CMS draws criticism from Texas rural hospitals over MFAR rule

Rural hospitals and stakeholders are warning that CMS’s proposed Medicaid Fiscal Accountability Regulation (MFAR) rule could have devastating impacts on rural health care and employment.

The rule, published in November, is aimed at safeguarding the fiscal integrity of the Medicaid program through rules designed to ensure states receiving federal matching funds are complying with federal law.

State of Reform has excerpted a few comments from notable rural hospital stakeholders in Texas.

At the 2020 State of Reform Health Policy Conference in Austin last week, Eddie Read, CFO at Hamilton General Hospitals echoed concerns that have been expressed throughout the country as it relates to funding Intergovernmental Transfers (IGT).

It has the high probability of destroying all of our rural hospitals because even though we made $1.8 million last year on pure operations we lost $7.6 million. Supplemental funding was $8.5 million and property taxes were only $700,000. We cannot go very far in funding IGTs through our property taxes alone, and this has a huge, huge devastating effect if it goes into law.” 

Also at Texas State of Reform, Congressman Michael Burgess M.D. pointed out a lack of clarity regarding the MFAR rule from CMS. 

Because of the pause it would put on Intergovernmental Transfers (IGT) between local, state, and federal governments with health care reimbursement it poses some serious cash flow risks for not just small institutions but large institutions, academic institutions and so on. Nothing has been finalized yet. What is unclear to me is the problem we were trying to fix, perhaps if we can go back to that, maybe there can be a way to address that problem. The agency says we need more transparency in how these transfers are carried out, but there is a way to do that without killing every institution that is providing care for Texans.”

Rep. Burgess also relayed support for the 1115 waiver, as a significant amount of Texans are still uninsured. 

The Texas Hospital Association urged CMS to withdraw the proposal, saying that if finalized the rule would “force state and local governments to increase taxes, further erode the state’s control of the Medicaid program and devastate the state’s health care infrastructure.”

If enacted, the federal rule would jeopardize $11 billion in annual payments Texas hospitals rely on to offset chronic Medicaid underpayment and uncompensated care. The proposed rule would collapse Texas’ already fragile rural health care infrastructure. Texas leads the country in rural hospital closures, with 26 closures in 22 Texas communities since 2010, twice the rate of any other state.”

In separate comments, The Texas Organization of Rural & Community Hospitals cited the same statistic in pointing out that despite supplemental payments and the 1115 waiver, Texas leads the nation with 26 rural hospital closures since 2010. Furthermore, the organization maintains that rural providers in Texas could suffer from the rule more than any other class of provider in any other area. 

MFAR puts safety-net providers, Medicaid beneficiaries, and all employees, employers and patients in rural Texas at risk. The rule summary notes a goal to “promote transparency,” which we support, but the remaining ~200 pages are very problematic for rural healthcare, the Texas Medicaid program, and state flexibility authorized by the Social Security Act.

We believe there is no state more adversely impacted than Texas and no class of healthcare providers more acutely harmed than rural. Research repeatedly affirms that the closure of rural hospitals is a major contributing factor to rural infrastructure loss, rural employment loss, a decline in preventative care and a decline in access to primary and emergency services.”