CMS Issues Proposed Medicaid Fiscal Accountability Rule

The Centers for Medicare & Medicaid Services (CMS) issued a proposed Medicaid Fiscal Accountability Rule recently that is intended to improve the program’s integrity, as well as to ensure state supplemental payments and other financial contracts are transparent and value-driven.

“We have seen a proliferation of payment arrangements that mask or circumvent the rules where shady recycling schemes drive up taxpayer costs and pervert the system,” said CMS Administrator Seema Verma in a press release. “Today’s rule proposal will shine a light on these practices, allowing CMS to better protect taxpayer dollars and ensure that Medicaid spending is directed toward high-value services that benefit patient needs.”

Currently through the Medicaid program, states make additional payments to providers at an increased rate compared to the normal reimbursement for billed services. The Government Accountability Office (GAO) and Office of Inspector General have made several recommendations recently on how best to oversee these payments, which have increased nearly 10% since 2010.

The proposed rule will address the current practices’ vulnerabilities, as well as more clearly explain existing financial policies.

“The proposed rule would establish new requirements for states to report provider-level information on Medicaid supplemental payments, responding to calls from oversight organizations to increase transparency,” explained CMS in a press release.

Under the proposed rule changes, new regulations would exist to:

• Improve reporting on supplemental payments;
• Clarify Medicaid financing definitions; and
• Reduce questionable financing mechanisms.

According to the press release, “CMS is aware of numerous schemes states have used that are not consistent with federal statute.”

This proposed rule would help prevent situations that CMS described. “Some examples include states that generate extra payments for private nursing facilities that enter into arrangements with local governments to bypass tax and donation rules, and the use of a loophole to tax managed care entities 25 times higher for Medicaid business than for similar commercial business.”

The agency continued to explain that states can use that tax revenue to generate additional payments, with no commensurate increase in state spending.

Ms Verma and CMS in its press release emphasized if Medicaid is intended to be a lasting, successful program, states must be more transparent and value-driven in order to make it sustainable for future generations. —Edan Stanley