CMS proposes to limit new or increased pass-through provider payments in Medicaid Managed Care

The Centers for Medicare & Medicaid Services today published a proposed rule to limit states’ ability to increase or create new pass-through payments for hospitals, physicians or nursing homes under Medicaid managed care contracts. In a May final rule that modernized Medicaid managed care requirements, CMS provided for a 10-year phase-out of pass through payments. CMS issued further guidance in July in response to questions from states regarding the implementation of these payments. That guidance clarified that states could not add new or increase current pass-through payment programs for hospitals, physicians and nursing facilities, beyond what was included in their Medicaid managed care contracts on or before July 5, 2016. The proposed rule would codify this policy. In addition, the rule recommends changes to the calculation of the payments to prevent increases in current pass-through payment programs. CMS stated that adding new or increased pass-through payments complicates the required transition of these payments to permissible provider payments models such as valued-based purchasing strategies. Comments on the proposed rule are due to CMS by Dec. 22.