Medicaid Program; Change in Application of Federal Financial Participation Limits

This final rule changes the current requirement that limits on Federal Financial Participation (FFP) must be applied before States use less restrictive income methodologies than those used by related cash assistance programs in determining eligibility for Medicaid. This change was originally published as a proposed rule on October 31, 2000 (65 FR 64919). This regulatory change is necessary because the current regulatory interpretation of how the FFP limits apply to income methodologies under section 1902(r)(2) of the Social Security Act (the Act) unnecessarily restricts States' ability to take advantage of the authority to use less restrictive income methodologies under that section of the statute. While the enactment of section 1902(r)(2) of the Act could be read in the limited manner embodied in current regulations the statute does not require such a reading, and subsequent State experience with implementing section 1902(r)(2)of the Act calls into question the current regulation's approach.