CMS Formally Withdraws Proposed Federal Rule on Medicaid Supplemental Payments

This week, the U.S. Centers for Medicare and Medicaid Services (CMS) formally withdrew its proposed federal regulation, “Medicaid Fiscal Accountability Rule” (MFAR). Recall, CMS proposed the rule last fall which would have broadly expanded federal oversight of Medicaid supplemental payments. MFAR would have additionally recast current rules and regulations governing how supplement payments are structured, financed and distributed.

According to CMS, the proposed rule would have strengthened “the fiscal integrity of the Medicaid program and help ensure that state supplemental payments and financing arrangements are transparent and value-driven.” Experts in the field, including California’s Legislative Analyst’s Office (LAO), anticipated that if the rule were to be implemented, billions of dollars of Medicaid payments nationwide would have been impacted, creating significant uncertainty for state budgets and Medicaid providers.

In announcing the withdrawal of the proposed rule, CMS Administrator Seema Verma indicated in a statement, “We’ve listened closely to concerns that have been raised by our state and provider partners about potential unintended consequences of the proposed rule, which require further study. Therefore, CMS is withdrawing the rule from the regulatory agenda.”