CMS Proposes New Rule Targeting Fiscal Integrity of Medicaid

In September, the owner and operator of an Atlanta-based in-home care provider pleaded guilty to defrauding Medicaid in a $1.2 million scheme.

Shortly before that, a Boston-based in-home provider agreed to pay $1.95 million in a settlement to resolve allegations that it submitted Medicaid claims without physician authorization in August.

These cases are both part of a larger wave of Medicaid program integrity challenges, highlighted over the years by the Government Accountability Office (GAO) and other watchdog groups. The Trump Administration and the Centers for Medicare & Medicaid Services (CMS) are trying to address the issue in a newly proposed rule that aims to strengthen the fiscal integrity of Medicaid.


IIn 2014, 53% of all Medicaid long-term care spending was for home- and community-based services, according to government statistics.

“We have seen a proliferation of payment arrangements that mask or circumvent the rules where shady recycling schemes drive up taxpayer costs and pervert the system,” CMS

Administrator Seema Verma said in a Tuesday press release. “Today’s rule proposal will shine a light on these practices, allowing CMS to better protect taxpayer dollars and ensure that Medicaid spending is directed toward high-value services that benefit patient needs.”


Under the newly proposed rule, states will be required to give CMS provider-level information about Medicaid supplemental payments.

In general, there has been an increase in Medicaid spending over the past couple of years. Spending skyrocketed to an estimated $576 billion in 2016, according to CMS.

“We’ve seen payments increasing dramatically over the years for governmental providers that are able to self-fund the state match to levels that often far exceed even Medicare payments and have little connection to improving the health of Medicaid beneficiaries,” Verma said.

Tuesday’s proposed rule would also require the reporting of provider-specific payment information on payments received for state plan services and through demonstration programs.

The proposal enables CMS to phase out existing and new supplemental payment methodologies after three years. The proposal also requires states to request CMS approval to continue a supplemental payment that falls outside of the three-year threshold.

Additionally, the rule would clearly define Medicaid “base” and “supplemental” payments.

“The proposed rule would provide clearer guidance on the law to states and other stakeholders, help close regulatory loopholes, and improve reporting to help CMS ensure that states fund their share of payments to providers through only permissible sources and with methodologies that comport with statutory requirements and align with Medicaid program goals,” CMS noted.

The full text of the rule is available here.

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