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Association Warns of Medicaid Fiscal Accountability Rule’s ‘Devastating’ Impact


WASHINGTON — The proposed Medicaid Fiscal Accountability Regulation (MFAR) would have a “deep and devastating impact” on patients and providers and would upend budgets and raise taxes at the state and local levels, America’s Essential Hospitals said in comments today.

The association, which represents more than 300 hospitals that care for high numbers of Medicaid patients, called on the Centers for Medicare & Medicaid Services (CMS) to withdraw the MFAR in its entirety.

“The provisions would cut at the very core of the Medicaid program by introducing unprecedented restrictions on states’ ability to fund their share of the Medicaid program,” America’s Essential Hospitals said in its comments. “Prohibiting states from using traditional local sources of funding leaves them with an untenable choice between enacting painful program cuts or turning to state and local taxpayers to replace the funding this rule would prohibit.”

The association said the proposal’s sweeping and arbitrary restrictions would create a chilling effect by threatening states with “massive retroactive disallowances at any time based on shifting and opaque CMS review criteria,” leaving them “unable to use legitimate sources of funding Congress intended to be available to them.”

The proposal’s severe limits on how states can raise their share of Medicaid funds will create access barriers for the vulnerable patients essential hospitals serve. These hospitals, on average, operate with a 1.6 percent margin, about a fifth that of other U.S. hospitals, and they rely on the supplemental support the MFAR largely would constrain.

America’s Essential Hospitals pointed out that the agency’s analysis of the rule’s impact is “cursory at best” and that CMS even acknowledges this shortcoming. “It is irresponsible and reckless for the agency to move forward with implementing policies of this significance without understanding the full effect on states, their budgets, providers, and Medicaid beneficiaries,” the association said.

In other arguments, America’s Essential Hospitals said the MFAR runs counter to congressional intent, interprets policy in its preamble without appropriate notice-and-comment rulemaking, and allows an extraordinary degree of federal intrusion into matters traditionally left to the discretion of states.

A full copy of the association’s comments on the MFAR is available for download.

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About America’s Essential Hospitals
America’s Essential Hospitals is the leading champion for hospitals and health systems dedicated to high-quality care for all, including the most vulnerable. We support our more than 300 members with advocacy, policy development, research, and education. Communities depend on essential hospitals to provide specialized, lifesaving services; train the health care workforce; advance public health and health equity; and coordinate care. Essential hospitals innovate and adapt to lead the way to more effective and efficient care. Learn more at

Carl Graziano


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