CMS NEWS
FOR IMMEDIATE RELEASE
November 12, 2019
Contact: CMS Media
Relations
(202) 690-6145 | CMS Media Inquiries
Trump Administration Proposes Historic Steps to Strengthen
Oversight and Fiscal Integrity of the Medicaid Program
Proposed Rule Would Promote State Accountability on Medicaid Payments through Improved Transparency and Accountability
Today, the Trump
Administration and the Centers for Medicare & Medicaid Services (CMS)
issued a notice of proposed rulemaking to strengthen the fiscal integrity of
the Medicaid program and help ensure that state supplemental payments and
financing arrangements are transparent and consistent with all applicable
statutory requirements.
The proposed Medicaid
Fiscal Accountability Rule (MFAR) would take historic steps to ensure
transparency in Medicaid payments and clamp down on impermissible financing
arrangements to ensure that federal Medicaid dollars are spent in ways that
support the direct needs of Medicaid beneficiaries. The proposed rule aims to
strengthen accountability, increase transparency of Medicaid payments, and
improve program integrity to ensure the Medicaid program is sustainable for
future generations.
“We have seen a
proliferation of payment arrangements that mask or circumvent the rules where
shady recycling schemes drive up taxpayer costs and pervert the system,” said
CMS Administrator Seema Verma. “Today’s rule proposal will shine a light on
these practices, allowing CMS to better protect taxpayer dollars and ensure
that Medicaid spending is directed toward high-value services that benefit
patient needs.”
States often make
additional payments to providers above the normal reimbursement for billed
services. Oversight agencies, including the Government Accountability
Office (GAO) and Office of Inspector General (OIG), have recommended changes
to better oversee and understand these Medicaid supplemental payments, which
have steadily increased from 9.4 percent of all other Medicaid payments in FY
2010 to 17.5 percent in FY 2017. The proposed rule will address several
additional areas of program vulnerabilities while clarifying existing
financial policies. The proposed rule would establish new requirements
for states to report provider-level information on Medicaid supplemental
payments, responding to calls from oversight organizations to increase
transparency.
CMS is aware of numerous
schemes states have used that are not consistent with federal statute. Some
examples include states that generate extra payments for private nursing
facilities that enter into arrangements with local governments to bypass tax
and donation rules, and the use of a loophole to tax managed care entities 25
times higher for Medicaid business than for similar commercial business.
States can then use that tax revenue to generate additional payments, with no
commiserate increase in state spending.
Many of the
vulnerabilities in Medicaid financing arise from high risk financing
mechanisms that states have used, or sought to use, to finance the state
portion of Medicaid payments. These include intergovernmental fund transfers,
certified public expenditures, provider taxes, and provider donations that
provide additional payments to institutions with no clear link to improving
care for patients. The proposed rule would provide clearer guidance on
the law to states and other stakeholders, help close regulatory loopholes,
and improve reporting to help CMS ensure that states fund their share of
payments to providers through only permissible sources and with methodologies
that comport with statutory requirements and align with Medicaid program
goals.
The proposed rule would
also clarify Medicaid financing definitions by proposing new regulatory
definitions for Medicaid “base” and “supplemental” payments, which would
allow CMS to better monitor and enforce statutory requirements around the
non-federal share of Medicaid expenditures and regulatory requirements for
upper payment limits. It would also clarify definitions and processes
associated with provider ownership categories to close loopholes that have
allowed states to attempt to inappropriately fund their share of Medicaid
expenditures and to be more consistent with the statute.
To ensure payment
arrangements align with both state and federal Medicaid program goals, states
would also be required to sunset supplemental payments and tax waivers after
no more than three years, with the option to request renewal.
Comments on the proposals
will be due 60 days from the release of the NPRM.
To view a summary of the
proposed changes, visit Medicaid.gov at: https://www.medicaid.gov/federal-policy-guidance/downloads/reg111219.pdf
For a copy of
Administrator Verma’s November 12, 2019 speech at the National Association of
Medicaid Directors conference, click here: https://www.cms.gov/newsroom/press-releases/cms-administrator-seema-vermas-speech-national-association-medicaid-directors-washington-dc
For more information, you
can refer to the fact sheet here: https://www.cms.gov/newsroom/fact-sheets/fact-sheet-2019-medicaid-fiscal-accountability-regulation-mfar
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Tuesday, November 12, 2019
Trump Administration Proposes Historic Steps to Strengthen Oversight and Fiscal Integrity of the Medicaid Program
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