Category Archives: Medicaid Supplemental Payments

CMS kills controversial Medicaid fiscal accountability rule

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What You Need to Know About the Medicaid Fiscal Accountability Rule (MFAR) | KFF

Dive Brief:

  • CMS is axing its proposed Medicaid Fiscal Accountability Rule, agency head Seema Verma announced via Twitter late Monday afternoon, in a move quickly cheered by provider organizations.
  • The rule proposed last year would have increased federal oversight of how states fund their Medicaid programs and potentially resulted in funding cuts for the cash-strapped safety net insurance. Myriad providers, patient advocacy groups and lawmakers in both states and the halls of Congress opposed the rule as a result.
  • “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,” Verma said.

Dive Insight:

MFAR was designed to increase fiscal transparency in the 55-year-old Medicaid program, but was quickly met with a firestorm of controversy, with even bipartisan House and Senate members raising concerns it could lead to states being forced to choose between program cuts or raising taxes to replace the lost funding.

One estimate, conducted by Manatt Health for the American Hospital Association, estimated the changes proposed in the rule would cut Medicaid funding by almost $50 billion annually, shrinking the program by 8%.

“Hospitals and health systems will be greatly relieved when the proposed rule is formally withdrawn,” AHA EVP Tom Nickels said in a statement.

Bruce Siegel, CEO of America’s Essential Hospitals, a lobby representing hospitals serving a disproportionate amount of vulnerable patients, called CMS’ decision “wise and welcome … especially as state budgets and providers strain under the heavy financial burden and economic fallout of COVID-19.”

Medicaid is jointly funded by the states and the federal government. Generally, CMS matches every dollar states spend at rates that vary depending on the state, its covered services and its population. There are no limits for how much federal funding a state can receive, and snowballing spending in Medicaid has resulted in concerns about cost control.

Medicaid spending swelled from $456 billion in 2013 to $576 billion in 2016, per CMS data, mostly due to an expanding federal share.

The most acute worries on the federal side stemmed from supplemental payments, or payments state Medicaid agencies give to providers for going above and beyond routine care, normally for high-need patients or those in underserved areas.

Supplemental payments to healthcare providers have increased from 9.4% of all other payments in 2010 to 17.5% in 2017, according to CMS, and are generally uneven across state lines, contributing to geographic funding disparities.

Oversight agencies, including the Government Accountability Office and the Office of the Inspector General, flagged the growth in payments and called for stronger Medicaid oversight in a series of reports from 2006 to 2015.

As a result, CMS proposed the MFAR rule in November 2019. If finalized, it would require states to report Medicaid payment and financing data at the individual provider level, instead of an aggregate, and establish definitions for “base” and “supplemental” payments. It would also have allowed CMS to sunset existing supplemental payment methodologies after up to three years, requiring states to get approval for a longer period, and close financing loopholes that might allow states to re-use federal Medicaid dollars to fund additional payments.

At the outset, CMS attempted to stamp out criticisms the rule could winnow Medicaid funding. “Alarmist estimates that this rule, if finalized, will suddenly remove billions of dollars from the program and threaten beneficiary access are overblown and without credibility,” Verma wrote in a blog post on the proposal in February.

But the rule received more than 4,000 public comments, most of them negative. The swirling concerns about unintended consequences, especially as COVID-19 exacerbates worries about care access, have now brought CMS back to the drawing board on Medicaid fiscal accountability.

As of late Monday, MFAR remained on the Federal Register.

Other actions from the Trump administration to overhaul Medicaid have faced similar backlash, including unpopular efforts to instill requirements linking coverage to work hours and an early 2020 push to cap federal funding for states in exchange for wider latitude in program administration.

 

 

 

 

Payers, providers urge CMS to scrap rule targeting supplemental Medicaid payments

Posted on by • Posted in Health Policy, Health System, Hospital, Hospital Industry, Medicaid, Medicaid Supplemental Payments • Leave a comment

https://www.healthcaredive.com/news/payers-providers-urge-cms-to-scrap-rule-targeting-supplemental-medicaid-pa/571573/

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Dive Brief:

  • Payer and provider lobbying groups are urging CMS to pull back a proposed rule that aims to clamp down on supplemental Medicaid payments in order to contain spending growth.
  • The American Hospital Association wants CMS to withdraw the rule, warning it would “severely curtail the availability of health care services to millions of individuals,” according to comments it submitted in response to the proposal.
  • The insurance lobby wants CMS to start with a “more limited initial step” and focus on gathering data so it can “fully assess the current landscape of state Medicaid funding and payment mechanisms,” America’s Health Insurance Plans said in its comments. The Association for Community Affiliated Plans also asked the agency to withdraw the rule.

Dive Insight:

A sharp rise in these supplemental Medicaid payments caught the attention of CMS as spending has continued to increase and much of the growth has come from the federal share of the program, according to the agency.

These supplemental payments from the federal government to the states have risen from 9.4% of all other payments in fiscal year 2010 to 17.5% in 2017. This growth comes with “an urgent responsibility to ensure sound stewardship and oversight of the Medicaid program,” CMS said in November as it rolled out the proposed rule called Medicaid Fiscal Accountability Regulation.

A 2015 Government Accountability Office report found that states are increasingly relying on providers to help them finance the state’s portion of Medicaid funding. “A small number of providers supplied funds to the state for the nonfederal share, generally through intergovernmental fund transfers or provider taxes, and in turn received large supplemental payments, enabling states to obtain billions of dollars in additional federal matching funds,” according to the report.

CMS argues the proposed rule, which calls for states to provide more detailed information on these supplemental payments, including provider-specific payment data, would help beef up its oversight of the program.

AHA warned, however, the rule could cut Medicaid payments to hospitals by up to $31 billion annually, or nearly 17% of total hospital program payments. The group also argued the changes violate the Administrative Procedures Act and due process protections in the Constitution.

The Association of American Medical Colleges also opposed the rule, saying it would “limit the federal government’s congressionally mandated responsibility to the Medicaid program and could result in reductions in coverage, access, and quality care for the millions of vulnerable patients who rely on this critical program.”

CMS and the GAO report have noted a lack of data about these payments once they reach the states, making it hard to do any sort of analysis. In fact, GAO complained that the state of California did not have data on these payments for the agency to do an assessment.

 

The hospitals staying silent on Medicare for All

Posted on by • Posted in 2020 Election Issues, America's Essential Hospitals, Ascension, Critical Access Hospitals, Health Policy, Hospital, Hospital Industry, Medicaid, Medicaid Supplemental Payments, Medicare, National Rural Health Association, Partnership for America's Health Care Future, Rural Health, Rural Hospital, Safety Net Hospitals, Single Payer Healthcare System, Underinsured, Uninsured • Leave a comment

https://www.axios.com/hospitals-medicare-for-all-health-care-bernie-sanders-5d28dc00-05cd-411b-98cc-556ddfa12c9b.html

Doctors and nurses treat a patient in a hospital trauma room.

Large hospital systems and trade groups have vociferously criticized Democrats’ “Medicare for All” proposals, but rural facilities and public hospitals that treat mostly low-income patients are sitting on the sidelines of the debate.

Why it matters: Safety nets and many rural hospitals could hypothetically benefit under Medicare for All, but expressing support would put them at odds with their larger brethren.

Between the lines: The Partnership for America’s Health Care Future has become one of the loudest industry-funded voices against Medicare for All.

  • Pharmaceutical companies, health insurers and others are part of PAHCF. But 10 hospital systems and lobbying groups, like Ascension and the American Hospital Association, drive PAHCF.
  • Chip Kahn, the head of the Federation of American Hospitals, said PAHCF was his “brainchild,” according to Modern Healthcare.

Yes, but: Some hospital constituencies aren’t part of the anti-single-payer lobbying.

  • America’s Essential Hospitals, the trade group for safety net hospitals, and the National Rural Health Association, which represents rural hospitals and providers, are not part of PAHCF. They also don’t have official positions on Medicare for All.
  • A spokesperson for AEH said the group recognizes industry peers “have raised reasonable questions” about Medicare for All, but “our focus right now is where our members want it: on stopping the $4 billion cut” to supplemental Medicaid payments.
  • “With specific legislation not moving forward at this time, I don’t see us weighing in anytime soon,” NRHA CEO Alan Morgan said. “I don’t see us at odds. We just haven’t entered the national debate yet.”
  • In an interview, Kahn would not discuss on the record why those two groups were not part of PAHCF.

The big picture: Hospitals that mostly care for poor and uninsured patients could see higher, more stable revenues if everyone had Medicare — a program that often pays higher base rates than Medicaid and infinitely higher rates than nothing at all.

  • Cook County’s public hospital system in Chicago, for instance, gets 79% of its gross patient revenue from the uninsured and Medicaid. That system and multiple other hospitals did not respond to interview requests.
  • Separately, Medicare pays rural “critical access” hospitals 101% of their allowable costs, although those payments have suffered since Congress instituted mandated cuts in 2013.

The intrigue: “If you’re trying to solve the problem that we want to get everybody covered and we want to level the playing field between the hospitals that take care of the poor people and hospitals that take care of the rich people, Medicare for All is something we better take a look at,” Eric Dickson, CEO of UMass Memorial Health Care, told Politico.