CMS withdraws MFAR rule

The Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma announced on Monday that the agency is officially dropping the controversial Medicaid Fiscal Accountability Regulation (MFAR) rule.

The proposed rule, which was announced in November, would have altered the way states are able to finance their share of Medicaid, specifically targeting provider taxes and inter-governmental transfers (IGTs).



In a tweet on Monday, Verma stated:

“The proposed Medicaid Fiscal Accountability Rule (MFAR) was designed to increase transparency in Medicaid financing to ensure that taxpayer resources support the health care needs of our beneficiaries. We’ve listened closely to concerns that have been raised by our state and provider partners about potential unintended consequences of the proposed rule, which require further study. Therefore, CMS is withdrawing the rule from the regulatory agenda.”

The rule faced opposition in recent months from a broad range of providers, stakeholders, and state leaders across the country.

A January statement from leaders of the American Hospital Association and the American Health Care Association stated that enacting the rule “would cut up to $50 billion nationally from the Medicaid program annually.”

A letter from the Oregon Health Authority stated that the rule would cut over 60% of state and federal financing for Oregon’s Medicaid system.

In Texas, rural hospitals and stakeholders warned that the rule would have devastating impacts on rural health care. The Texas Hospital Association also urged CMS to withdraw the proposal, stating that it would “jeopardize $11 billion in annual payments Texas hospitals rely on to offset chronic Medicaid underpayment and uncompensated care.”

In response to the news that CMS is dropping the rule, Texas Gov. Greg Abbott, Lt. Gov. Dan Patrick, and AG Ken Paxton issued the following statement:

“We applaud President Trump for taking action to withdraw this rule. His action will save rural hospitals in Texas and support our health care providers statewide. The global pandemic has created unprecedented challenges for our healthcare system, and the proposed MFAR regulation would have exacerbated these challenges.”