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National Advocacy Groups Pen Letter Urging CMS to Withdraw Harmful Medicaid Proposed Rule

August 12, 2020

A group of six national health care, business, and public-sector advocacy groups have urged the Centers for Medicare & Medicaid Services (CMS) to withdraw the Medicaid Fiscal Accountability Regulation (MFAR) proposed rule.

In a letter to CMS Administrator Seema Verma, America’s Essential Hospitals, the American Health Care Association, the Association for Community Affiliated Plans, the National Association of Counties, the National Governors Association, and the U.S. Chamber of Commerce said that in the wake of the unprecedented uncertainty brought forth by the COVID-19 pandemic, implementing MFAR could cause irreparable damage to the Medicaid program at a critical time.

The MFAR proposed rule’s introduction, as well as the resulting comment period, took place as the COVID-19 pandemic just was beginning to enter the public consciousness. Previously submitted comments about the rule—as well as the accompanying analysis of the potential impact of the rule—did not take into account the toll of the disease and the response thus far.

“As the full extent of the economic impact of this pandemic is revealed, the importance of ensuring Medicaid program stability cannot be overstated,” the signatories wrote. “COVID-19 has left states, hospitals, and other providers in a precarious financial position, with these pressures expected to remain for the foreseeable future.”

The letter underscores the tremendous financial strain on state and local governments as they implemented measures to slow the spread of COVID-19, including closing nonessential businesses. Many states now face troubling budget deficits, which could jeopardize their abilities to support their respective Medicaid programs.

The economic downturn has caused compounding pressures, as newly unemployed residents turn to Medicaid for insurance, after losing their employer-based plans. The signatories caution that reliance on Medicaid will grow as unemployment continues to rise.

The groups note that COVID-19 has presented “extraordinary public health and economic circumstances [that] were unthinkable when MFAR first was proposed. Now, more than ever, it is imperative that CMS not move forward with finalizing the rule.”

This letter comes on the heels of a request from the National Association of State Medicaid Directors, which cautioned that “In this environment, states need assurances that all existing financial tools will be available to weather what is expected to be a significant and years-long economic downturn. MFAR would remove these assurances and exacerbate these already substantial fiscal challenges.”

HAP has also advocated for needed Medicaid funding by addressing the Federal Medical Assistance Percentage (FMAP). A group of more than 100 hospitals, health care, local government, and advocacy organizations sent a letter to Congressional leaders in support of an enhanced FMAP. Legislation introduced by U.S. Senator Bob Casey (D, PA)—S. 4108, the Coronavirus Medicaid Response Act—would support Medicaid funding by linking FMAP support to economic conditions, automatically connecting the FMAP to state unemployment levels. HAP endorsed Senator Casey’s legislation recognizing an automatic mechanism would provide for appropriate funding in times of economic crisis when there is a greater reliance on Medicaid as a safety-net for those who lose coverage due to job loss.

For more information, contact Jolene Calla, Esq., HAP's vice president of health care finance and insurance.