Experts Lambast CMS MFAR as Detrimental to Employers, Patients

February 19, 2020 - The US Chamber of Commerce is the most recent opponent to the CMS Medicaid Fiscal Accountability Regulation (MFAR), joining governors, providers, and payers in its disavowal of the rule’s disruptions to Medicaid reimbursement arrangements.

“Although we support the goals detailed in the preamble, the proposed rule could: have detrimental economic ramifications on communities across the country; put patient access to critical services in jeopardy, exacerbate cost-shifting onto privately insured communities; and violate state sovereignty and ability to manage state programs and populations by providing CMS unprecedented discretion over its evaluation of state financing and payment approaches,” the Chamber of Commerce wrote. 

“Additionally, we have operational and procedural concerns given that the time-table contemplated by the proposed rule is untenable, and the lack of meaningful regulatory impact analysis. We urge CMS to withdraw this proposed rule.”

MFAR would alter how states report supplemental payments, redefine certain Medicaid financing terminology, and  stamp out financing mechanisms that could be used for impermissible payment arrangements. With this new rule, CMS aims to gain more oversight regarding payments to crack down on improper payments.

While the chamber approved the rule’s stated goal of controlling improper healthcare spending, it was not subdued in its commentary on the new rule. The chamber called the rule’s potential impact on the national economy and patient access “detrimental” and one that would compel states to make “untenable choices” for their Medicaid populations.

READ MORE: GAO Reveals Medicaid Eligibility Inaccuracies, Recoup Strategies

MFAR policies could lead to funding cuts of $37 billion to $49 billion each year, the Chamber of Commerce stated. Payments to hospitals and health systems could drop by between $23 billion and $31 billion, or nearly 13 to 17 percent of all hospitals’ payments. Hospitals, particularly in rural areas, would shut down and employment would suffer.

These results would leave payers with fewer options for in-network hospitals and in-network providers leading to major access to care barriers and higher healthcare spending for employers, payers, and individuals.

The Chamber of Commerce projected a possible chain of events resulting in a larger uninsured population.

Because of the rule’s budgetary restrictions, states would have to adjust their eligibility and benefits.

Widespread disenrollment would create major barriers in access to care. As states disenroll individuals from their Medicaid programs under revised eligibility rules, providers—overwhelmed by uncompensated care costs—would have to cut down their patient panel sizes.

READ MORE: What are Impacts of the Medicaid Fiscal Accountability Regulation?

In turn, the lack of provider availability could stunt employers’ healthcare benefits offerings and, by extension, negatively affect employees’ healthcare services utilization.

Both within and outside of the healthcare industry, these changes would also have implications for employers’ competition and wage growth.

In addition to this chain of events, the chamber reprimanded CMS for its incomplete economic analysis.

MFAR places a 150 percent fee-for-service (FFS) base payment cap on supplemental payments. The chamber highlighted the CMS estimation that this cap would leave providers with 25 percent ($256 million) less in funding each year but that the agency seemed not to grasp the import of that financial loss.

“CMS blithely dismisses this reduction as merely a ‘transfer’ from Medicaid providers to the government,” the Chamber of Commerce stated. “CMS makes a fatal mistake by stopping there in its analysis. The impact characterized by CMS as a ‘transfer’ has serious consequences that must not be ignored in a credible regulatory impact analysis.”

READ MORE: Eligibility Process Impacts Medicaid, CHIP Improper Payment Rates

By issuing a statement of disapproval, the Chamber of Commerce joined governors, payers, providers, and other policymakers.

“Our comments recognize the need for CMS to safeguard the fiscal integrity of the Medicaid program, but we express serious concern that the proposed restrictions could significantly hinder the ability of many states to fund their Medicaid programs, which could have harmful impacts on Medicaid beneficiaries and coverage,” America’s Health Insurance Plans said in a statement.

Massachusetts’s Executive Office of Health and Human Services was more severe in its remarks.

The department called the rule “an unprecedented federal overreach.” The letter characterized the restrictions on current financing arrangements as “arbitrary” and the standards of review as ambiguous. The department also called out the damage that could be caused by restricting intergovernmental transfers.

The state stands to lose from $365 million to $2.4 billion in federal funding as a result of MFAR, New England Public Radio reported.

The National Governor’s Association stressed the uncertainty this rule creates. The standards of review are so expansive regarding supplemental payments and provider taxes that states will have difficulty assessing whether their payments are within the new legal boundaries.

A recent report from the Government Accountability Office underscored the motivation for the MFAR rule by revealing eligibility inaccuracies which have the potential to lead to improper payments and the fact that CMS is powerless to recoup the cost of improper payments.

While most stakeholders expressed an understanding for the agency’s desire for greater oversight and the need to cut down improper payments, governors, payers, providers, and now the Chamber of Commerce have also articulated that MFAR could cause more damage than resolution. Most of these entities suggested that CMS withdraw the proposal and take more time to gather data and stakeholder comments before implementing changes.