LeadingAge NY Comments on Medicaid Fiscal Accountability Regulation

LeadingAge NY recently submitted written comments to the Centers for Medicare and Medicaid Services (CMS) on the Medicaid Fiscal Accountability Regulation (MFAR) Proposal. This proposed regulation would make major changes to key parts of state Medicaid financing structures for nursing homes and hospitals, including Medicaid-reimbursable provider taxes and supplemental payments such as Intergovernmental Transfers (IGTs). As of the writing of this article, CMS had received over 4,000 comments on the rule. LeadingAge NY called on CMS to withdraw the proposed rule and conduct further data analysis to justify any proposed changes prior to republishing it.

According to a CMS release, the proposed regulation is aimed at strengthening the fiscal integrity of the Medicaid program and ensuring that state supplemental payments and financing arrangements are transparent and value-driven. CMS notes that overall Medicaid spending grew by 26 percent between 2013 and 2016, and that the federal share grew by 38 percent during the same period due in part to states’ increased use of provider taxes and supplemental payments to enhance federal Medicaid matching payments.

LeadingAge NY’s comments stressed that the proposed regulation:

• Could disproportionately affect nursing homes, which tend to serve large numbers of Medicaid beneficiaries and are significantly underpaid by Medicaid;
• Includes vague and arbitrary proposed standards for provider taxes;
• Seeks to make changes to the requirements for Upper Payment Limit (UPL) compliance demonstrations and to supplemental payment requirements without adequate data;
• Fails to adequately estimate the impact of the rule on Medicaid-funded services;
• Incorrectly concludes that small entities/providers would not be impacted; and
• Provides for an unrealistically short three-year implementation/renewal timeline, which could create uncertainty for states and providers.

New York State imposes a 6 percent Medicaid-reimbursable provider tax on nursing home patient care and other operating revenues (i.e., the “cash receipts assessment”), excluding Medicare revenues. This assessment is Medicaid-reimbursable based on a previous demonstration by the State that the tax meets CMS requirements for being considered broad-based and uniform. States such as New York would need to meet additional criteria for their taxes to be considered Medicaid-reimbursable and demonstrate their compliance more often than is currently the case.

In addition to provider taxes, the MFAR proposal seeks to revise supplemental payments such as IGT programs. Under an IGT, a local government (such as a county or city) that operates a nursing home can receive a supplemental payment to bring total Medicaid payments up to the UPL amount (the amount Medicare would have otherwise paid for the services) by contributing the non-federal share of the payment (50 percent in New York) to receive a federal matching payment. New York’s IGT program allows county governments and the NYC Health and Hospitals Corporation to participate in these arrangements, at no cost to the State. The proposal includes new requirements for how UPLs can be calculated and validated. If finalized, MFAR would sunset supplemental payments every three years pending CMS re-review.

LeadingAge NY will continue to closely monitor these proposed regulations and keep members updated.

Contact: Dan Heim, dheim@leadingageny.org, 518-867-8866