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Hearing Stakeholders’ Concerns, CMS Withdraws Medicaid Regulation

September 14, 2020

In a tweet today, Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS) announced the Administration would withdraw a proposed Medicaid regulation which stakeholders cautioned would have significant consequences, putting economic pressure on states and negatively impacting Medicaid beneficiaries across the country.

The Medicaid Fiscal Accountability Regulation (MFAR), proposed by CMS during November 2019, would dramatically reshape state Medicaid program financing and supplemental payments for providers, ultimately affecting access to care for more than 2.8 million Pennsylvanians who rely on Medicaid for quality coverage.

This afternoon, CMS Administrator Verma tweeted: “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.”

During March, U.S. Congressmen Brendan Boyle (D, PA-02) and Mike Kelly (R, PA-16) spearheaded a letter—signed by all 18 members of the Pennsylvania U.S. House delegation—recognizing the Administration’s efforts to foster accountability within the Medicaid program, but cautioning that MFAR “puts into jeopardy the care and services the Commonwealth of Pennsylvania provides to the most vulnerable and sick in our communities.”

The delegation letter called for the Administration to “continue to engage and work with relevant stakeholders” and urges “fundamental rethinking of the MFAR proposal… recogniz[ing] the jeopardy it places on our rural and urban safety net hospital systems, providers, children, and low-income Medicaid beneficiaries.”

Urgency for the Administration to rethink MFAR has been heightened in light of COVID-19; stakeholders have called for federal policymakers to take steps to strengthen the Medicaid program which will serve as an even more important safety net as the economic toll of the pandemic deepens.  

Prior to COVID-19, estimates projected, under the proposed rule, the Medicaid program could face total funding reductions between $37 billion and $49 billion annually or 5.8 percent to 7.6 percent of total program spending nationally. If MFAR had been finalized, hospitals and health systems specifically could have seen reductions in Medicaid payments of $23 billion to $31 billion annually, representing 12.8 percent to 16.9 percent of total hospital program payments. The implications of those reductions would be even more profound as state economies reel from the pandemic and more beneficiaries rely on Medicaid for coverage.

CMS still must formally withdraw the rule through a notice published in the Federal Register. HAP will monitor developments and keep members posted as the regulation is formally withdrawn.

Please contact Laura Stevens Kent, HAP’s senior vice president, strategic integration with questions.