Fitch: Medicaid Block Grants, MFAR Threaten States, Providers

Medicaid block grants and the proposed Medicaid fiscal accountability regulation (MFAR) pose new financial threats to providers and states, according to Fitch Ratings, the financial rating company.

MFAR poses the greater threat, Fitch believes, noting in a new analysis that it could

…reduce total Medicaid spending nationally by $37 billion and $44 billion annually…and by $23 billion to $30 billion for hospitals alone.  States, and to some extent providers, would respond to MFAR’s implementation with measures to mitigate the negative fiscal implications.

Block grants, through what has been named the Healthy Adult Opportunity program, also pose a threat, with Fitch explaining that

Capping federal Medicaid contributions, even for a subset of beneficiaries, poses risks to state budgets and those entities reliant on state funding, including local governments and providers.  States would need to find revenue or cost savings, either in Medicaid or elsewhere, to offset reduced federal contributions.

Because private safety-net hospitals care for more Medicaid patients than the typical hospital, both proposed policy changes have a potentially greater impact on them.

Last month NASH conveyed its opposition to the proposed MFAR regulation in a formal comment letter to the Centers for Medicare & Medicaid Services in response to the regulation’s publication late last year.  While NASH has not commented publicly about the Healthy Adult Opportunity program, it has long been concerned about a block grant approach to Medicaid funding, writing in its 2019 advocacy agenda that

Block grants, whether based on individual states’ Medicaid enrollment or on their past Medicaid spending, could impose unreasonable limits on Medicaid spending that could potentially leave private safety-net hospitals unreimbursed for care they provide to legitimately eligible individuals. NASH will work to ensure that any new approach that involves Medicaid block grant continues to give states the ability to pay safety-net hospitals adequately for the essential services they provide to the low-income residents of the communities in which those hospitals are located.

Learn more about the potential impact of the proposed Medicaid fiscal accountability regulation and Medicaid block grants in the Fitch Ratings analysis “Fitch Rtgs: Medicaid Changes Will Affect States, NFP Healthcare Providers.”

Verma Responds to MFAR Critics

CMS administrator Seema Verma addresses criticism of her agency’s proposed Medicaid fiscal accountability regulation in a new commentary on the CMS blog.

Critics of the so-called MFAR regulation have argued that the Centers for Medicare & Medicaid Services’ proposed regulation, if adopted, will lead to a reduction of federal funding for state Medicaid programs, jeopardize access to care and the financial health of providers by leading to a reduction of supplemental payments to high-volume Medicaid providers, and possibly even force some states to raise taxes to compensate for the loss of federal funding.

In her commentary Verma rebuts these criticisms, maintaining that the proposed regulation seeks to ensure that states pay their fair share of their Medicaid partnership with the federal government, raise that share in a manner consistent with federal guidelines, and spend it in ways that fall within regulatory standards.  She also maintains that the regulation will foster greater transparency and accountability for the Medicaid program.

Verma notes that more than 4000 stakeholders submitted written comments in response to the proposed regulation.  NASH was among those commenters, writing that MFAR would give too much authority to federal regulators; create new administrative burdens for hospitals and state governments; and inappropriately limit state financing of their share of Medicaid spending.

Learn more from the Verma CMS blog commentary “Medicaid Fiscal Integrity: Protecting Taxpayers and Patients” and from NASH’s letter in response to the proposed regulation.

 

Verma Responds to Medicaid Block Grant Critics

Last week the Trump administration unveiled its Healthy Adult Opportunity program, a new, optional, already-controversial approach to structuring state Medicaid programs.

Ever since, the program – essentially, Medicaid block grants – has been the subject of criticism from many public officials and health care stakeholders.

Now, Centers for Medicare & Medicaid Services administrator Seema Verma, who oversaw the development of Healthy Adult Opportunity, has responded to the program’s critics in an op-ed piece published in the Washington Post.  See her commentary “No, the Trump administration is not cutting Medicaid.

NASH Raises Concerns About Proposed Budget in News Release

Medicare and Medicaid cuts detailed in the administration’s proposed FY 2021 budget could be harmful to private safety-net hospitals, the National Alliance of Safety-Net Hospitals declared in a news release issued in response to that proposed budget.

Among those cuts:  $465 billion in Medicare payments and $920 billion in Medicaid reductions over the next ten years.

“The extent of the proposed spending cuts is daunting,” said Ellen Kugler, NASH’s executive director.  “The payments that have been targeted for the biggest cuts are the very payments that enable safety-net hospitals to provide vital services to their communities.  Without them, the capacity of private safety-net hospitals across the country to continue serving the low-income, low-income elderly, uninsured, and medically vulnerable residents of their communities could be in serious jeopardy.”

Among the payments targeted for major cuts are Medicare disproportionate share (Medicare DSH), Medicaid disproportionate share (Medicaid DSH), Medicare graduate medical education payments, Medicare bad debt reimbursement, and payments for some Medicare-covered outpatient services.

Learn more about NASH’s objections to the proposed cuts in this NASH news release.

Health Care Groups Rebel Against Proposed Federal Regulation, Program

The administration’s proposed Medicaid fiscal accountability regulation and its guidance encouraging states to implement Medicaid block grants have incurred widespread opposition among a variety of health care groups.

The Medicaid fiscal accountability regulation would, if adopted, impose new restrictions on how states raise their share of their Medicaid spending, potentially limiting state participation in Medicaid or necessitating tax increases to fill the funding gap if long-accepted financing tools are no longer available to them.

The Medicaid block grant guidance offers states a blueprint for curtailing their Medicaid costs by imposing limits on that spending that they negotiate with the federal government.

Numerous health care groups have expressed reservations or direct opposition to one or both of the proposals.  Among them:

  • AARP
  • America’s Essential Hospitals
  • America’s Health Insurance Plans
  • American College of Emergency Physicians
  • American Health Care Association
  • American Hospital Association
  • American Medical Association
  • Association for Community Affiliated Plans
  • Association of American Medical Colleges
  • Coalition of Long-Term Acute-Care Hospitals
  • LeadingAge
  • National Association of State Budget Officers
  • National Association of Medicaid Directors
  • National Continuing Care Residents Association
  • National Governors Association
  • Private Essential Access Community Hospitals
  • Safety-Net Association of Pennsylvania

NASH is among the many that submitted formal comment letters in response to the proposed Medicaid fiscal accountability regulation; see NASH’s letter here.

Learn more about why these groups object to these two new policy developments in articles in Axios (“A little-noticed Medicaid proposal could have huge consequences”), Bloomberg Law (“Trump Plan to Tame State Medicaid Finance Schemes Sees Pushback”), Health Affairs (“Proposed Rules On Medicaid Financing Miss Mark And Threaten Access”), Healthcare Dive (“Payers, providers urge CMS to scrap rule targeting supplemental Medicaid payments”), Healthcare Finance News (“Providers, payers, others speak out against federal proposals for Medicaid funding”), McKnight’s Long-Term Care News (“Providers rally against proposed Medicaid supplemental payment rules that threaten ‘major financial burdens’”), McKnight’s Senior Living (“CMS proposal would be ‘major financial burden’ for CCRCs, residents, organizations say”),  and U.S. News & World Report (“Governors Warn Trump Rule Could Lead to Big Medicaid Cuts”)

Health Care Groups Rebel Against Proposed Federal Regulation, Program

The administration’s proposed Medicaid fiscal accountability regulation and its guidance encouraging states to implement Medicaid block grants has incurred widespread opposition among a variety of health care groups.

The Medicaid fiscal accountability regulation would, if adopted, impose new restrictions on how states raise their share of their Medicaid spending, potentially limiting state participation in Medicaid or necessitating tax increases to fill the funding gap if long-accepted financing tools are no longer available to them.

The Medicaid block grant guidance offers states a blueprint for curtailing their Medicaid costs by imposing limits on that spending that they negotiate with the federal government.

Numerous health care groups have expressed reservations or direct opposition to one or both of the proposals.  Among them:

  • AARP
  • America’s Essential Hospitals
  • America’s Health Insurance Plans
  • American College of Emergency Physicians
  • American Health Care Association
  • American Hospital Association
  • American Medical Association
  • Association for Community Affiliated Plans
  • Association of American Medical Colleges
  • Coalition of Long-Term Acute-Care Hospitals
  • LeadingAge
  • National Alliance of Safety-Net Hospitals
  • National Association of State Budget Officers
  • National Association of Medicaid Directors
  • National Continuing Care Residents Association
  • National Governors Association
  • Private Essential Access Community Hospitals

Among the groups submitting formal comment letters to the Centers for Medicare & Medicaid Services in response to the proposed Medicaid fiscal accountability regulation was the National Alliance of Safety-Net Hospitals.  See NASH’s letter here.

Learn more about why these groups object to these two new policy developments in articles in Axios (“A little-noticed Medicaid proposal could have huge consequences”), Bloomberg Law (“Trump Plan to Tame State Medicaid Finance Schemes Sees Pushback”), Health Affairs (“Proposed Rules On Medicaid Financing Miss Mark And Threaten Access”), Healthcare Dive (“Payers, providers urge CMS to scrap rule targeting supplemental Medicaid payments”), Healthcare Finance News (“Providers, payers, others speak out against federal proposals for Medicaid funding”), McKnight’s Long-Term Care News (“Providers rally against proposed Medicaid supplemental payment rules that threaten ‘major financial burdens’”), McKnight’s Senior Living (“CMS proposal would be ‘major financial burden’ for CCRCs, residents, organizations say”),  and U.S. News & World Report (“Governors Warn Trump Rule Could Lead to Big Medicaid Cuts

Implications of Medicaid Block Grants

States will be able to pursue new Medicaid block grants under guidance recently sent by federal regulators to state Medicaid directors.

But what does that mean?

In a new article, the Commonwealth Fund examines how the Centers for Medicare & Medicaid Services’ Medicaid block grants will work (for states that choose to pursue them; they are not mandatory), the new flexibility block grants will give states, and how the new approach will give states some relief from CMS oversight and delivery system requirements.

Because private safety-net hospitals care for more Medicaid patients than the typical hospital, such a major change in Medicaid policy has a potentially greater impact on them.

Learn more from the Commonwealth Fund article “What Does New Block Grant Guidance Mean for the Medicaid Program?” and by going directly to the source:  the guidance letter CMS sent to state Medicaid directors explaining in detail how Medicaid block grants will work.

Not Surprisingly, Higher Medicaid Rates Improve Access

Higher Medicaid payments for substance abuse disorder treatment lead to better access to such treatment, a new report by the U.S. Government Accountability Office has concluded.

According to the study, which focused on six states,

State officials and SUD [substance abuse disorders] providers in the selected states with larger rate changes reported greater effects on SUD service availability compared to those in states with smaller changes. For example, state officials said that larger rate increases helped increase the number of SUD providers participating in Medicaid, but did not generally note SUD service availability effects for smaller rate increases.  Providers in selected states identified certain factors, such as Medicaid program requirements, that could affect how much the availability of SUD services increased or decreased following rate changes.

The communities served by private safety-net hospitals often have larger numbers of residents with substance abuse disorders than most communities, making this a major challenge for such hospitals.

Learn more about how Medicaid rates affect access to substance abuse disorder services in the new GAO report Medicaid:  States’ Changes to Payment Rates for Substance Use Disorder Services.

 

NASH Unveils 2020 Advocacy Agenda

The National Alliance of Safety-Net Hospitals has published its 2020 advocacy agenda.

To advance the interests of private safety-net hospitals, in the coming year NASH will:

  • Continue to address the major policy challenges of 2019 that had not been resolved as that year ended:  an extended delay of Medicaid disproportionate share (Medicaid DSH) cuts, surprise medical bills, and prescription drug prices.
  • Respond to administration-driven policies such as the calculation of Medicare disproportionate share (Medicare DSH) payments, reduced payments for prescription drugs under the 340B prescription drug discount program, and efforts to reduce Medicaid eligibility and benefits and to limit the means through which states may finance their share of Medicaid payments.
  • Respond to expected judicial decisions addressing the extension of site-neutral Medicare outpatient payments to additional outpatient settings and the implementation of a new public charge regulation.

For a more detailed look at NASH’s advocacy plans for the coming year, see its complete 2020 advocacy agenda.

NASH Urges CMS to Withdraw Medicaid Fiscal Accountability Regulation

CMS should withdraw its proposed Medicaid fiscal accountability regulation, NASH wrote in formal comments in response to the proposed regulation.

In its comment letter, the National Alliance of Safety-Net Hospitals wrote that

While NASH supports greater transparency in Medicaid, that support is outweighed by too many troubling aspects of the proposed regulation.

Specifically, NASH told CMS that the proposed regulation would:

  • deprive states of important, established policy-making prerogatives;
  • create major new administrative burdens for hospitals, state governments, and federal regulators;
  • inappropriately regulate how states finance their share of their Medicaid spending;
  • introduce new, unspecified standards for state Medicaid programs; and
  • violate the federal Administrative Procedures Act.

Learn more by reading NASH’s complete formal comment letter to CMS in response to the agency’s proposed Medicaid fiscal accountability regulation.