Lawmakers: Medicaid Supplement Crackdown Would Constrict Nursing Home Supply

A group of 27 U.S. representatives asked the Centers for Medicare & Medicaid Services (CMS) to rethink a proposal restricting Medicaid supplemental payments — claiming enforcement will lead to decreased services and fewer available nursing home beds.

The controversial proposed rule, the Medicaid Fiscal Accountability Regulation (MFAR), would bring tighter regulations to state-based Medicaid supplemental payment programs.

Cracking down on these reimbursement boosts would further worsen already squeezed margins and potentially squelch the supplemental payment programs that many operators have counted on amidst insufficient Medicaid payments — potentially eradicating $50 million in reimbursements each year, some industry leaders say.


The lawmakers echoed those concerns in their letter.

“This change restricts the availability of high-quality nursing home beds at a time when demand is increasing exponentially,” the lawmakers wrote. “Older Americans who have spent their lives contributing to their communities and planning their retirements will pay the price. We urge CMS to protect these older Americans.”

In the letter condemning MFAR, the bipartisan group of representatives pointed out its potential consequences, in particular focusing on the proposed rule’s impact on provider taxes.


Many states use special provider taxes on nursing homes to increase the matching Medicaid funds that they collect from the federal government; because senior living properties, including continuing care retirement communities (CCRCs) don’t rely as much on Medicaid, states have implemented special waivers that exempt their owners from paying into that program.

But MFAR would force states to apply the taxes to all operators or none, which both senior living operators and residents fear will lead to increased costs; nursing home operators, meanwhile, worry that state lawmakers will scrap the taxes entirely to spare the CCRCs, leading to reduced Medicaid payments.

“CCRCs are likely to lose their exemption and be assessed additional state taxes,” the lawmakers wrote, adding that many senior living communities also feature on-site nursing homes.

Slamming CMS’s proposal, Rep. Donna Shalala — one of the primary signatories of the letter — pointed a finger at President Trump for impairing state financing that would diminish much needed health care resources.

“I believe this is all part of the Trump Administration’s concerted effort to undermine Medicaid.  They are doing it here by trying to undermine state financing mechanism [sic] for Medicaid,” the Florida Democrat told SNN in a statement. “I think this regulation is a disaster and I hope the Administration pulls the rule.”

Rep. Shalala expressed concern for seniors who have pinched pennies in preparation for retirement and warned against further dipping into the shallow pool of federal dollars.

“If we increase taxes on these folks — by some estimates to the tune of a $1,000 a month — we could see people drawing down their assets faster and possibly joining the Medicaid system sooner, adding more costs to the program,” Shalala said.

In addition to federal lawmakers telling CMS to reconsider the rule in their January 30 letter, nursing home operators are rallying against the intended cuts.

“The bleak reality is that Medicaid funding is already inadequate,” American Health Care Association CEO Mark Parkinson and American Hospital Association CEO Rick Pollack said in a joint statement released late last month, SNN reported in January.

If carried out, rule would remove “up to $50 billion nationally from the Medicaid program annually, further crippling Medicaid financing in many states and jeopardizing access to care for the 75 million Americans who rely on the program as their primary source of health coverage,” the trade-group CEOs argued.

Meanwhile, CMS administrator Seema Verma responded to the criticism against the MFAR initiative in a strongly worded blog post released last week. Verma in particular asserted that the latest round of Medicaid restrictions is only for “strengthening accountability and increasing transparency to ensure that every Medicaid dollar is claimed and spent in accordance with federal laws.”

Verma also questioned the veracity of projections that showed billions of dollars in losses.

“This proposed rule is not intended to reduce Medicaid payments, and alarmist estimates that this rule, if finalized, will suddenly remove billions of dollars from the program and threaten beneficiary access are overblown and without credibility,” Verma wrote. “If states have arrangements that need to evolve, we will work with them to achieve a successful transition.”

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