CCF Submits Comments on Harmful Trump Administration Medicaid Financing and Supplemental Payment Rule

CCF has submitted public comments to the Centers for Medicare and Medicaid Services (CMS) proposed “Fiscal Accountability” rule which could significantly change how states finance their share of the cost of Medicaid programs and how states provide supplemental payments to hospitals, nursing homes, physicians and other health care providers.

As my recent Health Affairs blog post explains, the proposed rule could throw existing state financing and supplemental payment arrangements into chaos, seriously undermine state budgets and substantially threaten the financial viability of providers serving Medicaid beneficiaries.  As a result, many low-income beneficiaries, including millions of children and their families who now rely on Medicaid for their health coverage, could see sharply reduced access to needed care if states are forced to make sizable budget cuts to their Medicaid programs because they are unable to raise other revenues and increase provider payments in other ways.

We encourage you to submit your own comments here by the February 1, 2020 deadline.

Our comments make the following points:

  1. The proposed rule would make major changes to current, longstanding federal requirements related to state financing and supplemental payments. 

    The proposed rule would establish new broad, ill-defined standards of review and approval of financing and supplemental payment arrangements that give excessive discretion to CMS. These standards would apply not only to new arrangements but also to existing arrangements that have already been approved by CMS and have been in place for many years.  Moreover, it would newly require that certain provider taxes and all supplemental payment arrangements be limited to a three-year duration.  While states could subsequently renew these provider taxes and supplemental payments, these renewals would be subject again to these new vague standards of review and approval.  As a result, the proposed rule would likely inject significant uncertainty into state Medicaid programs for states and health care providers and create a chilling effect.  The proposed rule would also impose numerous substantive technical changes to requirements governing state financing and supplemental payment arrangements that could explicitly bar or restrict current arrangements.  As a result, states could end up eliminating or significantly scaling back their current Medicaid financing and payment arrangements not only because such arrangements could fail to comply with the new requirements but also because of fear and confusion due to the new overly broad and vague review and approval standards and the undue discretion provided to CMS.

  2. The proposed rule includes virtually no analysis of the likely harmful impact of the proposed rule on Medicaid, as required under federal law. 

    It states that the “fiscal impact on the Medicaid program from the implementation of the policies in the proposed rule is unknown.” The rule further notes that “we do not have sufficient data to predict or quantify the impact of the proposed provisions on health-care related taxes….”  Yet the rule could have a widespread, large and harmful impact on states, providers and beneficiaries including children and families.  That is because nearly all states rely on provider taxes to help finance the state’s share of Medicaid costs and most states use intergovernmental transfers (IGTs) and/or certified public expenditures (CPEs) as well, all of which could be affected adversely by the proposed rule.  Furthermore, nearly all states make supplemental payments to providers.  Even though it is CMS’ obligation to assess the impact of the proposed rule on the Medicaid program, the proposed rule instead merely invites comments from stakeholders to estimate the likely impact of the proposed rule.  Yet the complexity of the rule and of existing financing and supplemental payment arrangements, the lack of publicly available information about current arrangements and the significant uncertainty about how the proposed rule’s new approval standards and requirements would be applied in individual cases makes its exceedingly difficult, if not impossible, to analyze the impact and meaningfully comment on the provisions of the proposed rule.

  3. Any final rule should instead include only limited reporting and data collection requirements. 

    CMS should withdraw nearly all provisions of the proposed rule. Instead, if there is any final rule, it should only include limited public reporting and data collection requirements related to supplemental payments and state financing that would improve transparency and oversight.  CMS should ensure such requirements are designed to be usable and actually help assess whether any new policies or regulations are necessary to address issues that cannot be remedied with existing statutory and regulatory authority.  It also should limit such reporting and data requirements in ways that minimize the administrative burden on states and providers, establish a far more reasonable multi-year timeframe to allow for adequate planning and implementation by states and make the information publicly available in an accessible format for stakeholders.  This data, along with detailed, comprehensive CMS analysis of such information and necessary collaboration with states, providers, and beneficiary advocates, would then allow for the later design of more reasonable, narrowly-targeted and well-defined approaches that could address violations of the current statutory and regulatory requirements related to financing and supplemental payments — to the extent that they are necessary because current federal regulations do not already address them — but without risking indiscriminate, widespread harm to state Medicaid programs.  Importantly, unlike under the proposed rule, it would allow CMS to conduct a sufficient, comprehensive regulatory impact analysis and allow stakeholders including those representing low-income children and families and other Medicaid beneficiaries to evaluate the collected data and later make meaningful, substantive comments to any policy changes included in future rulemaking.

Edwin Park
Edwin Park is a Research Professor at the Georgetown University McCourt School of Public Policy.

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