Protection & Advocacy for People With Disabilities Issues Public Comment on Centers for Medicare & Medicaid Services Proposed Rule

WASHINGTON, Feb. 13 -- Beth Franco, executive director of the Protection and Advocacy for People with Disabilities, Columbia, South Carolina, has issued a public comment on the Centers for Medicare and Medicaid Services' proposed rule entitled "Medicaid Program: Medicaid Fiscal Accountability Regulation". The comment was written on Jan. 27, 2020, and posted on Feb. 11, 2020:

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Protection and Advocacy for People with Disabilities in South Carolina (P&A) submits these comments in opposition to the proposed Medicaid Fiscal Accountability Regulation. P&A protects and advocates for people with disabilities in South Carolina. We ensure that people served in residential and day programs are free from abuse, neglect and exploitation, people are able to participate in the community, including the right to live in the most integrated setting, and people have access to facilities, programs, housing, education, employment, voting and disability-related rights. We are concerned about how this rule would affect access to services that people with disabilities need. We appreciate the opportunity to submit comments and strongly recommend that HHS not finalize the proposed rule.

Impact of the Proposed Rule

The proposed rule would have a significant detrimental impact on how states finance their Medicaid programs and pay providers like hospitals, nursing homes and physicians. It could lead states to cut benefits and eligibility as well as provider payments, jeopardizing access to care for over 70 million Medicaid beneficiaries. HHS says it wants to "better understand the relationship between and among the following: Supplemental provider payments, costs incurred by providers, current UPL requirements, state financing of the non-federal share of supplemental payments, and the impact of supplemental payments on the Medicaid program (such as improvements in the quality of, or access to, care.)" Yet rather than seek to obtain that better understanding, HHS would severely restrict states' ability to use these mechanisms to finance their share of Medicaid expenditures and reimburse providers.

The proposed rule would make a number of highly technical policy changes that could prohibit or limit ways that states finance their share of Medicaid expenditures or provide supplemental payments to providers. For example, under current law, public providers may make "Intergovernmental Transfers" (IGTs) using any public funds. The proposed rule would limit the source of IGTs to funds from state and local taxes or funds appropriated to teaching hospitals. That would effectively prohibit public providers from using private insurance revenues or charitable donations to fund IGTs. As a result, the proposed rule would likely reduce the amount of IGTs if states are unable to replace IGT funding with other sources such as general revenues, as is likely in many states, this could lead states to cut their Medicaid programs. Because fewer state funds for Medicaid results in fewer federal Medicaid matching funds, the cuts would be much larger than the shortfall in state funding. The proposed rule also seeks to limit the use of provider taxes and other existing, legal funding mechanisms states utilize to pay their share of Medicaid costs. It also would restrict the use of supplemental payments.

We are also concerned that the proposed rule would establish discretionary standards of review for states' Medicaid financing arrangements and supplemental payments that would create uncertainty about what is allowable. These standards would apply to both new and current financing and payment arrangements that HHS approved and have been in place for many years. The proposed standards of review give HHS too much discretion and fail to explain how HHS would apply them, which could lead to geographic, or other unexplained differences between states. Further, because HHS would conduct reviews at least every three years for certain provider taxes and all supplemental payments, states could end up eliminating or significantly scaling back existing financing and payment arrangements in their Medicaid programs out of fear and confusion.

The subject matter of the proposed rule is extremely complex and the lack of specifics makes it difficult for us to respond to the rule's potential impact on access to care. We are, however, very concerned that the proposed rule will directly affect those individuals on whose behalf our organization works.

In South Carolina, not only do people with disabilities rely on Medicaid coverage. Medicaid is an important source of coverage for people with disabilities who live in rural communities, and are people of color. Based on NHeLP's Medicaid Fast Facts

* Medicaid is an important source of health coverage for people of color, who represent approximately 58% of non-elderly Medicaid enrollees.

* More people in rural areas (21 %) are enrolled in Medicaid compared to metropolitan areas (16%).

Administrative Requirements for Proposing a Rule

In addition to the concerns we discuss above, we believe HHS has failed to comply with Executive Order (E.O.) 12,866 in proposing this rule. E.O. 12,866 requires agencies to assess the costs and benefits of any economically significant regulatory action. An agency should propose a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs, and after considering all costs and benefits of available regulatory alternatives, including the alternative of not proposing a rule. Yet HHS acknowledges that "[t]he fiscal impact of the Medicaid program from the implementation of the policies in the proposed rule is unknown [italics added]." The only estimate of the fiscal effects on state Medicaid programs that HHS provides is for the single provision establishing the new, lower limit on Medicaid supplemental payments to physicians and other practitioners.

Separate from the requirements of E.O. 12,866, under the Administrative Procedure Act, courts have held that when an agency relies on a cost-benefit analysis as part of its rulemaking, a serious flaw undermining that analysis can render the rule unreasonable. Because HHS' cost-benefit analysis for the Proposed Rule fails to adequately quantify or to explain why HHS could not quantify those costs, HHS does not adequately assess the economic effects of the Proposed Rule. Thus finalizing the Proposed Rule is unreasonable.

Conclusion

Despite acknowledging that more information is needed, HHS proposes making immediate, significant changes in the rules on the use of supplemental payments and the use of provider taxes, intergovernmental transfers (IGTs) and certified public expenditures (CPEs) to finance the state share of Medicaid costs. If adopted in its current form, the proposed rule would force many states to make rapid changes in the way they finance their share of Medicaid expenditures and reimburse providers. It is likely that most states would not increase the c::mount of general revenue they devote to Medicaid, forcing them to make cuts in provider payments, benefits and even eligibility. Similarly, states are unlikely to increase base payments to providers or increase payments in other ways to offset the reduction or elimination of supplemental payments. Further, the lack of data and vagueness of many provisions of the rule make it impossible to fully understand its impact and provide appropriate comments.

We urge HHS to withdraw the rule in its entirety, and instead establish a process to obtain a full understanding of various financing arrangements, their impact on the program, and necessity for any potential changes.

Thank you for the opportunity to provide out input on this proposed rule. If you have any questions please contact Beth Franco at 803-217-6713, or [email protected]

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The proposed rule can be viewed at: https://www.regulations.gov/document?D=CMS-2019-0169-0001

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