Lawmakers and federal agencies are proposing sweeping changes to Medicaid with a new bill and a CMS rule.
Here are 10 things ASCs need to know on the two moves:
House Republicans introduce a bill to implement Medicaid work requirements
1. House Republicans introduced a 160-page bill on May 11 that would implement nationwide Medicaid work requirements and tighten eligibility rules. The legislation is intended to slash federal spending by hundreds of billions over the next 10 years, primarily by reducing Medicaid and Affordable Care Act-related expenditures.
2. According to a Congressional Budget Office analysis, the bill could cut up to $715 billion from Medicaid and ACA programs and lead to at least 8.6 million people losing health insurance coverage by 2034.
3. Key Medicaid provisions in the bill include:
- Stricter eligibility rules and more frequent redeterminations
- Work requirements for able-bodied adults aged 19-64 without dependents
- A ban on using Medicaid and CHIP funds for gender transition procedures for minors
- Penalties for states that fail to verify citizenship or immigration status by withholding federal funding
4. While the bill does not propose per capita caps or eliminate expansion funding entirely, it includes provisions to penalize states that provide Medicaid benefits to noncitizens by reducing their ACA expansion match rates.
5. American Hospital Association President and CEO Rick Pollack called the proposed cuts “a devastating blow” to vulnerable communities.
“These proposed cuts will not make the Medicaid program work better for the 72 million Americans who rely on it. Instead, it will lead to millions of hardworking Americans losing access to health care and many of our nation’s hospitals struggling to maintain services and stay open for their communities,” Mr. Pollack said in a May 12 statement. “We urge Congress to reject efforts to dismantle this vital program.”
CMS closes alleged Medicaid tax ‘loophole’
6. CMS also proposed a rule to address what it describes as an alleged loophole allowing states to impose targeted taxes on Medicaid managed care organizations to secure larger federal matching funds, which are then funneled back to those same entities. While federal law permits certain taxes as part of the state share for Medicaid funding, CMS claims some states exploit the system with non-redistributive, Medicaid-specific taxes.
7. According to CMS, states like California, Michigan, Massachusetts and New York are responsible for 95% of projected federal losses from these schemes. The agency estimates that if left unchecked, these practices could cost federal taxpayers more than $74 billion over five years.
8. The proposed rule would:
- Ban higher tax rates on Medicaid business compared to non-Medicaid business
- Eliminate ambiguous language obscuring Medicaid-specific taxes
- Strengthen statistical safeguards against manipulation
- Provide a phased transition based on the duration of current waivers
9. In a May 12 news release, CMS Administrator Mehmet Oz, MD, said that states are “gaming the system” to to offset their Medicaid costs and finance unrelated state programs, including benefits for noncitizens
10. The proposed rule has been published in the Federal Register and is open for public comment until July 14
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