Last fall, as weighty healthcare issues such as drug costs and surprise medical bills consumed Capitol Hill, the CMS proposed profound changes of its own to Medicaid—changes that could erode access to care, strain state budgets, increase taxes and tip the balance of state and federal control of the program.
The CMS proposed its expansive and complex Medicaid Fiscal Accountability Regulation under a banner of promoting program integrity and transparency. But those admirable goals are sheep’s clothing on this wolf, which would severely restrict the long-standing flexibility states have to finance their share of Medicaid.
Essential hospitals, which shoulder much of the nation’s safety-net care, certainly want to safeguard Medicaid integrity—after all, it’s a lifeline for these hospitals and their low-income patients. But MFAR steps far beyond program integrity by responding to isolated payment concerns with sweeping prohibitions on traditional funding mechanisms. Worse, the agency offers only scant analysis of how these draconian changes would impact patients, providers and states, and it allows no transition period to help stakeholders adjust.
MFAR would undermine principles of federalism and dramatically shift the balance between federal and state governments in policymaking. One glaring example: The rule would allow the CMS to second-guess how states define a unit of government—and, in turn, restrict the funding sources available for their nonfederal share of Medicaid spending. This astonishing degree of intrusion into matters traditionally reserved to states would upset long-standing policies and processes states use to generate the federal matching dollars that keep Medicaid programs afloat. MFAR would make numerous other changes that appear designed only to shrink Medicaid rather contribute in any meaningful way to integrity and transparency.
Maybe worst of all, the proposals would give the CMS almost unlimited and arbitrary discretion to determine what is and what is not permissible. The nebulous nature of that authority would create a chilling effect: A state might forgo a needed funding approach based only on the possibility, rather than certainty, the agency would find it unlawful. That’s no way to plan reliable and sustainable funding for a program on which millions of working people and families depend.
MFAR is particularly disappointing because we’ve been down this road before. It contains many of the same proposals found in 2007 CMS rulemaking that Congress and the courts roundly rejected. In fact, Congress blocked that earlier rule multiple times through moratoriums. It was a bad idea then and it’s a bad idea now—and clearly counter to congressional intent.
MFAR proposals likely would impose a high cost on states, straining their budgets and increasing the burden on taxpayers to support the costs of uncompensated care. The cost of care for low-income patients doesn’t disappear with these proposals—it just shifts to a larger share of state and local spending, which could mean higher taxes for everyone.
Also consider these changes would hit just as we gain ground in our battle with the opioid epidemic. Nearly 2 million non-elderly U.S. adults had an opioid use disorder in 2017—and nearly 4 in 10 were covered by Medicaid, a Kaiser Family Foundation analysis shows. It also found that opioid use disorder patients with Medicaid were nearly twice as likely as those with private insurance to have received drug or alcohol treatment. Just as it looks like we might turn the corner on the opioid crisis, MFAR threatens to send us back.
In the end, MFAR is little more than another prong in the latest assault on the nation’s safety net. At a time when budgets already are stretched thin, states cannot afford federal regulatory overreach that will harm their ability to fund Medicaid at adequate levels. This rule will prove costly not only to state budgets but also to safety-net hospitals, which provide a disproportionate amount of care to patients who rely on the lifeline that Medicaid provides. The CMS must withdraw its damaging plan.