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Capitol to Capitol | Jan. 17, 2023

January 17, 2023

Administration Updates

States Face Significant Penalties for Failure to Comply With Medicaid Redetermination Requirements

The Consolidated Appropriations Act of 2023, signed into law on Dec. 29, 2022, decouples Medicaid’s continuous eligibility requirement from the COVID-19 public health emergency. The requirement will end on March 31, and guidance from the Centers for Medicare & Medicaid Services provides states with the flexibility to begin redeterminations in the month before, during or after the end of the continuous enrollment mandate. As such, states are authorized to begin their Medicaid redeterminations as early as Feb. 1, regardless of the expiration of the emergency. Redeterminations must be completed by May 31, 2024. The enhanced federal medical assistance percentage (FMAP), currently at 6.2%, that had been in place during the emergency will be phased out over the coming year as follows: 6.2% in the first quarter, 5% in the second quarter, 2.5% in the third quarter and 1.5% in the fourth quarter.

Before the appropriations act, the enhanced FMAP would have been terminated at the end of the quarter following the expiration of the emergency.

To be eligible for the enhanced funding during the phaseout period, states must meet new and existing requirements, including:

  • Conducting renewals in accordance with federal requirements—including using flexibilities to prevent enrollees from being disenrolled for procedural reasons.
  • Making a good faith effort to locate enrollees for whom mail has been returned.
  • Complying with data reporting requirements specific to the unwinding process between July 2023 and June 2024 that include, among other key data points:
    • Number of eligibility renewals initiated.
    • Number of enrollees renewed.
    • Number of enrollees whose coverage was terminated—and those who were terminated for procedural reasons.

States that fail to comply with the data reporting provisions may be subject to a .25 percentage points reduction in the state’s FMAP for every quarter of noncompliance. In addition, any state that fails to comply with other unwinding requirements may be required by CMS to suspend procedural disenrollments and submit a corrective action plan. Failure to submit or implement a corrective plan could result in civil penalties up to $100,000 per day.

Beyond the unwinding requirements, the appropriations bill contains a number of other Medicaid provisions, including continuous coverage for kids, extension of the FMAP for the U.S. territories, and a permanent state option for postpartum coverage. See this summary from NCSL’s Medicaid team.

Education Department Releases Proposed Income-Driven Repayment Regulation

The regulations would provide a more generous income-driven repayment option compared with existing plans by amending the current Revised Pay as You Earn (REPAYE) program. Under the proposal, the cap on a borrower’s income that is protected from repayment would increase to 225% of the federal poverty line compared with the current 150% limit. This would mean that borrowers with incomes below $30,600 for individuals and $62,400 for families of four would have no monthly payments. The new plan would decrease monthly repayment rates for borrowers with undergraduate debt to 5% of their discretionary income above the protected income limits, down from 10% under current plans. Borrowers with graduate debt would still pay 10% of their discretionary income but would pay a weighted monthly average based on their share of undergraduate and graduate debt. Additionally, any unpaid interest above a borrower’s monthly payment would be waived and not capitalized on the principal, thus ending negative amortization.

Borrowers with original principal balances of $12,000 or less would qualify for forgiveness after 10 years, with each additional $1,000 of borrowing adding an additional year until forgiveness. Borrowers, regardless of their principal balance, would have their remaining balance forgiven after 20 years of successful repayment for undergraduate borrowers and 25 years for graduate borrowers. Certain periods of loan deferment or forbearance would also receive credit toward forgiveness for all income-driven plans. Borrowers who are at least 75 days delinquent on payments would automatically be enrolled in an income-driven plan if the department is authorized to access the borrower’s income from the IRS. Defaulted borrowers would also be granted access to an income-driven plan for the first time.

Finally, the department would phase out new enrollments on other income-driven plans to make the amended REPAYE the primary option for borrowers. Comments on the proposed rule are due by Feb. 10. Read more.

EPA to Host Webinar on State and Local Environmental Justice Program

The Environmental Protection Agency announced the availability of $100 million for projects that advance environmental justice in underserved or overburdened communities. The funding will be split between two buckets—the Environmental Justice Collaborative Problem-Solving Program Cooperative Agreement Program, which will provide $30 million directly to community-based nonprofits, and the Environmental Justice Government-to-Government (EJG2G) Program, formerly known as the State Environmental Justice Cooperative Agreement Program, which will provide $70 million. Of that amount, $20 million will be for state governments, $20 million for federally recognized tribal nations and $10 million for territories and remote tribes. The EJG2G program works to support state activities that lead to measurable environmental or public health results in specific communities. Applicants must submit proposals by April and should plan for projects to begin October 2023.

The EPA will host pre-application assistance webinars to answer questions about the grant process. To attend the Jan. 26 webinar, register here.

Congressional Updates

House Establishes New Financial Services Subcommittee on Digital Assets

Rep. French Hill, R-Ark., will serve as the inaugural chairman of the Subcommittee on Digital Assets, Financial Technology and Inclusion. The new panel's responsibilities will include providing directives to federal regulators who oversee the burgeoning industry and cultivating policies to reach underserved communities. Read more.


18 States and DC Request SCOTUS to Weigh In on State Rail-Crossing Regulatory Responsibilities

Attorneys general of 18 states and the District of Columbia have called on the U.S. Supreme Court to uphold state authority to regulate blocked railroad crossings and prevent the stripping of states’ authority “to regulate grade crossings in the interest of public safety.”

The attorney generals have requested that the court overturn a lower court’s decision that the federal ICC Termination Act, which created the Surface Transportation Board to oversee rail carriers and the Federal Railroad Safety Act, preempts existing laws limiting how long stopped trains may block crossings. In the amicus brief, states claim nowhere in statute is power stripped from the states to enact anti-blocking laws. The Federal Railroad Administration, which maintains the blocked crossing incident reporter website, determined that out of 18,000 incidents reported in 2020 and 2021, only 900 were investigated. If the court takes the case, it is likely to be significant as 37 states and the District of Columbia have adopted statutes or regulations related to blocked grade crossings. Read more.

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