CMS Rescinds Controversial Medicaid Fiscal Accountability Rule

Concerns over provisions of the Medicaid Fiscal Accountability Rule (MFAR) have compelled CMS to rescind the rule proposed last November.

In a tweet late Monday, CMS Administrator Seema Verma announced the decision.

“The proposed Medicaid Fiscal Accountability Rule (MFAR) was designed to increase transparency in Medicaid financing and ensure that taxpayer resources support the health care needs of our beneficiaries,” she stated. “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.”

The American Hospital Association (AHA) praised the decision.

“We appreciate CMS for acknowledging the harmful consequences this rule would have for patients,” said Executive Vice President Tom Nickels. “Up to $50 billion in annual funding for the Medicaid program was on the line, cuts that would have crippled state financing and limited access to care, especially in rural and underserved areas. Hospitals and health systems will be greatly relieved when the proposed rule is formally withdrawn.”

Likewise, state officials in Arizona and Texas are heralding the move by the federal agency as the country continues its fight against COVID-19.

The rule comprised three parts. First, MFAR intended to alter how states report supplemental payments to glean more data, specifically affecting upper payment limits (UPL) reporting and calculations. Second, the proposed rule proposed new definitions for undefined Medicaid financing terms (e.g., base, supplemental) as well as other types of payment arrangements in order to close loopholes and enforce consistency. Lastly, MFAR sought to practice reliance on questionable financing mechanisms, potentially the most complex and technical part of the threefold rule.

The complexity of the proposed rule generated concerns among healthcare organizations. America’s Health Insurance Plans (AHIP) President & CEO Matt Eyles emphasized the need to protect the coverage of tens of millions of Americans.

“For 76 million Americans, Medicaid is an essential part of health care that helps to improve their health and financial security every day,” he stated earlier this year. “We recognize and appreciate CMS’ responsibility to protect the fiscal integrity of Medicaid, but we have serious concerns that this proposed rule could undermine the ability of many states to fund their Medicaid programs and inhibit access to care for millions of Americans.”

Stay tuned for further updates.

Update 09/15/2020: The Association for Community Affiliated Plans, the national organization of safety net plans, called on CMS to work closely with stakeholders moving forward to improve Medicaid spending.

“If ever there was a Medicaid regulation in need of a do-over, it was this one. We applaud the withdrawal of this rule; going forward, we restate our desire that CMS consult with the appropriate stakeholders on how to improve the financing and operation of state Medicaid programs—and make a good-faith effort to assess the effects of the proposed changes on Medicaid programs and beneficiaries,” said CEO Margaret A. Murray.