CMS Withdraws Proposed Medicaid Fiscal Accountability Regulation

Arent Fox

Arent Fox

The Centers for Medicare and Medicaid Services (CMS) has withdrawn its proposed Medicaid Fiscal Accountability Regulation (MFAR), according to a September 14, 2020, announcement via Twitter by Administrator Seema Verma.

See Verma's Announcement.

Verma tweeted that CMS is withdrawing the rule due to state and provider partner concerns “about potential unintended consequences of the proposed rule, which require further study.”

MFAR was proposed in November 2019 as an attempt to increase transparency and accountability in Medicaid program spending, particularly regarding state supplemental payments for providers. The proposed rule targeted reform in the following areas:

  1. Medicaid fee-for-service (FFS) provider payments;
  2. Disproportionate share hospital (DSH) payments;
  3. Medicaid program financing;
  4. Supplemental payments; and
  5. Health care-related taxes and provider-related donations.

Had it been enacted, MFAR would have subjected states to greater scrutiny and created new reporting requirements for states’ Medicaid funds, leading to more uncertainty in administering and funding state Medicaid programs. The states would have been required to report certain information on supplemental payments to Medicaid providers, and establish revised upper payment limits (UPLs) for Medicaid payments to providers. These actions would have required fundamental restructuring of Medicaid programs while states remain in the midst of addressing the financial impact of the COVID-19 pandemic under the Coronavirus Aid, Relief, and Economic Security Act. CMS’s withdrawal of MFAR means that none of these requirements and consequences will go into effect – at least, not unless or until CMS promulgates a replacement regulation.

CMS’s overview of MFAR is here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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