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CMS Withdraws Rule, Giving Reprieve To Health Care Providers

Seema Verma
The Florida Channel
CMS administrator Seema Verma withdrew the rule, which was meant to cut down on what she once described as "shady recycling schemes."

The Trump administration has withdrawn a proposed rule that Florida health care providers were dreading and that was once described by a top state Medicaid official as crippling.

The move Monday was greeted warmly by hospital and nursing home officials who were worried about the rule taking effect at the same time facilities have lost money amid the coronavirus pandemic.

Seema Verma, administrator of the federal Centers for Medicare and Medicaid Services, withdrew the rule, which was meant to cut down on what she once described as “shady recycling schemes.” It would have required any health care tax collected by the state to draw down so-called “supplemental Medicaid dollars” to be broad based.

That proposed requirement would have run afoul of a 2009 Florida law that authorized a tax, or assessment, on every nursing-home resident whose care is not funded by Medicare. The state law exempts nursing homes with fewer than 45 beds and nursing homes that are co-located on the campuses of continuing care retirement communities. Additionally, the assessment --- which helps draw down more federal money --- is not uniformly applied to high-volume Medicaid providers who pay less than facilities with smaller numbers of Medicaid beneficiaries.

“This proposal would have cut over $660 million in funding to Florida nursing centers. A loss that significant would have had a devastating effect on the residents in our centers who rely on Medicaid as the safety net to cover their long-term care service,” Florida Health Care Association Executive Director Emmett Reed said in a statement. 

Medicaid is jointly funded by state and federal governments. Typically, standard payments, or base payments, go to providers on a per-claim basis for providing services to Medicaid patients. Base payments are also made to account for higher levels of care or complexity or intensity of services. States can offer extra compensation to providers by establishing supplemental payments, which are in addition to the base payments. In recent years, the amount of money the federal government spends for supplemental payments has grown exponentially.

Verma unveiled the proposed rule in November, saying at the time there had been a proliferation of supplemental payment arrangements “where shady recycling schemes drive up taxpayer costs and pervert the system.”

The rule drew widespread criticism from disparate interests. Joan Alker, executive director of the Center for Children and Families at Georgetown University, called the proposal “a way to undermine Medicaid spending, no question, by making it harder for states to come up with their share.”

Florida Medicaid director Beth Kidder wrote to the Centers for Medicare and Medicaid Services during a public-comment period to oppose the measure.

“It is abundantly clear the CMS (the federal agency) has not sufficiently assessed the substantial consequences this proposed rule would have on both the providers serving and the recipients relying on Medicaid program services that would be impacted by a myriad of the draft positions,” Kidder wrote in her Jan. 31 letter. “While we are unable to calculate the specific impact to all our state programs based on the existing ambiguities in the proposed rule, it is clear that the impact would be immediate and crippling.”

Safety Net Hospital Alliance of Florida CEO Justin Senior, who once served as Florida’s Medicaid director, estimated earlier this year that the proposed regulation would amount to a $631 million hit for hospitals that are members of his organization, which includes public, teaching and children’s hospitals.

Those hospitals include Jackson Health System in Miami, Orlando Health, UF Health Jacksonville, and UF Health Shands Hospital in Gainesville. Additionally, Senior previously estimated that medical faculty teaching programs at the University of Florida and the University of Miami could have lost about $250 million under the proposed rule

“We’re happy the administration took the time to review all of the public input and gave the questions about this proposal the serious considerations they deserved,” Senior said Monday night. “We support transparency, but this proposed rule would have opened up a slew of unintended consequences. It would have imposed additional costs on the elderly and additional taxes on communities around the country, just to name a few. The administration did the right thing to pull this back, and we appreciate it.”