditures for  services received through UIOs,  
NHHCs, and  NHHCSs  is available  only for the  eight  fiscal quarters  beginning  April  1, 2021 and 
ending March 31,  2023.  States will  be able  to claim  100 percent FMAP for services  received  
through these  entities  retroactively to April  1,  2021.   
 
Prior to the  enactment of  section 9815  of  the  ARP, the  third sentence of  section 1905(b) provided 
for 100 percent FMAP  for amounts expended as  medical assistance for  services  which are 
received through an [IHS] facility  whether operated by the  [IHS]  or  by an Indian tribe  or  tribal 
organization   (as  defined in section 4 of  the  Indian Health Care  Improvement  Act).  This  includes  
a  facility   that  is operated by a  Tribe or Tribal  organization  under  the Indian Self-Determination 
and Education Assistance Act  (ISDEAA).  This statutory language  remains  in place  and was  not  
changed by the ARP.  CMSs  long-standing  interpretation of  the pre-ARP  language in  section 
1905(b)s third sentence  is that the 100 percent FMAP  for  these services  is limited   to  
expenditures for  services  received by American  Indian  and Alaska Native (AI/AN)  Medicaid  
beneficiaries  through IHS facilities  (including  those operated by Tribes  or Tribal  organizations). 
This  interpretation  of the pre-ARP  language  is  based on the legislative   history of  that language, 
which indicates  that  Congress intended  that the 100 percent FMAP would apply only to services  
received by  Medicaid-eligible  AI/ANs  through IHS facilities   (including  those operated by Tribes  
or Tribal  organizations).6     
 
Unlike  the legislative   history of  the  pre-ARP  language  in the third sentence of section  1905(b),  
which supports  CMS current  interpretation of that  language,  the legislative   history of section 
9815 of  the  ARP  contains  no indication  that Congress  intended the  100 percent  FMAP for  
services received through UIOs, NHHCs,  and NHHCSs  to be limited  to services provided to 
                                                             
5  Under title V  of  the IHCIA, the Indian Health Service (IHS) enters into limited, competing contracts  and grants  
with non-profit organizations  meeting the statutory definition of Urban Indian Organization to provide health  
programs for urban Indians  residing in urban centers throughout the United States. The Health Resources and  
Services Administration (HRSA) provides grant funding to the Papa Ola Lokahi to coordinate health care programs  
and services  provided to Native Hawaiians and to five NHHCSs to provide health services to fit the needs  of Native  
Hawaiians located in their respective island communities.  
6 See H. Rep. No. 94-1026  (1976)  (Since the 100 percent Federal matching funds are available under Medicaid  
only for services for Medicaid-eligible Indians in Indian Health Service facilities (where care is already provided  
without cost to these Indians), the Committee notes that this represents primarily a shift in Federal expenditures  
from the Indian Health Service budget to the Medicaid (title XIX) budget.).  
 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  AI/ANs or  Native  Hawaiians.7  Therefore, CMS  is interpreting  the amendments  made by section 
9815 of  the  ARP  to authorize  100 percent FMAP for  expenditures for  services  received by  all 
Medicaid beneficiaries  through  UIOs,  NHHCs,  and NHHCSs.  CMSs  longstanding 
interpretation  limiting   the application  of  100 percent FMAP  to  services  received by  AI/AN  
beneficiaries through  IHS facilities  (whether operated by IHS or by Tribes  or Tribal 
organizations)  remains unchanged;  states  must  claim  services received by  non-AI/AN  
beneficiaries  through  these facilities   at their  regular, state-specific  FMAP  under  section  1905(b),  
or  the  otherwise applicable  FMAP  if that state-specific FMAP does not  apply.  
 
The third sentence of section 1905(b)  of  the Act  is  about  the federal matching percentage that  
CMS pays  to states  for certain Medicaid expenditures,   and it  is  silent  about  the payment  rates  
states  opt  to pay to the  health care providers  named in that  sentence.  States have the discretion to 
set  and adjust Medicaid provider  payment  rates,  consistent with section 1902(a)(30)(A)  of the  
Act,  as long as  the state payment  rates  are consistent with efficiency,  economy, and quality  of  
care and  are sufficient  to  enlist  enough providers  so that care  and services are  available  under  the  
state plan  at  least  to the extent  that such care and services are available to  the general  population  
in the  geographic  area.   CMS is available to  provide technical  assistance  to states  that believe  
adjusting  their reimbursement  rates for UIOs, NHHCs,  and NHHCSs  is appropriate.  
 
Section 4: Claiming  FFP at the Increased FMAP under Sections 9811, 9814, 9815, and 9821  
of the  ARP  through the MBES/CBES  
 
FFP associated with  the temporarily increased FMAP  and EFMAP under sections  1905(hh),  
1905(ii),   and 2105(c)(12)  of the Act,  and the third sentence  of section 1905(b)  of the Act,  is  
made available  to states  based on amounts  reported by states  on quarterly budget  and 
expenditures  reports in MBES/CBES.   As discussed above,  under sections 1905(hh)  and 
2105(c)(12)  of  the Act,  a  temporary FMAP  and EFMAP  of 100 percent  is available  for  
qualifying  state  expenditures  on COVID-19 vaccines  and their administration  beginning  April 1,  
2021 (third quarter of the federal  fiscal  year (FFY) 2021) and ending on  the last  day of  the first  
quarter that begins  one  year  after the last day of the COVID-19 emergency period described in 
section 1135(g)(1)(B)  of the Act.   As discussed above,  under  the  third sentence  of section 
1905(b)  of the  Act, a  temporary FMAP  of 100 percent is available  for qualifying  state  medical  
assistance expenditures  for services  received through certain  UIOs, NHHCs and NHHCSs  from  
April 1,  2021 through March 31, 2023.  And,  as discussed above, under section 1905(ii)   of the  
Act, effective beginning  with the first  calendar quarter during which a  qualifying  state expends  
amounts for  all individuals   in the  Adult group,  a  5  percentage point  FMAP increase is  available 
to a qualifying  state  for  each quarter occurring during an  8-quarter  period except for any quarter  
(and each subsequent  quarter) during the 8-quarter period during which  a state ceases its  Adult  
group expansion (or limits  the expansion to less  than the  entire Adult  group).  
 
                                                             
7 H. Rep. No. 117-7  (2021),  at 173 (Section 3106 would, for eight calendar quarters, provide a 100 percent federal  
matching rate for services  to Medicaid enrollees who access care in the Urban Indian Health Programs (UIHPs) or  
the Native Hawaiian Health Care System (NHHCS).),  https://www.congress.gov/117/crpt/hrpt7/CRPT-
117hrpt7.pdf.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
    Obtaining  FFP associated with the increased FMAP for Medicaid under sections 
1905(hh) and 1905(ii) of the Act and the third sentence of section 1905(b) 
  Form CMS-37 - CMS will  provide  advance FFP associated with the temporary
o
increased FMAP  under sections  1905(hh) and 1905(ii)   of the  Act  and the third
sentence  of section 1905(b)  to states  based on budget  estimates submitted on the 
quarterly Form CMS-37 (Medicaid Program  Budget Report; Quarterly
Distribution  of Funding  Requirements)  as described in 42 CFR 430.30(b). 
  Form  CMS 64  - CMS  will  reconcile the advance FFP amounts  that include 
o
temporary increased FMAP  under sections 1905(hh)  and 1905(ii)   of  the  Act  and
the third sentence of section 1905(b)  to states actual recorded expenditures 
submitted through the quarterly Form CMS-64 (Quarterly Medicaid Statement  of 
Expenditures  for the Medical  Assistance Program) as described in 42 CFR 
430.30(c). 
 
  Obtaining  FFP associated with increased EFMAP for Medicaid-CHIP 
(MCHIP)/CHIP under section 2105(c)(12) of the Act   
  Form  CMS 37/21B    CMS  will  provide  an advance adjustment  amount  to a 
o
states applicable fiscal  year CHIP Allotment  based  on  budget  estimates 
submitted by the  state  on the  applicable  quarterly Form CMS 37.1/37.3 for  its 
Medicaid-CHIP (MCHIP)  Expansion and Form CMS-21B  for a separate CHIP as 
described in 42 CFR 457.630(b),   as  applicable. 
  Form  CMS 64.21U/CMS 21  - CMS  will  reconcile such fiscal  years advance
o
CHIP  allotment  adjustment  based on actual recorded expenditures  submitted
through the  quarterly Form CMS  64.21U  for Medicaid-CHIP (MCHIP)
Expansion and Form  CMS-21 as  required by 42 CFR 457.630(c)  for CHIP, as 
applicable.  
  Please note:  Section 9821(c)  of  the  ARP  adds section 2104(m)(12)  to the  Act, 
o
which provides  for  an adjustment  to a states fiscal  year CHIP allotment,
beginning  with FY 2021,  related to the increased expenditures  associated with the 
100 percent EFMAP for vaccine  and vaccine  administration  under section
2105(c)(12)  of  the Act  for such  fiscal  year.  CMS  provided additional   information
regarding this provision  in the budget instructions   emailed to states  on August 5, 
2021. 
 
  MBES Modifications  - CMS  is working to modify  the MBES to reflect the  temporary
increased FMAP and EFMAP  under sections 1905(hh),   1905(ii),   2105(c)(12),  and the 
third sentence of  section 1905(b)  of the  Act.   Once the  MBES/CBES  is  modified,   the 
system will  enable state entry of expenditures  at  these  temporary matching rates, and will
apply the increases to actual  claimed expenditures.  Expenditure  reporting associated with
the temporary increased  matching rates  for the  third quarter  of  FFY 2021 may be 
delayed.  In those  cases,  states  may need to report  expenditures  associated with these rates 
through prior period adjustments  in subsequent quarters.  
 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
    Other Expenditure Reporting Information  - States  should follow existing federal 
requirements  regarding  the applicability   of a particular  match rate available for  a given 
quarter. The applicable  FMAP is  based on date of payment,  not date of service  for current 
quarter original   expenditures.   The FMAP  applicable   to expenditures  for  prior  period
adjustments  should be the FMAP at  which the original  expenditure  was  claimed,  for both
private and governmental  providers.  All  states  are  responsible  for reporting Medicaid and
CHIP collections   and overpayments  on the  Form CMS-64 and CMS  21,  as required by
our regulations.  States  must  report  overpayments  and collections   at the same match  rate
at which the expenditures  were  originally  claimed,  including  the temporary increased
FMAP or EFMAP  under 1905(hh),  1905(ii),   or 2105(c)(12)  of  the Act  or the  third
sentence  of  section 1905(b)  of the Act. Recoveries of FFP  must  be returned  at  the same
match  rate at which  they  were originally   claimed.  Therefore,  if  a Medicaid  or  CHIP 
expenditure  was  claimed using the  temporary increased FMAP or EFMAP  under section
1905(hh),  1905(ii),   or  2105(c)(12)  of the Act, or  the  third sentence  of  section 1905(b) of 
the Act,  the federal  share  of any recoveries associated with that expenditure  should be 
returned using the same temporary increased FMAP or EFMAP. Consistent  with existing
requirements, states  must  document  expenditures  to ensure  a clear audit  trail,  including
isolating  expenditures  that  are matched  at increased  FMAP or  EFMAP  rates. CMS  will 
conduct  oversight  to ensure that expenditures  are allowable,  accurate,  and are claimed  at 
the correct  FMAP rate.  
 
Section 5: Administrative Claiming  for  State-Funded Beneficiary Incentives for COVID-19 
and Influenza  Vaccinations   
Recently,  the Federal  government  and states  have  taken numerous  steps  to address COVID-19 
vaccine hesitancy and  to increase COVID-19 vaccination rates, because  of the significant   burden 
COVID-19  has had on the healthcare  system. In addition  to the strain on the healthcare  system  
from COVID-19, influenza  can place  a  substantial  burden on Medicaid and CHIP  providers and 
beneficiaries  each year.  Thus, in addition  to supporting  state  efforts to encourage uptake  of  
COVID-19 vaccinations  among Medicaid and  CHIP  beneficiaries, CMS supports  state efforts to  
encourage uptake  of influenza   vaccinations  among  Medicaid  and  CHIP beneficiaries.  Improved 
influenza  vaccination rates  may help to reduce strain on the healthcare system  and  better enable 
providers  to focus  on treating COVID-19  and  other conditions.    While all  vaccinations help to 
address the burden of disease,  both COVID-19 and influenza   have proven to be especially 
detrimental to  beneficiaries in  facility settings.  In addition,   as the  country enters into the  
influenza   season during an increase of COVID-19 cases and the return of many individuals   to in-
person academic and work settings,  it  is  of paramount importance  that  beneficiaries  access all  
resources necessary to avoid infections  and subsequent  medical  visits.    
CMS has received questions  from  multiple   states  about  whether  administrative   FFP is  available  
for state-funded monetary  incentives  to Medicaid and CHIP  beneficiaries  to encourage them  to  
get  a COVID-19 or influenza   vaccination.  We have determined  that  FFP  is available,  subject to  
applicable federal  requirements, for  state administrative   costs on monetary  incentives  funded  by 
states  and paid  to Medicaid and  CHIP beneficiaries  in an effort  to increase vaccination  uptake  for 
COVID-19 or influenza.  These  costs will  further  the efficient  administration  of the Medicaid and 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  CHIP  programs by encouraging COVID-19 and influenza  vaccination  uptake among Medicaid 
and CHIP  beneficiaries,  thereby reducing the incidence  of these diseases  and reducing  burden on 
the health  care system. We are available to provide technical  assistance to  states  that are 
interested in developing  beneficiary vaccine incentive programs and will  adjudicate  state  
proposals  on a case-by-case basis,  consistent  with the  existing  process  for administrative  
claiming  proposals.  Below, we  discuss the application  of this  policy  to help states  better  
understand which costs  they may  propose to claim  as administrative   costs  under  Medicaid and 
CHIP.  
Section 1903(a)(7)  of the Act  and implementing  regulations  at 42 CFR  433.15(b)(7)  specify  
payment of FFP  at  50 percent  for state  expenditures  found necessary by the Secretary for the  
proper and efficient  administration  of the  Medicaid  state plan.  Similarly,   states may  claim  for 
reasonable costs  incurred by the  state to  administer  the  CHIP state  plan  at state-specific rates for  
CHIP  under section 2105(a)(1)(D)(v)  of  the Act.8  CMS determines  which activities  fall under the  
definition  of administrative   expenditures  eligible   for FFP  under  these authorities.  CMS has  
consistently stated  that allowable claims  under  section 1903(a)(7)  must  be directly related to the  
administration  of  the Medicaid program,  and  therefore  must  be directly  related  to Medicaid  state  
plan  or waiver services.9   Similarly,   42 CFR 457.622(e)  provides  that  CHIP administrative  
expenditures should support the  operation  of  the State child  health  assistance plan,  and that, in  
general,  FFP  for administration  under title  XXI is not available  for  costs  of  activities  related to 
the operation of  other programs.  
CMS has determined that  paying  beneficiaries  a monetary incentive,   out  of  state funds,  to receive 
COVID-19 and influenza  vaccinations,  could be necessary for the proper  and efficient  operation 
of the Medicaid  state plan  and a  reasonable  cost of administering  the CHIP  state  plan in certain  
circumstances.  States  might  be able to establish that administrative   expenditures  on state-funded 
beneficiary  vaccine incentives  for  these vaccines  would increase uptake  of  these vaccines, and 
thus would lead to more efficient operation of  the  state  plan by significantly  reducing  the  
likelihood  of severe  COVID-19 and/or  influenza   disease burden among  vaccinated beneficiaries,  
thereby reducing  utilization  of health care  resources, improving   access to  health care providers  
for all beneficiaries,  and lowering  costs for  the  Medicaid and/or CHIP  programs. Moreover,  
encouraging  beneficiaries  to  get vaccinated  for COVID-19 and influenza  would  benefit even 
beneficiaries  who remain unvaccinated,  because it  would make  it  less likely  that unvaccinated 
beneficiaries  would  become ill  with  those diseases,  by  promoting   increased  population 
immunity.    
States that are interested  in  claiming   their expenditures  on state-funded COVID-19 or  influenza  
vaccine administration   incentives  as an  administrative  cost  in Medicaid or  CHIP  should submit  
an amendment  to their  Public  Assistance Cost  Allocation  Plan (PACAP),  which is  approved by 
                                                             
8  Administrative costs related to CHIP receive federal match at the states EFMAP rate for health care services, and  
therefore the matching rate for these costs varies by state. However, administrative costs for CHIP are limited  to 10  
percent of the states annual federal CHIP spending. See Section 2105(c)(2)(A) of the Act.  
9  See  State Medicaid Director Letter (Dec. 20,  1994)  (1994  SMDL), 
https://www.hhs.gov/guidance/document/allowable-administrative-costs.  
 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  HHSs  Division  of Cost  Allocation  Services (CAS),  with CMS concurrence.  As  is always  the 
case, CMS  recommends  that  states submit  the  proposed administrative   claiming  methodology  to 
CMS in advance of,  or concurrently with,  submission  to CAS for  review and approval  to 
expedite  the process.  CMS  will  review the proposal  using our  existing administrative   claiming 
criteria, as  outlined  in the  2003 Medicaid School-Based Administrative Claiming Guide,10  as 
well as cost  allocation   principles   at 2  CFR part  200.  Reported expenditures  must  be reasonable,  
allowable,  and allocable.  As  stated in  the  1994 SMDL,  Medicaid  state administrative  costs 
matched by CMS  may not  include  funding  for general  public  health initiatives   that are made  
available to  all  persons, such as  statewide vaccine initiatives,  unless  the campaign  is explicitly  
directed at assisting Medicaid-eligible   individuals   to access the Medicaid program.11 Other  
general  principles   from  the 1994 SMDL also apply (e.g., an allowable  administrative   cost must  
be  supported by a system  that  has  the capability  to isolate  the costs  directly related to the support  
of the Medicaid program  from  all  other costs  incurred by the  agency).  
To be considered for approval,  any state  proposal  for  vaccine incentives  would need to include  
safeguards  to ensure that the  incentive is received  only by the beneficiaries  or the guardians  of  
beneficiaries  who  receive a vaccine.  In addition,   any claims  for FFP must  meet documentation 
requirements  and are subject  to audit.  Documentation for administrative   activities  must  clearly 
demonstrate  that the activities  directly support  the administration  of the Medicaid or CHIP  
program.12  See  42 CFR 433.32(a)  and 457.226(a)  (requiring  that states  maintain  an accounting 
system and supporting  fiscal  records to assure  that claims  for federal funds  are in  accord with  
applicable federal requirements),  and 42 CFR 433.32(b)  and (c)  and 457.226(b)  and (c)  
(establishing  retention periods  for records  that support  claims  for  federal funds).  Also,  42 CFR  
457.622(e)  provides  that allowable  administrative   expenditures  under CHIP  should support the  
operation of  the  State child health assistance plan  and that generally,   FFP for administration 
under  title  XXI  is  not  available  for costs of activities  related to the operation of other programs.  
CMS may  also  ask  that a  state agree  to provide  an evaluation of the impact  of the federally 
matched incentives  on vaccine uptake.   Finally,   any state  proposal  to disseminate  state-funded 
vaccine  beneficiary incentives through health care providers  or managed  care plans  should 
include  appropriate safeguards  to prevent  abuse and to ensure  compliance with all existing 
federal requirements  regarding payments  to Medicaid  and CHIP  beneficiaries.    
For  managed care enrollees,  CMS would  permit  states to contract with  their  managed  care plans  
to disseminate state-funded  beneficiary  vaccine incentives  for COVID-19  and influenza   to 
beneficiaries  as an  administrative   activity. Any administrative   costs  or  payments  to the plans  
associated with  performing the  activities  associated with  beneficiary  vaccine incentives  must be  
paid separately on an administrative   cost basis  and not  included  in the risk-based  managed care 
capitation  rates  under  separate contracts or amendment  to an existing  contract. States could  pay 
the managed  care plans  for performing  the activities  associated with administering   these 
incentive programs  on a cost  basis  and then claim  FFP for those expenditures   under the  
administrative   cost  claiming  authorities  described above for  incentive  payments made  to 
beneficiaries  to incentivize   beneficiaries  to become vaccinated. States  should  ensure that  they 
                                                             
10  https://www.hhs.gov/guidance/document/2003-school-based-administrative-claiming-guidance.  
11  https://www.hhs.gov/guidance/document/allowable-administrative-costs.   
12  Id.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  receive the managed  care plan  data that is  necessary  for  any requested  evaluation of the  impact  
of the  federally-matched  incentives  on vaccine  uptake.  
Closing  
 
CMS is  committed to supporting states in their  efforts to provide  access  to COVID-19 
vaccinations.   CMS will  consider state  requests  for federal  matching funds for  their  
administrative   expenditures to pay beneficiaries monetary incentives to increase  uptake of  
COVID-19 and influenza  vaccinations.   As  discussed above, sections 9811 and 9821 of the  ARP  
provide  for coverage  of  COVID-19 vaccine  administration   and for  a temporary increase in 
FMAP and EFMAP for state  expenditures  on that  coverage.  CMS is  also  committed to working 
with states  on issues related to expanding their Medicaid programs to cover  certain  low-income  
adults  and  to helping  states access the temporary 100  percent  FMAP for  services  received  
through certain UIOs, NHHCs and NHHCSs.   CMS is available  to provide  technical assistance 
in  all  these areas.  
 
If you have specific  questions  regarding coverage SPAs, please contact  Kirsten Jensen  at 410-
786-8146.  
 
If you have specific  questions  about  submitting  a  Medicaid expansion SPA, please contact  Sarah  
Spector  at 410-786-3031.  
 
If you have specific  questions  about  submitting  reimbursement  SPAs, please  contact  Todd 
McMillion  at  312-353-9860.  
 
Sincerely,  
           
 
 
            Daniel Tsai  
Deputy Administrator   and Director  
 
   
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
   
Appendix    Application of the Increased FMAP under  Section 1905(ii) of the 
Act  
 
       
In general,  states  expenditures  for  medical  assistance are matched at the state-specific FMAP  
defined  in the first  sentence of section 1905(b)  of the  Act  unless otherwise specified in statute.  
For a  qualifying  state  defined under section 1905(ii)(3)   of the  Act,  the  FMAP  determined 
under  section 1905(b)  of  the Act  for such [s]tate  is  increased by 5 percentage points  for an  8-
quarter period under section 1905(ii)(1)   of the Act.   The  increased FMAP  under section 1905(ii)  
also applies  to qualifying  territories  FMAPs, which are  defined under  section 1905(ff) of the  
Act for  the  period  between December  21,  2019 and September 30,  2021,  so  the references  in this  
section to states  also include  the territories.13  
 
Because  the language  of section 1905(ii)   refers  to an increase in the FMAP  determined under  
section 1905(b)  for such [s]tate,  CMS will apply  the  temporary  5 percentage point  FMAP  
increase  under section 1905(ii)   of the Act  to expenditures  matched at the  state-specific FMAP  
defined in the first  sentence of section 1905(b)  of the  Act, with  certain  exceptions  as described  
below.   The definition  of the  state-specific  FMAP in  section  1905(b) is  modified   by language  
referencing other statutory provisions.   For example, the  first  sentence  of  section 1905(b) says  
that the state-specific FMAP  defined  in that  section is subject  to certain other provisions   of  
section 1905,  including   1905(ii).   However, some  of those other  provisions   of section 1905 also 
include language  indicating   that  the  FMAP described in the  provision  replaces the  FMAP in the  
first sentence  of section 1905(b)  entirely,  in which case  the section 1905(ii)   increase does not  
apply.   
 
Certain  other  statutory  provisions   increase the state-specific FMAP in  the first  sentence of  
1905(b)  of the  Act. The temporary 5 percentage point  FMAP  increase under  section 1905(ii)   of  
the Act  is  available in addition to certain  other  FMAP increases, including:    
  The 10 percentage point  increase  under  section 9817 of the ARP, which temporarily
increases the FMAP  by 10 percentage points,  up to 95 percent, for  allowable  medical 
assistance expenditures for  certain home and community-based  services  under  the Medicaid
program beginning  April  1,  2021, and ending March 31, 2022.  (Section  9817(a)  of the  ARP 
provides  that this 10 percentage  point  increase  is in addition  to any increase  applicable  under 
section 1905(ii)   of the  Act  but  in no case can  the  FMAP for these expenditures  exceed 95
percent).   
  The 1 percentage point  increase under  clause  (5) of the first  sentence  of  section 1905(b) of 
the Act for certain  preventive  services and  vaccinations  when  that increase is  applied  to the
states FMAP  as defined in section 1905(b)s  first sentence  (because this  increase is defined
in the first  sentence of section 1905(b)).  
                                                             
13 Section 1905(ii)(2)(D) provides that the temporary FMAP increase for territories expenditures under section  
1905(ii) is  not taken into account for the purposes of applying the caps on federal matching funds under section  
1108(f) and (g) of the Act.  
 
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
    The  6 percentage  point  increase  for Community  First Choice  (CFC)  expenditures  under 
section 1915(k)  of the  Act  (which  is an increase to  the FMAP  applicable  to  the State (as 
determined under section 1905(b)),14   and thus  increases the FMAP  in section 1905(b)s  first 
sentence). 
  The increased FMAP for expenditures  related to the Money Follows  the Person
demonstration  program  defined in the Deficit  Reduction Act of 2005  (Pub. L.  109-171), 
section 6071(e)(5)  (because that  law  expressly  states that  this  FMAP increase is to  the FMAP 
defined in section 1905(b)s  first sentence). 
  The 6.2 percentage  point  FMAP  increase to  the state-specific FMAP  defined in  the first
sentence of  1905(b)  of  the  Act  as provided under  section 6008 of the FFCRA  for states  and
expenditures  that  qualify for that temporary FMAP  increase  (because this  is authorized by
the language  of  section  1905(ii),   but  note  that not  all  expenditures  can qualify for both
increases). 
Section 1905(ii)(2)   of  the Act  explicitly  precludes  the application  of the temporary 5 percentage  
point  FMAP increase  to certain types of  expenditures.  Specifically,  section 1905(ii)(2)  provides  
that this increase:   
  Does  not  apply with respect to Medicaid disproportionate   share hospital  (DSH) payments  
under  section 1923 of the Act (note that  because the federal match  rate  for DSH 
payments  can be increased  by the FFCRA section 6008 increase, this is an example of 
when  the  two FMAP  increases  under section 1905(ii)   and FFCRA  section 6008 do not 
both apply  to the same expenditure  category). 
  Is not  taken into account when calculating  the enhanced FMAP determined under  section
2105(b)  of the  Act, which is  the federal match rate  for: 
  Child health assistance  expenditures for  targeted low  income children  as defined
o
in section 2110 of the  Act  (separate CHIP);  expenditures for  optional  targeted low 
income children as provided under  section 1905(u)  of  the Act  (Medicaid-CHIP 
expansion)  as applicable; qualifying  state  expenditures described under  section
2105(g)  of the  Act, and most  expenditures  identified   under section 2105(a)(1)(D) 
of the Act  including   payments for other  child  health  assistance for targeted low-
income children, health services  initiatives  (HSIs),  outreach  activities,  and other 
reasonable costs  incurred by the  State  to administer  the plan;  
  Expenditures  for individuals   eligible   for medical  assistance  on the  basis of 
o
needing treatment for  breast  or  cervical cancer  (see clause 4 of section  1905(b)s 
first sentence);  and  
  Expenditures  for services provided to  certain enrollees  under  the Certified
o
Community  Behavioral Health Clinics  program (see section  223(d)(5)(B)  of  the 
Protecting  Access  to Medicare Act  of 2014,  Pub. L.  113-93).  
  Is not  taken into account  for the  purposes  of block grants for  TANF, supporting
enforcement  of child support  obligations,   or foster care  and transitional  independent 
living  programs under Titles  IV-A, IV-D, or IV-E of  the  Act. 
 
                                                             
14  Section  1915(k)(2)  of  the Act.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  Additionally,   because the 5 percentage point  FMAP increase under section 1905(ii)   does not  
apply to expenditures  that are not matched at the  state-specific  FMAP defined in the first  
sentence  of  section 1905(b)  of the Act,  there are several  other  state expenditures  to  which  the 
section 1905(ii)   increase does  not  apply. This includes  any expenditure  for which the  FMAP  is  
defined under other  provisions   of the  Act.  For example,  while  the  first sentence  of section 
1905(b)  is  subject  to the FMAP in section 1933(d)  relating to the Qualifying  Individuals  
program, the  FMAP  in section 1933(d)  is not a  state-specific FMAP  defined under section 
1905(b),  so it is not increased under section 1905(ii).   Additionally,  as  discussed above, other  
expenditures  are matched  at  FMAPs  defined in provisions   that the first sentence of  section 
1905(b) is  subject to,  but the  language  defining those FMAPs  indicates  that  they are  meant to 
supersede or replace the state-specific FMAP entirely.  Accordingly,   the following   categories of  
expenditures, in addition to those  listed in section 1905(ii)(2),   are not  eligible  to receive the 5  
percentage point  FMAP increase  under  section 1905(ii)   of the Act:  
   Expenditures  matched at  the  various  federal financial  participation  (FFP) rates  provided 
in  sections  1903(a)(2) through (a)(7)  of the Act  (such as  administrative   expenditures  and 
expenditures  for  family planning  services and supplies).  
   Expenditures  matched at the disaster-recovery FMAP  specified  in section 1905(aa)  of  
the Act.  
   Adult group expenditures matched at  the  newly eligible   FMAP  specified in section 
1905(y)  of the  Act.   
   Adult group expenditures matched at  the  expansion state  FMAP  specified in section 
1905(z).  
   Expenditures for  medical assistance services  received through  the following  types of  
facilities,  which  are matched at 100  percent FMAP  under  the third sentence  of section 
1905(b)  of  the  Act (i.e.,  not the  first sentence  of  that section):  
   An IHS facility  (including   facilities  operated by an Indian tribe or tribal  
o
organization   under  the ISDEAA);15  
   A UIO  (as defined at 25 U.S.C.  1603(29))  that has a grant or contract with the  
o
IHS  under  title  V of  the IHCIA,  from  April 1,  2021 through March 31, 2023;16  or   
   An  NHHC or  NHHCS  (as  described above), from April  1, 2021 through March 
o
31, 2023.  
   Expenditures  matched at 100 percent for individuals   in Qualifying  Individuals   programs.   
under section 1933(d)  (see  discussion  above).  
   Expenditures  for  health home  services under  section 1945 of the Act  when matched at the  
90 percent FMAP as specified in section 1945(c)(1).  After the  initial   increased FMAP  
period for these services that is  described in section 1945(c)(1)  ends,  expenditures on  
section 1945 health home  services  may be eligible   for the 5 percentage point  increase  
under  section 1905(ii)   of the  Act.  
   Expenditures  for  health home  services for children with medically  complex conditions  
under  section 1945A  of the Act, when qualifying  expenditures  receive a temporary 15 
                                                             
15 As discussed above, 100 percent FMAP will be limited  to expenditures for services received by American Indian  
and Alaska Native (AI/AN) Medicaid beneficiaries through IHS facilities (including those operated by Tribes or 
Tribal organizations  under the ISDEAA). 
16  As discussed above, 100 percent FMAP will apply to expenditures  for services  received by all Medicaid  
beneficiaries through UIOs, NHHCs, and NHHCSs.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.  
  percentage point  FMAP increase as  described in section 1945A(c)(1) of the  Act. After the  
increased FMAP period for these services that is  described in section 1945A(c)(1)  ends, 
expenditures on section 1945A  health home  services may be eligible   for the 5 percentage  
point  increase under  section 1905(ii)   of the Act.  
  Expenditures  for medical  assistance for COVID19 vaccines and the administration  of 
these vaccines,  which  are matched  at 100  percent FMAP  [n]otwithstanding  any other 
provision  of this title  under  section 1905(hh)  of the Act, as  added by section 9811 of  the 
ARP. 
  Expenditures  for qualifying  community-based  mobile   crisis  intervention  services  under 
section 1947 of the Act as  added by section 9813 of  the ARP,  for  the applicable  12-
quarter period that  they are  matched at  85 percent FMAP, unless  application   of  the 5
percentage point  increase under  section 1905(ii)   to the states  regular  FMAP defined in
the first  sentence of  section 1905(b) would result  in an FMAP  higher  than 85 percent  (in 
which case  that higher  FMAP applies  to those expenditures).17   
  Expenditures  eligible   for 100 percent FMAP  for services furnished to  beneficiaries 
eligible   under  the optional  COVID-19  group defined in section 1902(a)(10)(A)(ii)(XXIII) 
of the Act, as added by section 6004 of the FFCRA.   The federal matching  rate for these
expenditures  is defined in the  last sentence  of section 1905(b)  of  the  Act, not  the first.  
                                                             
17  See section 1947(c) of the Act.  
The contents of this document do not have the force and effect of law and are not meant to bind the public in any  
way, unless specifically incorporated into a contract.   This document is intended only to provide clarity to the public  
regarding existing requirements under the law.