CMS withdraws Medicaid Fiscal Accountability Rule

Sept. 16, 2020

The Centers for Medicare & Medicaid Services (CMS) plans to withdraw its proposed Medicaid Fiscal Accountability Rule from the Federal Register, CMS Administrator Seema Verma announced on Twitter.

“We’ve listened closely to concerns that have been raised by our state and provider partners about potential unintended consequences of the proposed rule, which require further study. Therefore, CMS is withdrawing the rule from the regulatory agenda,” Verma tweeted.

CMS still must formally withdraw the rule through a notice published in the Federal Register.

The American Hospital Association (AHA) and other provider groups opposed the rule, saying it would have curtailed healthcare services for Medicaid enrollees.

In a statement released in response the CMS announcement, AHA Executive Vice President Tom Nickels said, “Up to $50 billion in annual funding for the Medicaid program was on the line, cuts that would have crippled state financing and limited access to care, especially in rural and underserved areas. Hospitals and health systems will be greatly relieved when the proposed rule is formally withdrawn.”

CMS originally proposed the rule in November 2019, saying it would “strengthen the fiscal integrity of the Medicaid program and help ensure that state supplemental payments and financing arrangements are transparent and value-driven.”

Part of the issue was growth in the federal share of Medicaid spending, particularly for what are known as supplemental payments, which are additional payments to providers beyond the base Medicaid payment for particular services. In addition, CMS said that it did not have enough detailed information about state Medicaid spending to perform the agency’s oversight functions.

CMS has said that Medicaid spending grew from $456 billion in 2013 to an estimated $576 billion in 2016, and that much of the spending growth came from the federal share that grew from $263 billion to an estimated $363 billion during the same period. CMS said these supplemental payments have steadily increased from 9.4 percent of all other payments in 2010 to 17.5 percent in 2017.

Among the changes in the proposed rule, CMS would have required states to report financing information about Medicaid expenditures at the individual provider level and limited renewals of supplemental payment methodologies to three years.

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