AHA Letter on CMS’ Proposed Medicaid and CHIP Access, Finance and Quality Policies

June 28, 2023

The Honorable Chiquita Brooks-LaSure
Administrator
Centers for Medicare & Medicaid Services,
Attention: CMS-2439-P
P.O.Box 8016
Baltimore, MD 21244-8013

Submitted Electronically

Re: Medicaid Program; Medicaid and Children's Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality (CMS-2439-P)

Dear Administrator Brooks-LaSure:

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, our clinician partners — including more than 270,000 affiliated physicians, two million nurses and other caregivers — and the 43,000 health care leaders who belong to our professional membership groups, the American Hospital Association (AHA) appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services’ (CMS) proposed policies related to access, finance and quality in Medicaid and Children’s Health Insurance Program (CHIP) managed care programs. CMS advances many important policies in this wide-ranging regulation that will reshape the regulatory landscape for Medicaid managed care programs. While we commend CMS on many of the proposals that would, if finalized, improve access to coverage and care, we are concerned that certain policies may undercut these efforts by jeopardizing states’ access to critical financial resources.

The Medicaid program is critical to providing access to health care services for approximately 90 million individuals, many of whom are some of the most vulnerable patients hospitals and health systems treat. However, enrollment in Medicaid is not enough to ensure access to quality care. There must be an adequate supply of providers who are available to care for Medicaid beneficiaries within a reasonable amount of time; a goal which is fundamentally linked to payment adequacy. In fact, achieving adequate access to care has been a particular challenge within the Medicaid program, and one of the ongoing causes is the chronic underpayment of providers. Specifically, Medicaid programs routinely pay providers less than the cost of delivering care, including when benefits are administered through managed care plans. As such, many Medicaid programs have struggled to attract and retain an adequate supply of providers. CMS and states have taken steps in the past to address these issues. However, gaps remain. Therefore, the AHA commends CMS for proposing a variety of regulatory changes that aim to address payment-related barriers to care, as well as better monitor enrollee access to care. Specifically, we appreciate CMS’ proposals to review provider payments for adequacy, as well as proposals to adopt wait time standards and secret shopper surveys to ensure managed care plans maintain adequate networks.

A substantial portion of the rule relates to state directed payments (SDPs) — supplemental payments that states can operationalize in the managed care context. SDPs are a key funding tool enabling states to recruit and retain an adequate supply of participating providers, and, as such, have become a crucial component of provider payment for care provided to Medicaid beneficiaries. This is especially true as base reimbursement rates in most states — including in managed care arrangements — have not kept pace with either the cost of providing services nor with recent rapid increases in inflation. Even taking SDPs and other supplemental payments into account, hospitals receive only 88 cents for every dollar they spend caring for Medicaid patients.1 Therefore, preserving states’ flexibility to use SDPs to augment woefully inadequate base reimbursement rates is a priority for the AHA — and for hospitals and health systems nationwide who depend on these funding mechanisms to support their ability to care for their community.

States must also have the resources they need to fund their Medicaid program, including SDPs. To that end, while we support many of the proposals in the regulation, we are concerned about the interaction between this rule and the sub-regulatory guidance CMS issued in February 2023 on health care-related taxes. Provider taxes are an important and legally-permissible source of funding for states to use as a portion of their share of the costs of operating the Medicaid program. Further restrictions on states’ use of these taxes to finance Medicaid payments could have dire consequences for coverage and access to care, as it is unlikely that states would be able to replace any lost funds with other sources of revenue.

As CMS is aware, now is a particularly precarious time to put additional stress or restrictions on state Medicaid programs. States face unprecedented challenges with the unwinding of the COVID-19 public health emergency and will certainly require all available resources to mitigate unnecessary coverage loss during this time. In this effort, America’s hospitals and health systems continue to be ready and committed partners to ensure the individuals and families in their communities are aware of the need to undergo the Medicaid redetermination process and have access to the appropriate information to engage in this process. They also are prepared, as always, to help connect anyone who loses Medicaid to alternative forms of coverage.

Below, we provide more detailed comments on a number of provisions in the proposed rule. We recognize that these are complex issues that CMS seeks to regulate and welcome additional opportunities to work with CMS on how best to achieve our shared objectives of increased value, coverage and access in the Medicaid program.

View the detailed letter below.