CMS issues proposed rule on Medicaid supplemental payments

The Centers for Medicare & Medicaid Services May 20 released a proposed rule that would modify policies governing Medicaid state-directed payments as authorized under last year’s reconciliation package and would establish new requirements for certain fee-for-service supplemental payments. CMS said the proposal is intended to align payment policies across managed care and FFS delivery systems and to increase consistency in how payments are structured and reviewed. The proposed rule would extend limits on total payment rates for all SDPs across service categories (i.e., beyond hospital, nursing facility, and academic medical center practitioner services) and certain targeted practitioner payments, generally tying payment levels to Medicare rates. Among other proposals, CMS would phase out certain categories of SDPs over time, including “uniform increase” arrangements. In addition, the rule includes several changes to SDP requirements intended to ensure compliance with federal payment limits and to strengthen oversight and transparency of directed payment arrangements. The agency is providing a 60-day comment period for the rule. The AHA will issue a Regulatory Advisory to members detailing the proposed rule. 

Ashley Thompson, AHA senior vice president for public policy analysis and development, said in a statement, “The Medicaid program is a lifeline for tens of millions of Americans — children, seniors, people with disabilities and hardworking individuals who otherwise do not have access to affordable coverage. The AHA and its members share CMS’ goal of ensuring the fiscal integrity of the Medicaid program so that it can remain strong for those who rely on it. 

“Today’s proposed rule, however, raises important questions about how the statutory requirements will be implemented and the potential impact on providers’ ability to rely on critical Medicaid payments. Health care related taxes and Medicaid supplemental payment programs are longstanding tools that help address chronically inadequate base Medicaid payment rates, and the changes to these financing systems and related provider payments will have very real consequences for access to care in communities across the nation. Projected reductions in funding for essential health care services will not only limit access to care for Medicaid patients. When hospitals and providers are forced to reduce services — or even close entirely — everyone in a community is impacted.  

“We look forward to working with CMS to implement the statutory requirements of last year’s reconciliation package in a manner that preserves access to essential hospital and community services, allows a reasonable and predictable transition timeline for states and providers, and supports the long-term stability of the Medicaid program.”