Governors Warn New Regs Could Lead to Deep Medicaid Cuts

February 7, 2020 by Dan McCue
Governors Warn New Regs Could Lead to Deep Medicaid Cuts

WASHINGTON — The National Governors Association is warning that a newly proposed regulation by the Trump administration could lead to dramatic cuts in Medicaid and deny health care to millions of low-income Americans.

In a bipartisan letter signed by Govs. Kate Brown, D-Ore., and Charlie Baker, R-Mass., on behalf of the National Governors Association, the organization says it supports the administration’s goals to strengthen transparency and accountability in the Medicaid program to ensure long-term fiscal integrity.

“However, we are concerned that the proposed rule, as drafted, would significantly curtail the longstanding flexibility states have to fund and pay for services in their Medicaid programs,” Brown and Baker write.

“In losing this flexibility, states may be unable to adequately fund their Medicaid programs, which could lead to unintended consequences that would negatively impact Medicaid beneficiaries across the country,” the governors say.


The rule proposed by the Centers for Medicare and Medicaid Services, an agency under the U.S. Department of Health and Human Services, would tighten federal oversight and approval over complex financing strategies states have long used to help pay for their share of the $600 billion program.

Also targeted are certain payments to hospitals that treat many low-income patients.


Public comments on the rule closed last week.

But CMS Administrator Seema Verma says Medicaid needs closer scrutiny amid concerns about abuses to the system that  drive up taxpayer costs.

In a statement Wednesday, Verma said her agency recognizes the “critical importance” of the state financing but said it has to lead to better value and improved care for Medicaid beneficiaries. Under the proposed rule, “we are increasing transparency, integrity and clarity,” she said.

The policy comes from an administration that has repeatedly moved to scale back Medicaid. Trump has tried to repeal the program’s Obama-era expansion, supported block grants that would cap federal spending, and allowed states to impose work requirements on Medicaid recipients.

The governors say, if the federal government curtails financing methods states now rely on, they would have to seek broad tax increases, cut payments to hospitals and doctors, reduce benefits, restrict eligibility, or some combination of such measures. States can set their own Medicaid policies within federal requirements.


“The proposed rule will have significant and broad impacts in many states across the country. Preempting states’ authority and reducing states’ flexibility within their Medicaid program will result in decreased access to care for many vulnerable Americans,” the governors warn.

“[We] request that CMS not move forward with the current proposed rule, as written, and instead, gather more data to understand the impact, identify more targeted evidence-based policies to address concerns and work with states to determine best practices for how to strengthen accountability and transparency in the Medicaid program,” the letter concludes. “Medicaid plays a significant role for millions of people across the country and its complex structure warrants careful and thoughtful steps for any reform.”

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