CMS proposed rule would cap state Medicaid payments

Last week the Centers for Medicare & Medicaid Services (CMS) proposed what it calls “a sweeping crackdown on state Medicaid payment practices that have driven payment rates well above Medicare levels, leading to excessive federal costs.” Under the proposed rule, caps would be set which would, according to CMS, save $775 billion over 10 years. “Our goal: to refocus Medicaid dollars on individuals and families instead of inefficient payment schemes.” The proposed rule focuses on State Directed Payments (SDP) and Fee for Service (FFS) and would not allow states to shift the state's share of Medicaid payments to federal taxpayers, according to CMS, which wants to lower the federal government's “match” for Medicaid. “Medicaid was never meant to be a blank check — it was meant to be a lifeline — and lifelines only work when they're strong, reliable, and built to last,” said CMS Administrator Mehmet Oz. “Right now, misaligned payment incentives and opaque financing arrangements are driving up costs without delivering better care. This rule restores balance by aligning Medicaid payments with Medicare standards, strengthening accountability, and ensuring taxpayer dollars support patients, not payment schemes. When we hold the line on spending and put patients first, we protect Medicaid for the people who depend on it today and for generations to come.” While only two states used SDPs in 2016, now 41 do. Provider taxes are used as a financing mechanism, according to CMS, which stated that the “current system lacks clear, enforceable guardrails, allowing states to increase federal spending without consistent accountability for value or outcomes.”