Potential MFAR Medicaid Cuts Back in Spotlight as Wide Swath of Health Leaders Call for More Relief

A slew of governmental and health care organizations called on the federal government to boost its share of Medicaid support — and to revoke a controversial proposed rule that would have overhauled how some states drew down federal dollars.

The organizations — which represent political officials from the local to the state level and care settings from hospitals to skilled nursing facilities — wrote to Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, Speaker of the House Nancy Pelosi, and House Minority Leader Kevin McCarthy this past week, calling for an enhanced federal medical assistance percentage (FMAP) for Medicaid in the next COVID relief bill.

The March 18 Families First Coronavirus Response Act included an FMAP increase of 6.2 percentage points, and the funds were available to states from January 1; while the signatories to the July letter expressed support for the increase, they argued that more aid will be needed given the scope of the COVID-19 emergency.

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That original increase led to some states taking action to boost Medicaid rates for nursing homes, but the allocation of the additional federal matching funds was up to states, and not all of them opted to use the funds for that purpose.

The organizations signing the July 10 letter — which included the major nursing home trade groups American Health Care Association and LeadingAge — called for an additional FMAP increase of “at least 5.8 percentage points,” also retroactive to January 1, that would remain in effect until September 30 regardless of unemployment.

They also called for maintaining what would then be the 12% increase to FMAP until the national unemployment rate in the U.S. drops below 5%. As of June, the unemployment rate sat at 11.1%, according to the U.S. Bureau of Labor Statistics.

“Given the magnitude of both the public health and economic crises the nation continues to face, state and local governments need more support to provide health care services to individuals and families,” the letter said.

The letter also asked that the proposed Medicaid Fiscal Accountability Rule (MFAR) be rescinded.

The rule would clarify definitions for Medicaid supplemental payment programs and establish new reporting requirements for states that use those programs; many are used to shore up Medicaid payments for SNFs. AHCA and the American Hospital Association pegged the potential annual Medicaid losses under MFAR at $50 billion earlier this year.

“We believe this rule would reduce the ability of states and localities to finance the non-federal share of Medicaid, resulting in a reduction in federal Medicaid funding for the public health and hospital systems and destabilizing them at a time when healthcare and public health services are needed most,” the July letter stated.