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Stakeholders Outline Concerns with Medicaid Proposal

What if a hospital were suddenly told its Medicaid reimbursements would be cut next year by 25 percent? A recently proposed federal regulation may just do that. This same rule could result in cuts to benefits for 2.8 million Pennsylvanians who rely on Medicaid, including children, the elderly and individuals with disabilities.

A chorus of concern has been voiced about a new regulation proposed in Washington, D.C., which would have a profound impact on the authority of states to finance their Medicaid programs and address low reimbursement rates through supplemental payments, ultimately, putting access to care at risk.

The Medicaid Fiscal Accountability Regulation (MFAR) places significant constraints and limitations on how states finance their Medicaid programs, and introduces significant uncertainty with respect to how the federal government will evaluate state approaches.

In a comment letter to the Centers for Medicare and Medicaid Services (CMS), HAP expressed that the proposed MFAR would have a significant, negative impact on Pennsylvania patients if finalized in its current form, and pointed to 2.8 million Pennsylvanians who rely on Medicaid for comprehensive, high quality health coverage. In addition, HAP noted that:

  • During 2017, 34.2 percent of Pennsylvania’s 137,771 births were funded by Medicaid
  • Two-thirds of all nursing home residents are covered by Medicaid
  • More than 750,000 Pennsylvanians have benefited from health insurance coverage under Medicaid expansion as of November 2018

In a joint statement, the American Hospital Association and the American Health Care Association stated: “Enacting this proposed rule would cut up to $50 billion nationally from the Medicaid program annually, further crippling Medicaid financing in many states and jeopardizing access to care for the 75 million Americans who rely on the program as their primary source of health coverage.”

Nationally, the Medicaid program could face total funding reductions between $37 billion and $49 billion annually. Hospitals and health systems specifically could see reductions in Medicaid payments of $23 billion to $31 billion annually.

In nearly all states, the reductions from this rule would result in cuts in program enrollment and covered services. Medicaid already only pays 81 cents on the dollar of actual cost for caring for vulnerable populations in Pennsylvania; these additional payment reductions would be devastating.

The U.S. Chamber of Commerce said the rule would put patient access to critical services in jeopardy, exacerbate cost-shifting onto privately insured communities; and provide CMS with unprecedented discretion over its evaluation of state financing and payment approaches.

The National Association of Medicaid Directors said the one-size-fits-all approach would inevitably create challenges for the majority of states.

The National Governors Association urged CMS to gather more data to understand the impact, identify more targeted evidence-based policies to address concerns, and work with states to determine best practices for how to strengthen accountability and transparency in the Medicaid program.

HAP and Pennsylvania hospitals submitted comments urging the proposal to be withdrawn in its entirety, and are now working to elevate understanding of the impact of the proposal with our elected officials.

Please contact Jolene Calla, HAP’s vice president, health care finance and insurance; or Laura Stevens Kent, HAP’s senior vice president, strategic integration, with questions regarding the proposed rule.


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