Proposed supplemental pay rule ‘not intended’ to reduce Medicaid payments: Verma

A Centers for Medicare & Medicaid Services’ proposed rule that targets supplemental payments is “not intended to reduce Medicaid payments” for providers but rather increase transparency, Administrator Seema Verma argued in a blog post Wednesday.

The agency is currently reviewing more than 4,000 comments submitted on the proposed Medicaid Fiscal Accountability Regulation, which has faced heavy criticism from long-term care providers.

Both the American Health Care Association and LeadingAge have called on CMS to withdraw the proposed rule, arguing it has serious implications for providers’ supplemental payments and could cut billions from the Medicaid program.

“The proposed rule is not intended to reduce Medicaid funding, but is aimed at strengthening accountability and increasing transparency to ensure that every Medicaid dollar is claimed and spent in accordance with federal law while supporting the interests of Medicaid recipients,” Verma wrote. 

Verma explained that Medicaid is supposed to be funded jointly by states and the federal government, and states can use alternative sources of funding to help finance its share. Total annual spending on Medicaid by states and the federal government is projected to reach $1 trillion by 2030, she noted.

According to Verma, states have increasingly relied on the use of supplemental payments to healthcare providers over the past several years. The payments have increased from 9.4% of all total reimbursement in 2010 to 17.5% by 2017.

“While they can be an important source of revenue for safety-net providers, data indicate that these additional payments are used unevenly across states, leading to large funding inequities across the nation,” Verma wrote. “As providers come up with a creative strategies to put up the state’s match, they are essentially allowing the state to skirt its responsibility to finance part of the program while increasing Medicaid costs without any clear connection to the volume or quality of services delivered.”  

Oversight agencies have also urged CMS to strengthen supervision of Medicaid supplemental payments, Verma said. She added the rule would also increase transparency by requiring states to report payment and financing information at the individual provider level. 

“These ‘pay to play’ schemes can lead to huge disparities, with some providers receiving net reimbursement at rates double or triple other providers, creating market distortion and unfair competition,” she added.