CMS: Proposed Rule for States on Medicaid Fee-for-Service Rate-Setting Procedures

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The U.S. Centers for Medicare and Medicaid Services (CMS) published in the May 6, 2011, Federal Register (76 Fed. Reg. 26342) a proposed rule establishing a transparent process that states would be required to follow to change Medicaid payment rates, as well as procedures to ensure ongoing access to care for Medicaid beneficiaries. Under section 1902(a)(30)(A) of the Social Security Act, states are required to ensure that state payments for Medicaid services are "consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area." The proposed rule was prompted by states increasingly being subject to litigation challenging Medicaid payment rate reductions as conflicting with the quality-of-care and access provisions of section 1902(30)(A). This litigation has led to inconsistent opinions among the federal circuit courts; and therefore, has left states without consistent guidance on section 1902(a)(30)(A)'s requirements for Medicaid rate-setting. Moreover, CMS has noted "[t]ight State budgets coupled with increased demand for services during the recession have led many States to propose reductions in Medicaid provider payments, without clear Federal guidance on how to assure access."

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