On Monday, September 14, 2020, the Centers for Medicare & Medicaid Services (“CMS”) Administrator Seema Verma announced on Twitter that CMS was withdrawing the proposed Medicaid Fiscal Accountability Rule (“MFAR”) from its regulatory agenda.

The MFAR, which was proposed in November of 2019, would have added new reporting requirements for state governments to receive state supplemental payments for Medicaid providers (HL Pulse article here). If implemented as proposed, the rule would have significantly affected the manner in which states finance their Medicaid programs. In addition to stringent reporting requirements related to supplemental payments, the proposed rule would have limited the mechanisms available for states to finance their share of Medicaid funding. For many states this would have meant having to restructure their Medicaid program at the same time their programs were facing financial pressure as a result of the COVID-19 pandemic. In particular, under the Coronavirus Aid, Relief, and Economic Security Act, states receiving enhanced federal Medicaid matching funds are required to follow maintenance of effort protections.

Administrator Verma’s tweet on Monday explained that CMS withdrew the proposed rule because they had “listened closely” to concerns raised by CMS’s “state and provider partners” of the “unintended consequences of the proposed rule, which will require further study.” CMS’s withdrawal of MFAR comes only weeks after Ms. Verma received a letter from critics of MFAR, explaining that the “financial impact[s] of MFAR” are “especially concerning as states experience unprecedented financial constraints due to COVID-19.”

Norton Rose Fulbright attorneys will continue to provide relevant Medicaid updates for healthcare providers on the Health Law Pulse.