New Jersey Did Not Comply With Recovery Act Requirements for Receiving Increased Federal Medicaid Assistance

Under the American Recovery and Reinvestment Act of 2009 (Recovery Act), States were eligible for a temporary increase in Federal medical assistance percentage (FMAP) only if they did not require political subdivisions (e.g., counties and local school districts) to pay a greater percentage of the non-Federal share of Medicaid expenditures during the recession-adjustment period (October 1, 2008, through December 31, 2010) than the percentage required under the State Medicaid plan during the 12-month period ended September 30, 2008 (base period).

New Jersey did not comply with the political subdivision requirement for receiving the increased FMAP under the Recovery Act. In the aggregate, New Jersey's political subdivisions contributed 4.84 percent of the non-Federal share of Medicaid expenditures during the base period and 6.35 percent of the same share during the recession-adjustment period-a difference of 1.51 percent. We calculated that New Jersey could demonstrate compliance with the political subdivision requirement if it redistributed approximately $45.2 million to its political subdivisions.

New Jersey's political subdivisions contributed a greater percentage of the non-Federal share of Medicaid expenditures during the recession-adjustment period than during the base period because the New Jersey Department of Human Services (State agency) did not adjust its requirements for these contributions to ensure compliance with the political subdivision requirement before the State agency accessed increased FMAP funds.

We recommended that the State agency (1) redistribute approximately $45.2 million in increased FMAP funding to its political subdivisions to comply with the political subdivision requirement and (2) work with CMS to ensure that, for the 6-month Recovery Act extension period ended June 30, 2011, political subdivisions did not contribute a greater percentage of the non-Federal share of Medicaid expenditures than the percentage required under the State Medicaid plan on September 30, 2008.