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 Industry Groups Warn of Crippling Impact of Proposed Medicaid Funding Change

​Health care provider groups and the National Governors Association (NGA) said on Thursday that a funding proposal by the Centers for Medicare & Medicaid Services (CMS) would have severely negative consequences for the nearly 75 million Americans who rely on the program.

In a statement, Mark Parkinson, president and chief executive officer (CEO) at the American Health Care Association/National Center for Assisted Living (AHCA/NCAL), and Rick Pollack, president and CEO at the American Hospital Association (AHA), said the proposed Medicaid Fiscal Accountability Regulation (MFAR) [CMS–2393-P] threatens funding and access to care.

“We appreciate CMS’ responsibility to oversee appropriate Medicaid financing and service delivery. However, the bleak reality is that Medicaid funding is already inadequate,” the two association leaders said.

“Enacting this proposed rule would cut up to $50 billion nationally from the Medicaid program annually, further crippling Medicaid financing in many states and jeopardizing access to care for the 75 million Americans who rely on the program as their primary source of health coverage.”

Parkinson and Pollack said entire communities could lose access to care under the CMS proposal, notably in rural areas where 15 percent of hospital revenue and nearly two-thirds of nursing facility revenue nationwide depend on Medicaid funding. The supplemental payment programs targeted in this rule are also a critical lifeline at hospitals, health systems, and nursing facilities that serve some of the most vulnerable individuals, they said.

“CMS has provided little to no analysis to justify these policy changes, nor has the agency assessed the impact on providers and the patients they serve. Many of the proposed changes would also violate federal laws, including the current Medicaid statute. AHA and AHCA request that the agency withdraw the proposed rule in its entirety,” Parkinson and Pollack said.

Also, adding to those opposed to the CMS plan, NGA said it has concerns that the proposed rule “would significantly curtail the longstanding flexibility states have to fund and pay for services in their Medicaid programs. In losing this flexibility, states may be unable to adequately fund their Medicaid programs, which could lead to unintended consequences that would negatively impact Medicaid beneficiaries across the country.”

NGA also said the proposed changes “create significant uncertainly as to whether a state’s payment and financing structure will meet federal requirements. For example, a provider tax which had previously been approved by CMS as consistent with federal law may now be deemed inappropriate. This leaves the state

Separately, in comments to CMS on the MFAR proposal, AHCA/NCAL said it opposed the draft plan based on several issues, led by the lack of proper technical vetting of the proposal.

“CMS should: a.) convene a technical expert panel (TEP) made up of stakeholders to identify the data that are truly necessary to meet its goals while meeting its obligations under Section 30(A) [of the Social Security Act] and b.) ensure this TEP work is coordinated with CMS’ upcoming work to uniformly assess access to care,” AHCA/NCAL said.

Other highlights of its comments said, “CMS must first have data to understand the impact of what it is proposing; what coming into compliance means; and how this will impact providers, states, and beneficiaries. Once those data have been collected and the agency understands the scope and scale of what it is proposing, only then should the agency proceed with implementation and compliance.”

A third objection said the proposed changes do not look at total provider payments when figuring the impact of the plan, and lastly, the proposed implementation time frames are likely to result in serious challenges at the state level.

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