HAP Resource Center

Fact Sheet: Medicaid Fiscal Accountability Regulation (MFAR)

HAP’s Perspective

Nationally, the Medicaid program could face total funding reductions between $37 billion and $49 billion annually or 5.8 percent to 7.6 percent of total program spending. Hospitals and health systems specifically could see reductions in Medicaid payments of $23 billion to $31 billion annually, representing 12.8 percent to 16.9 percent of total hospital program payments.

HAP has both substantive and procedural concerns about the rule, including:

  • The impact of the proposed rule is unknown. The Centers for Medicare & Medicaid Services (CMS) has failed to complete a rigorous regulatory impact analysis for the proposed rule, including an analysis of its impact on the statutorily mandated factors of access to care and quality, which would be placed at risk by the proposed rule
  • ​CMS is operating beyond its existing statutory authority and proposing broad discretion with no clear criteria for approvals, creating enormous uncertainty for states
  • The proposal creates pressure on state/local communities to increase taxes to maintain support for the Pennsylvania Medicaid program
  • The proposed rule runs contrary to President Trump’s Executive Order and CMS’ stated intent of reducing regulatory burden

Stakeholder Statements

The U.S. Chamber of Commerce said the rule would "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 National Governors Association urged CMS not to move forward with the rule and "instead, gather more data to understand the impact, identify more targeted evidence-based policies to address concerns and work with states to determine best practices for how to strengthen accountability and transparency in the Medicaid program." NGA also said it was concerned the proposed rule "would significantly curtail the longstanding flexibility states have to fund and pay for services in their Medicaid programs. In losing this flexibility, states may be unable to adequately fund their Medicaid programs, which could lead to unintended consequences that would negatively impact Medicaid beneficiaries across the country."

The National Association of Medicaid Directors said the rule "would impose uniform rules and requirements on states without sufficient consideration to the diversity of state program designs and financing mechanisms. This one-size-fits-all approach will inevitably create challenges for the majority of states. While we support clarifying the parameters of appropriate financing mechanisms, CMS should not do so in a manner that gives the federal government significantly more authority over state decisions or define parameters so tightly that states no longer have necessary flexibility to administer their programs."

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Topics: Federal Advocacy, Medicaid

Revision Date: 2/26/2020

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