September 17, 2020

CMS Withdraws Medicaid Fiscal Accountability Rule from Regulatory Agenda

On September 14, CMS Administrator Seema Verma announced the withdrawal of the Medicaid Fiscal Accountability Rule (MFAR) from CMS’ regulatory agenda.  MFAR was initially proposed in November 2019, and billed as a tool to “strengthen the fiscal integrity of the Medicaid program and help ensure that state supplemental payments and financing arrangements are transparent and consistent with all applicable statutory requirements.”  The rule would have established regulations addressing states reporting on supplemental payments, health care-related taxes and donations, disproportionate share hospital payments, and intergovernmental transfers, while also clarifying certain Medicaid financing definitions.  However, the proposed regulations in MFAR were opposed by a wide array of lawmakers, providers, and patient-advocacy groups, who argued that the new regulations would lead to large cuts in Medicaid funding and hamper states’ ability to meet escalating health care needs.  In her statement announcing the withdrawal of MFAR, Administrator Verma stated that CMS has “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.”