CMS Withdraws Proposed MFAR Rule

The Centers for Medicare & Medicaid Services (CMS) withdrew the proposed Medicaid Fiscal Accountability Regulation (MFAR) rule. The rule was published in November and would have overhauled the payment arrangements states could use to raise their matching grants for the Medicaid program—funding that is then matched by the federal government. It was widely opposed by conservative and liberal states, hospitals, insurers, patient advocates and a bipartisan mix of members of Congress.

The decision to withdraw the rule was announced via CMS’ twitter account. It noted that the rule was being withdrawn because of the “concerns that have been raised by our state and provider partners about potential unintended consequences of the proposed rule, which require further study.”

The Trump administration initially expressed concern over methods some states used to raise the state matching funds required for participation in the federal Medicaid program. The administration questioned practices such as taxing providers to help raise matching funds.

The proposed rule was intended to address the administration’s concerns. Specifically, it was “designed to increase transparency in Medicaid financing and ensure that taxpayer resources support the health care needs of our beneficiaries,” CMS Administrator Seema Verma said.

Many in the health care industry opposed the proposed rule. They warned the rule could lead to massive cuts in Medicaid because states would struggle to raise the required matching funds, which would lead to cuts in coverage and cuts to providers.