New Rule Seeks to Improve Transparency of State Medicaid Provider Payment Rates

CMS recently finalized two key regulations: “Ensuring Access to Medicaid Services” (Access Rule) and “Medicaid, CHIP Managed Care Access, Finance, and Quality” (Managed Care Rule), aimed at improving access to care in Medicaid across delivery systems (fee-for-service and managed care) and authorities (state plan and waiver services). The rules are long and complex; we’ve summarized the Access Rule and the Managed Care Rule, and we will continue to unpack various provisions in greater detail. This post focuses on the new provisions related to documentation of access to care and service payment rates from the Access Rule.

Section 1902(a)(30)(A) of the Social Security Act requires states to “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” This provision is known as the “equal access provision” and it has been around for about 35 years. There have been many attempts to improve compliance with and oversight of the equal access provision, the most recent of which are outlined in the summary blog.

In short, the Access Monitoring Review Plans (AMRP) are out, and new payment rate transparency provisions are in. Importantly, all states are required to comply with the payment transparency publication, comparative payment rate analysis, and payment rate disclosure provisions under §447.203(b), regardless of the quantity of services covered or delivered or people enrolled in managed care. The preamble states: “Due to coverage transition periods, such as where an individual is Medicaid eligible but not yet enrolled in a managed care plan or benefits are covered retroactively, even states that generally enroll all beneficiaries into managed care plans pay for some services on a FFS basis that are carved out of the managed care plan contracts, and therefore are expected to have Medicaid FFS fee schedule payment rates in effect. Such Medicaid FFS fee schedule payment rates are subject to the provisions finalized in this rule under §447.203(b).”

Fee-for-Service (FFS) Payment Rate Transparency §447.203(b)(1)

Effective July 1, 2026

States must post Medicaid FFS payment rates, described as fee schedule payment rates made to providers delivering Medicaid services to Medicaid beneficiaries through a FFS delivery system. The rates may be posted on the state Medicaid agency’s website or the website of a contractor, as long as the site is accessible to the general public. The rates must be organized in a way that a member of the public can readily determine the amount that Medicaid would pay for the service. If payment rates vary, the state must separately identify the Medicaid FFS payment rates by population (pediatric and adult), provider type, and geographical location, as applicable. For a state that varies its Medicaid FFS rates by any combination of these groupings, the payment rate transparency publication must reflect these multiple groupings (e.g., physician billing 99202 provided to a child in a rural area).

When describing which types of payment rates must be posted, the rule emphasizes fee schedule payment rates that are known in advance of a provider delivering a service to a beneficiary. This means that some payments are clearly NOT included, such as prospective payments made to federally qualified health centers (FQHCs), rural health clinics (RHCs) and certified community behavioral health clinics (CCBHCs) because these payments are based on statutory formulas. Similarly, cost-based payments or value-based payments that are not known ahead of time are not included. For other types of payments, whether they are included in the transparency requirements or not is more complicated. For example, bundled payments are included in the transparency requirements, but states must provide a breakdown of the constituent parts only if each component is based on a fee schedule payment rate. States are not required to break down bundled payment rates that are based on a formula with factors such as patient acuity, operating costs, etc rather than a fee schedule.

CMS will issue subregulatory guidance with an example of these rate transparency requirements, including an example of a compliant website and how to handle payment bundles prior to July 9, 2024.

Comparative Payment Rate Analyses §447.203(b)(2)-(4)

Effective July 1, 2026 then updated every two years 

In addition to posting the FFS fee schedule payment rates, the new Access Rule requires states to compare some FFS payment rates to comparable Medicare rates. Specifically, states must compare rates paid for primary care services, obstetric and gynecological services (OB/GYN), and outpatient mental health and substance use disorder (SUD) services to comparable Medicare rates per the Medicare physician fee schedule. If this list of providers and services sounds familiar, it may be because the new Managed Care Rule also focuses on these areas in related network adequacy provisions.

Rates must be compared at the code level and must include any beneficiary copayment amounts but exclude supplemental payments. If the rates vary based on provider type, adult vs. pediatric patients, or geographical location, separate reporting is required. States must post the Medicaid rate, the Medicare rate, the Medicaid rate as a percentage of the Medicare rate, the number of Medicaid-paid claims and the number of people enrolled in Medicaid who received a service within the calendar year.

The non-facility Medicare rates needed for this analysis are posted annually in the Medicare Physician Fee Schedule. In order to ensure that Medicaid rates are compared to Medicare rates in effect at the same time and for the same service, there is a one-year data lag. That is, states are required to post the comparative payment rate analysis by July 1, 2026 for rates that were in effect as of July 1, 2025.

Payment Rate Disclosures and Interested Parties Advisory Group §447.203(b)(2)-(4), (6)

Effective July 1, 2026 then updated every two years; IPAG must meet by July 9, 2026 

The comparative payment rate analyses will allow for a better understanding of Medicaid rates as they relate to Medicare rates and how changes over time impact the number of services delivered. However, for some Medicaid services, especially home and community based services (HCBS), Medicare does not provide comparable services. With that in mind, the Access Rule sets out a different process for HCBS, requiring payment rates to be disclosed in such a way as to allow for comparison between states and over time. Specifically, states will be required to disclose payment rates for personal care, home health aide, homemaker and habilitation services in the form of an hourly payment rate, regardless of whether the state actually pays for such services on an hourly, daily, or other basis. Within each service category, separate reporting is required if rates vary based on whether the payment is made to an individual or an agency, the provider type, adult vs. pediatric patient, geographic location and whether the payment rate includes facility-related costs.

Additionally, states are required to form an Interested Parties Advisory Group (IPAG) to advise and consult on payment rates and access metrics for home care and habilitation services. The Advisory Group must include direct care workers, Medicaid enrollees, authorized representatives of Medicaid enrollees, and others. The IPAG must meet at least every other year, beginning in 2026, to issue recommendations to the Medicaid agency on the sufficiency of direct care worker payment rates under all applicable HCBS authorities (§§1915(c), (i), (j), (k) and §1115). Though the state is not required to adopt the IPAG’s recommendations, the state must publicly post them.

Reducing or Restructuring Payment Rates §447.203(c)(1)-(2)

Effective July 9, 2024

The Access Rule establishes a two-tiered system for reviewing state requests to reduce or restructure Medicaid payment rates. Rate reductions could be approved under a streamlined process if the state can show: (1) aggregate Medicaid payments following the change would be at or above 80% of the comparable Medicare rate, (2) the cumulative effect of all reductions would result in no more than a 4% reduction in aggregate FFS Medicaid expenditures for each benefit category, and (3) the public process yielded no significant access to care concerns that the state could not reasonably address.

If the state cannot meet the criteria outlined in all three sections listed above, additional analyses are required. The additional analyses must include: a summary of the proposed change and its cumulative effect; aggregate Medicaid payment rates (base and supplemental) before and after the proposed reduction and the comparable Medicare rate; information about any changes in provider participation, the number of beneficiaries served, and the number of services furnished; and a summary of access concerns received and the state’s response.

Noncompliance with these requirements could result in CMS disapproving the state plan amendment (SPA) or withholding payment.

Going Forward

It is important to note that the rules do not set a minimum amount that states must pay for Medicaid services – states continue to have the flexibility to set base Medicaid payment rates. However, having standardized and consistent rate information will enable stakeholders to more effectively advocate for payment rate increases, particularly when there are known or emerging access issues. Payment is only one part of the access puzzle, but the new Access Rule will go a long way toward improving Medicaid payment transparency and elucidating the relationship between payment rates and access to care.

[This is part of a blog series on two key federal regulations that aim to improve access to care for people enrolled in Medicaid and CHIP across delivery systems. Learn more about the “Ensuring Access to Medicaid Services” and “Medicaid, CHIP Managed Care Access, Finance, and Quality” rules here.]

Kelly Whitener is an Associate Professor of the Practice at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.