The CMS on Tuesday withdrew its proposed rule to crackdown on state Medicaid eligibility determinations from the Office of Management and Budget's regulatory review process.
"This proposed rule would strengthen the integrity of the Medicaid eligibility determination process including verification, changes in circumstance, and redetermination," the agency said in its description of the rule. The proposed rule was supposed to be published in April.
But many healthcare experts worried that tightening eligibility rules would make it tougher for eligible people to enroll in the program and maintain coverage, even if it reduced improper Medicaid enrollment and federal payments to states.
"While the specific contents of the rule aren't known ... when finalized, it will put downward pressure on program enrollment," wrote Chad Mulvany, director of healthcare finance policy, strategy and development for the Healthcare Financial Management Association.
The Trump administration seems to have gotten cold feet about going through with the proposed rule now that the coronavirus pandemic has upended the U.S. healthcare system and the economy.
Officials might be wary about proposing new rules that would likely increase the uninsured rate and make it difficult for many people to maintain continuous coverage as unemployment spikes during a massive public health crisis.
Public health experts worry that people will be less likely to seek treatment if they're worried about medical bills, which could worsen the outbreak.
And providers have already seen an uptick in uncompensated care and budgetary pressure thanks to new restrictions that prevent them from carrying out more profitable elective surgeries and procedures.
Congress included additional Medicaid matching funds in its second relief package to shore up state and hospital budgets. The proposed rule may have done the opposite and created a public relations problem for the Trump administration, even before it finalized the rule.
Many states have sought to expand access to care through their Medicaid programs in response to COVID-19, a move supported by a number of experts and policymakers.
The Trump administration has made reducing waste, fraud and abuse in the Medicaid program a key part of its healthcare strategy, in part, because Medicaid covers more than 76 million people in the U.S. and makes up about 1 in 6 dollars of national healthcare spending, according to the Kaiser Family Foundation.
The CMS unveiled its so-called "Medicaid Program Integrity Strategy" in June 2018 to limit Medicaid spending growth, which has been driven by the program's expansion to most low-income adults in 36 states and the District of Columbia. The proposed rule was an essential part of its strategy.
"While the primary responsibility for ensuring proper payments in Medicaid lies with states, CMS plays a significant role in supporting states' efforts and holding them accountable through appropriate oversight and increased transparency," CMS Administrator Seema Verma wrote in a June 2019 blog post.
But leading experts think that the administration has overstated the extent to which improper Medicaid payments are driven by ineligible people enrolling in the program, citing significant problems with the way improper payments are measured and how the data has been interpreted.
The CMS did not respond to a request for comment before deadline.