HHS Fact Sheet: Working to Solve the Health Care Challenges in Puerto Rico

“We are committed to continuing our work to strengthen Puerto Rico’s health care system and improve health outcomes on the island using available administrative authorities,” said HHS Secretary Sylvia M. Burwell. “However, a true solution for the 3.5 million Americans living in Puerto Rico, including reforms to strengthen Puerto Rico’s Medicaid program, such as raising the federal share of Medicaid funding, requires Congress to act.”

The U.S. Department of Health and Human Services (HHS) has taken a number of steps to help ensure that residents of Puerto Rico continue to have access to quality and affordable health care. While the bipartisan passage of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA, P.L. 114-187) was another important step forward, there is still critical work needed to be done to solve Puerto Rico’s health challenges.

HHS is committed to using all our available authorities to address this crisis – including by making investments in Puerto Rico’s health care system, responding to the spread of the Zika virus, and making improvements to the Commonwealth’s treatment under Medicare payment systems. However, the most meaningful measures for Puerto Rico, including those needed to avoid the loss of health care coverage for up to 900,000 Americans, will require legislation. The Administration stands ready to work with Congress to take these critical next steps.

Insufficient and unstable funding for Medicaid has contributed to Puerto Rico’s fiscal challenges and endangered access to health coverage. Given the current treatment of Puerto Rico and the other territories under federal law, the 3.5 million Americans living in Puerto Rico have substandard access to health care treatments compared to the rest of the nation. Despite the significant one-time funding increase provided in the Affordable Care Act, up to 900,000 Americans living in Puerto Rico could lose their healthcare coverage when those funds run out as early as December 2017.

The Administration has proposed to reform and Strengthen Puerto Rico’s Medicaid Program. Specifically, the President’s FY17 Budget proposal would make the Medicaid program in Puerto Rico and the other territories like those in States, and is integral to the Administration’s broader roadmap to financial stability for Puerto Rico. The proposal puts forward three core reforms to raise the standard of care in Puerto Rico to a level that better aligns with what is available on the mainland, including:

1. Lift the Federal Cap on Medicaid Funding to Puerto Rico and the Other U.S. Territories. Currently, federal Medicaid spending in the territories is subject to an annual limit, which prevents the program from flexibly responding to public health emergencies or growing needs. States are not subject to any annual cap.
2. Raise the Federal Medicaid Share from 55 percent to 83 percent over Time. Currently, the federal Medicaid matching rate for territories is statutorily set at 55 percent. The proposal would immediately increase the federal share to 60 percent and raise it up to 83 percent as Puerto Rico and the other territories successfully strengthen and modernize their Medicaid programs.
3. Expand Eligibility to 100 percent of the Federal Poverty Level. Eligibility in Puerto Rico and some other territories is lower than what it is in states. The proposal would gradually expand eligibility to anyone who is earning less than 100 percent of the federal poverty level

Responding to the Zika Virus

Zika is a serious public health challenge. In Puerto Rico, as of October 5, 2016, there are more 23,000 cases of local Zika transmission, CDC projects that a quarter of the island’s population may be infected with Zika in its first year. Despite this imminent threat, financial constraints have complicated the timely and comprehensive response required.

The Zika supplemental funding that Congress included in the Continuing Resolution provides over $100 million in funding to support health centers and providers and reimburse costs of health care for conditions related to Zika in territories with the highest rates of Zika transmission, which will increase Puerto Rico’s capacity to respond to emergent and growing health needs.  Funding in the legislation will also expand mosquito control programs to reduce transmission of the Zika virus by Aedes Aegypti mosquitos and enhance laboratory capacity for Zika and other infectious disease testing in Puerto Rico and the U.S. Territories. 

While reforming Puerto Rico’s Medicaid program to provide a higher standard of care is the single most important measure, the Administration has also implemented and proposed several changes to the Medicare program to expand resources for health care providers and ensure beneficiary access to care on the island. 

• Improve Hospital Payments Related to Low Income Patients and Uncompensated Care. In FY 2017, the Centers for Medicare & Medicaid Services CMS will use a new formula to estimate uncompensated care in Puerto Rico hospitals that is expected to increase these payments to Puerto Rico hospitals by 12.6 percent, or $8.4 million.  In addition, the FY17 Budget proposes to give the Secretary authority to make a similar adjustment when determining Medicare disproportionate share (DSH) payments for Puerto Rico hospitals to better account for the higher costs of low income patients in Puerto Rico. 
• Increase Payment Rates for Hospitals in Puerto Rico
  • Operating IPPS – HHS implemented legislation passed by Congress aligning the formula for operating IPPS payments to hospitals in Puerto Rico with the formula used in the 50 states, increasing hospital payment rates in the Commonwealth by approximately 5 percent. 
  • Capital IPPS – CMS also made a parallel change to the formula for capital IPPS payments to hospitals in Puerto Rico, beginning in FY 2017. This change is expected to increase payments to Puerto Rico hospitals by $350,000.
• Increase Payment Rates for Physicians’ Services in Puerto Rico. CMS has proposed revisions to the Geographic Practice Expense Indices (GPCIs) that would benefit physicians and other practitioners in Puerto Rico in 2017, which is expected to result in a nearly 10 percent increase in Medicare physician fee schedule payments in Puerto Rico.
• Supporting a Healthy Medicare Advantage Program. In 2017, at the direction of the Secretary, the CMS Office of the Actuary will adjust the calculation and projection of the Medicare fee-for-service experience in Puerto Rico, which will increase payments to Medicare Advantage plans operating in Puerto Rico, to account for possible underestimation of expenses from the normal rate setting mechanisms.  CMS will also implement a revised MA risk adjustment model that will increase the payments made to all plans, not just in Puerto Rico, that enroll a large proportion of full benefit dually eligible enrollees.  Based on CMS’ modeling, Puerto Rico would benefit more from these changes than any other state or territory.
• Medicare Advantage and Part D Star Ratings for contracts operating in Puerto Rico. In 2017, CMS will adjust the Medicare Advantage Star Ratings for contracts with a high percentage of dual eligible enrollees, enrollees who receive a Low Income Subsidy, and enrollees with disabilities.  This change will benefit health plans in Puerto Rico since it also accounts for the impact of the absence of the Low Income Subsidy in Puerto Rico.  In addition, CMS will adjust the weights of certain Star Ratings measures related to medication adherence to recognize that beneficiaries in Puerto Rico do not qualify for the Low Income Subsidy.

More detail on additional administrative actions will be made available as part of ongoing rulemaking activity. 

The Administration continues to make ongoing investments to improve the quality and accessibility of the health care system in Puerto Rico.

From 2009-2016, HHS has invested significant resources in the Commonwealth through programs to expand early childhood education and child care programs; provide access to health insurance and health care services through the Children’s Health Insurance Program (CHIP) and Medicaid; support food safety and security monitoring projects, and help people with disabilities and older adults live with dignity and independence. In April 2016, HHS awarded $5 million to 20 HRSA Health Center Program grantees in Puerto Rico to fight the spread of the Zika virus. Health centers are using this funding to expand their outreach, patient  education, voluntary family planning services, including contraceptive services, and/or testing and treatment services related to Zika.   In 2015 health centers in Puerto Rico served nearly 347,000 people, including more than 84,000 women ages 15 to 45.  Services provided include: prenatal care to nearly 3,300 pregnant women; delivery of more than 1,100 babies and contraceptive management services to 11,555 people.