Verma Announces Proposed Medicaid Fiscal Accountability Rule at National Association of Medicaid Directors (NAMD) Conference

NAMD-Logo3On November 12th, Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma kicked off the NAMD conference by announcing the CMS issuance of the proposed Medicaid Fiscal Accountability Rule (CMS-2392-P).

In her opening remarks, Administrator Verma indicated that this proposed rule seeks to strengthen the Medicaid program through program integrity measures and equitable funding distribution. She emphasized that the changes proposed in the rule are necessary to “ensure that the dollars we spend are truly going to support patient care,” noting that this is a “straightforward exercise when you can directly link a payment to a covered services rendered to a qualified beneficiary.”[1]

The proposed changes are not out of the blue; CMS notes within the preamble that oversight entities like the Government Accountability Office (GAO) have previously voiced concerns about the legitimacy of state Medicaid programs’ fiscal data. In their 2015 report, “Medicaid: CMS Oversight of Provider Payments Is Hampered by Limited Data and Unclear Policy,” the GAO concluded that “without good data on payments to individual providers, a policy and criteria for assessing whether the payments are economical and efficient, and a process for reviewing such payments, the federal government could be paying states hundreds of millions, or billions, more than what is appropriate.”

Overview and Fact Sheet

The proposed regulations are primarily focused on hospitals and other institutional services, but they have a broader impact on other community-based supplemental payment programs, such as emergency medical services, physicians from state-affiliated academic medical centers, and school-based services.  The rule’s proposed changes fall within five categories: Medicaid Fee-for-Services Provider Payments and Supplemental Payments; Disproportionate Share Hospital Payments (DSH); Medicaid Program Financing, Health Care-Related Taxes and Provider Related Donations, and Supplemental Payment Programs Financed by Certified Public Expenditures.MedicaidFiscalAccountabilityFactSheet-Thumbnail2

To assist states in formulating comments, Health Policy News compiled a brief fact sheet that outlines some of the major proposed changes by category. View the fact sheet by clicking the thumbnail to the right.


In addition to the fact sheet, HPN wanted to provide states some thoughts as to the potential impact of the proposed rule as they develop comments:

  • Supplemental payment programs will expire within 3 years, and be subject to a renewal process, after which no State Plan Amendment will be approved for more than three years;
  • States will have to complete an evaluation process that demonstrates the goals and objectives of the supplemental payments (access to care, quality of care, reductions in cost);
  • State will need to consider the permissibility of administrative fees state Medicaid agencies assess on the administration of supplemental payment programs, and how much of the state and federal share flows back to the providers receiving supplemental payments;
  • There will be additional data oversight pertaining to supplemental payments financed by certified public expenditures (CPEs), including the requirements for formal desk review protocols;
  • States will have to contend with more robust reporting requirements and standardized upper payment limitation (UPL) calculations, including physician UPLs.

Comments on the proposed rule are due no later than 5 P.M. on January 17th, 2020.

If your state would like further assistance in thinking through the impact of the changes or formulating comments in the meantime, please contact us at




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