Common use of Enforcement of Budget Neutrality Clause in Contracts

Enforcement of Budget Neutrality. CMS will enforce budget neutrality over the life of the demonstration, rather than annually. However, no later than 6 months after the end of each DY or as soon thereafter as the data are available, the state will calculate annual expenditure targets for the completed year. This amount will be compared with the actual claimed FFP for Medicaid. Using the schedule below as a guide, if the state exceeds these targets, it will submit a corrective action plan to CMS for approval. The state will subsequently implement the approved corrective action plan. Year Cumulative Target Expenditures Percentage DY 2015 DY 4 budget limit amount +2 percent DY 2016 DYs 4 through 5 combined budget limit amount +1.5 percent DY 2017 DYs 5 through 6 combined budget limit amount +0 percent Failure to Meet Budget Neutrality Goals. The state, whenever it determines that the demonstration is not budget neutral or is informed by CMS that the demonstration is not budget neutral, must immediately collaborate with CMS on corrective actions, which must include submitting a corrective action plan to CMS within 21 days of the date the state is informed of the problem. While CMS will pursue corrective actions with the state, CMS will work with the state to set reasonable goals that will ensure that the state is in compliance.

Enforcement of Budget Neutrality. CMS will enforce budget neutrality over the life of the demonstration, rather than annually. However, no later than 6 months after the end of each DY or as soon thereafter as the data are available, the state will calculate annual expenditure targets for the completed year. This amount will be compared with the actual claimed FFP for Medicaid. Using the schedule below as a guide, if the state exceeds these targets, it will submit a corrective action plan to CMS for approval. The state will subsequently implement the approved corrective action plan. Year Cumulative Target Expenditures Percentage DY 2015 DY 4 10 budget limit amount +2 percent DY 2016 DYs 4 10 through 5 11 combined budget limit amount +1.5 percent DY 2017 DYs 5 11 through 6 12 combined budget limit amount +0 percent Failure to Meet Budget Neutrality Goals. The state, whenever it determines that the demonstration is not budget neutral or is informed by CMS that the demonstration is not budget neutral, must immediately collaborate with CMS on corrective actions, which must include submitting a corrective action plan to CMS within 21 days of the date the state is informed of the problem. While CMS will pursue corrective actions with the state, CMS will work with the state to set reasonable goals that will ensure that the state is in compliance.