DFWHC Blog – CMS regulation puts North Texas on dangerous financial cliff


Blog by Stephen Love, President/CEO, DFW Hospital Council

In November 2019, Seema Verma, administrator of The Centers for Medicare and Medicaid Services (CMS), released a proposed rule called the Medicaid Fiscal Accountability Regulation (MFAR). Verma states the rule would promote transparency by establishing new reporting requirements for supplemental payments to Medicaid providers.

CMS is now proposing this mandatory MFAR for all states, a decision that would be devastating to all Texans whether a Medicaid beneficiary or not. We understand CMS’s attempted stewardship of MFAR, but this proposal goes beyond transparency and threatens the healthcare safety net of four million Texans on Medicaid.

CMS claims to be clarifying existing policies. In reality, it is introducing alarmingly ambiguous standards clearly inconsistent with CMS’ statutory authority. CMS apparently performed no financial modeling or expected impact analysis from these sweeping changes that threaten the healthcare safety net for the most vulnerable in Texas. Medicaid is a partnership between state and federal governments and the costs are shared for the state’s healthcare infrastructure for Medicaid beneficiaries.

The American Hospital Association estimated Medicaid payments could be reduced $23 – $31 billion per year throughout the U.S. Our concerns are not alone, as the American Medical Association stated the rule “could result in the loss of funding for our nation’s most vulnerable patients.” The National Governors Association stated this rule “will result in decreased access to care for many vulnerable Americans.”

MFAR would cripple our rural hospitals and force closures of many that already have razor thin margins in today’s environment due to decreased reimbursement. MFAR impacts all aspects of Medicaid reimbursement, but really focuses on supplemental payments that help fund the shortfall in base Medicaid payments where providers can’t cover the cost of delivering the services.

If implemented, MFAR would impact all Texas residents because everyone will have to fund the building deficit. The annual supplemental payments (including disproportionate payments) for just Dallas and Tarrant counties is approximately $2.5 billion dollars. This CMS regulation would cause North Texas residents to face a potentially catastrophic financial cliff that most certainly will create increased taxes for everyone.

Please contact Governor Abbott, your state and federal legislative leaders and CMS to insist that Texas push back on the MFAR proposal and withdraw the rule entirely. As Texans, we need to protect the most vulnerable in our society.