The CMS on Tuesday proposed a new rule that would increase transparency for Medicaid state supplemental payments and financing arrangements to help hold states more accountable for Medicaid spending.
The Medicaid Fiscal Accountability Rule would help the CMS cut down back on unauthorized Medicaid spending to ensure the sustainability of the Medicaid program, CMS Administrator Seema Verma said Tuesday at a National Association of Medicaid Directors conference. The new rule would force states to give the federal government provider-level information about Medicaid supplemental payments.
"We have seen a proliferation of payment arrangements that mask or circumvent the rules where shady recycling schemes drive up taxpayer costs and pervert the system," she said in a statement. "Today's rule proposal will shine a light on these practices, allowing CMS to better protect taxpayer dollars and ensure that Medicaid spending is directed toward high-value services that benefit patient needs."
Medicaid supplemental payments rose from 9.4% of all Medicaid payments in 2010 to 17.5% in 2017. The Senate Finance Committee, U.S. Government Accountability Office and HHS' Office of Inspector General have recommended that the CMS increase its oversight of these payments to control Medicaid spending better and to ensure that states are complying with federal law.
Under the Medicaid program, several states pay providers extra money on top of what they receive from regular Medicaid reimbursements to deliver care. The payments include both disproportionate-share hospital payments to reimburse for uncompensated care and upper payment-limit supplemental payments that fill the gap between Medicaid fee-for-service payments and Medicare rates. These payments give states more flexibility when they determine reimbursement rates and can help ensure access to care for Medicaid beneficiaries.
"Many of the vulnerabilities in Medicaid financing arise from high-risk financing mechanisms that states have used, or sought to use, to finance the state portion of Medicaid payments," the CMS said in a statement.
The proposed changes would provide states, hospitals and other stakeholders with clear guidance about what payments are legal. The agency also noted that the proposed rule would close existing loopholes and improve reporting to make sure that states aren't abusing the system to get more federal money.
The CMS needs to take these steps because the agency is "seeing some shenanigans go on," Verma said during a conversation with reporters. She added that it would aid the transition to a value-based healthcare system by shedding light on Medicaid spending that's not tied to specific patient services.
But the rule could make it more difficult for states to get federal funding to run their Medicaid programs so it might just be an excuse to slash federal Medicaid spending, according to Sara Rosenbaum, a health law professor at George Washington University and former chair of the Medicaid and CHIP Payment and Access Commission.
"What they are calling cracking down on fraud means reducing federal financial contributions to Medicaid," she said. "That's what they're trying to do here."