Despite withdrawing a proposed rule to eliminate accounting gimmicks in Medicaid, transparency is not off the radar, says Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma.
“A lot of these efforts, whether it’s price transparency or value-based care, enjoy broad bipartisan support, and I think people across the healthcare industry recognize that these are the things that we need to do to make our healthcare system is more sustainable and more accessible for every American,” Verma told HealthLeaders on October 30, 2020.
Verma announced the withdraw of the Medicaid Fiscal Accountability Rule (MFAR) on September 14, writing on Twitter that the agency was concerned “about potential unintended consequences of the proposed rule, which require further study.”
CMS withdrew the rule after state governments and lobbyist groups criticized the proposal. If enacted, MFAR would have established new reporting requirements for so-called “supplemental payments to health care providers” and changed how state governments may finance Medicaid programs.
Funding Other State’s Spending
MFAR, a rule published in the Federal Register in November 2019, would have allowed the federal government to track and control how states financed their Medicaid programs.
“The rule aimed to gather better data, provide greater transparency, and offer clearer guidance on appropriate financing of the Medicaid program, and in particular, the way the federal government and states finance its share of the costs,” said Nina Schaefer, senior research fellow in health policy with The Heritage Foundation.
MFAR was intended to crack down on state governments’ attempts to shift Medicaid costs onto federal taxpayers, says Chris Jacobs, the founder of Juniper Research Group and a former senior policy analyst for The Heritage Foundation.
“The proposed rule sought to address various schemes by states to have the federal government pay for a larger share of Medicaid expenses,” Jacobs told Health Care News. “These schemes increase federal spending two ways: first, by shifting costs from the states to Washington, and secondly by encouraging states to spend more on Medicaid because they believe Washington will pay a bigger share.”
MFAR’s withdrawal is a setback in the effort to slow the ongoing inflation of health care spending, Jacobs says.
“Abandoning the proposed rule abandons a potential restraint on Medicaid spending growth, at a time when federal debt and deficits have soared to unsustainable levels,” Jacobs said.
“Special interests win,” tweeted Brian Blase, president of Blase Policy Strategies. “To be clear, this rule was largely about understanding how much Medicaid money was going to individual providers and enforcing the law to limit the size of kickbacks in the program. Taxpayers and those who truly need Medicaid lose. [A] disappointing decision by CMS to allow Medicaid to continue as is without accountability or transparency.”
The Status Cannot Be Quo
Even though MFAR was withdrawn, Schaefer says Medicaid reform is still a priority.
“The decision to withdraw the rule should not imply that the efforts behind it are unwarranted or unhelpful,” Schaefer said. “Maintaining the status quo will only further the case for reform of the financing of the program in the future.”
Schaefer says Medicaid’s current design incentivizes state governments to bilk the federal government, and by extension, taxpayers.
“The current financing design of the Medicaid program encourages states to maximize the federal contributions and shift greater and greater costs to the federal taxpayer,” Schaefer said. “Ending the open-ended financing arrangement would help to curb this trend and restore proper accountability to the program.”
Lawmakers Need to Act
Schaefer says lawmakers in Congress need to pick up the ball and codify MFAR’s proposed reform into law.
“Ultimately, Congress should work to reform the overall financing of the Medicaid program; specifically, moving it away from the current open-ended arrangement to a budgeted amount whether through a block grant or some other arrangement that puts Medicaid on a discrete budget,” Schaefer said.
People should support future attempts to reform spending and improve health care for patients, Jacobs says.
“Conservatives should support efforts to improve program integrity throughout the Medicaid program – both regulations like MFAR designed to curb abuses by states, and common-sense reforms like beneficiary eligibility checks and other measures designed to curb waste, fraud, and abuse,” Jacobs said.
Jesse Hathaway (firstname.lastname@example.org) is a policy advisor for The Heartland Institute.