Federal Reimbursement Allowance

Financial DesignMissouri’s Federal Reimbursement Allowance program directly benefits Missouri’s economic and health care infrastructure. This highly successful public/private partnership serves as a model of vision, creativity and cooperation.

  • FRA History
  • FRA Tutorial
  • FRA Reports

More than 20 years ago, Missouri’s health care and governmental leaders were facing significant budgetary challenges. In response, the FRA program began in 1991 as a voluntary program; it was expanded and enacted into law as a provider tax in 1992. Hospitals provide funds to the state, and Missouri’s Medicaid program (now called MO HealthNet) uses these funds to earn federal matching dollars.

The FRA program has evolved to maximize federal matching dollars and reduce the burden of MO HealthNet on state general revenue. The FRA is a major source of revenue to the state, surpassing all but the two largest sources of general revenue. Today, it is a major funding stream for MO HealthNet. This releases traditional general revenue to be used for other state priorities.

Milestones in the FRA Law

MHA developed an FRA Tutorial to help its members better understand how the FRA funds are used and the role of MHA Management Services Corporation in the process. Navigate this interactive PDF using the links and bookmarks within the file. View your hospital's specific information using this secure link. A password is required. Email Kathy Hasenbeck or contact her at 573/893-3700, ext. 1344 to request a password.

Start the FRA Tutorial

Economic Impact of Proposed Cap on Provider Taxes on Missouri
MHA, in partnership with Associated Industries of Missouri and the University of Missouri, has produced a state-specific analysis of the possible impacts of proposed federal caps on provider taxes. The researchers found a reduction in the Federal Reimbursement Allowance from 6 percent of hospital revenue to 3.5 percent, as proposed by President Obama, would reduce Missouri’s federal share of Medicaid funding by $2.4 billion between 2015 and 2018. In addition, the researchers outlined the potential consequences by 2018 of the revenue loss, including a reduction in hospital employment of nearly 16,500 workers, elimination of Medicaid eligibility of nearly 200,000 beneficiaries and cost-shifts of more than $700 per commercially insured resident. The total economic impact on the state’s economy, including direct, indirect and induced impacts of the reduction, would be $13.2 billion statewide by 2018.