May 15, 2020 | Policy Cheat Sheet


By Lauren Moran

COVID-19 has affected many areas of the U.S. economy, and health care providers are no exception. Medicaid providers — many of whom operate on slim financial margins — are at particular risk. In an effort to help keep providers afloat, the federal government earmarked funds through recent legislation and started distributing those funds directly to providers. Recently, the Medicaid and CHIP Payment and Access Commission (MACPAC) submitted a letter to the U.S. Department of Health and Human Services (HHS) expressing concerns about provider payments in the midst of COVID‑19.

  • Why does this matter? There are some providers whose entire — or nearly entire — patient population is covered by Medicaid (for example, home- and community-based services providers). Many of these providers are struggling to stay open while keeping up with staff costs, personal protective equipment, and overhead expenses coupled with decreased patient visit volume. There’s a risk that these critical providers could close up shop, temporarily or permanently, which could mean potentially harmful access barriers for beneficiaries.
  • What does this look like on the ground? “A Shadow Medical Safety Net, Stretched to the Limit” (New York Times) offers a close look at the impact of COVID-19 on community health centers and the financial implications for very critical providers.
  • How does this relate to provider payments? MACPAC highlights three big issues: (1) the funding methodologies used to determine provider payments through the CARES Act could disproportionately affect certain, critical Medicaid providers; (2) some Medicaid providers are excluded from receiving payments from the first $50 billion allocation of the CARES Act; and (3) a “lack of transparency” about which providers have already received payments through which funding methodology. The MACPAC letter comes on the heels of a public notice from the National Association of Medicaid Directors (NAMD), urging HHS to work directly with Medicaid programs to collect and share relevant provider data as well as funding data, and identify the best mechanisms for distributing federal funds to Medicaid providers.
  • What is HHS doing about the payment data? The Centers for Disease Control and Prevention recently published information on provider payments, and the Centers for Medicare & Medicaid Services (CMS) requested that states submit provider-level Medicaid payments to CMS.
  • What options are others proposing? Multiple organizations have publicly described options for ensuring Medicaid provider solvency during the pandemic. For example, in early April, NAMD encouraged CMS to “allow states to make retainer payments to essential Medicaid providers through 1115 waivers.” More recently, the Association for Community Affiliated Plans proposed a distribution of one month’s revenue to all Medicaid providers by passing funds through states and/or managed care plans. Prospective payments also offer a potential solution to ensure provider solvency.
  • What new flexibilities do states have to support Medicaid providers? Just yesterday (5/14), CMS released an informational bulletin providing guidance to states on three specific approaches to temporarily modify provider payment methodologies and capitation rates under their Medicaid managed care contracts. These options don’t necessarily provide new federal funds, but could give states specific flexibilities for making advanced payments to providers during the pandemic.
  • What’s the bottom line? Federal dollars are going out to providers, however, many providers and stakeholders contend that the funding methodology and some processes have overlooked critical Medicaid providers. In addition, a lack of readily available data means that state Medicaid programs could have less insight into which of their Medicaid providers might be financially stable and which ones are still financially hurting.

What Else is Worth Watching?

  • FMAP on the Increase. Kaiser Family Foundation recently published a summary explaining the temporary increase in the Federal Medical Assistance Percentage (FMAP), and a summary of the new Medicaid eligibility pathway to cover COVID-19 testing for uninsured populations. The House also announced a new bill proposing to increase the temporary FMAP even further.
  • A Closer Look at Nursing Facility Practices. Nursing facilities have been deeply impacted by COVID-19 and many are calling into question how prepared nursing facilities really are when it comes to handling COVID-19. Last month, CMS announced an independent commission that will look into the safety and quality of nursing facilities. This week, State Attorney Generals in New Jersey, Pennsylvania, and Wisconsin, among others, announced investigations into nursing homes in their states.
  • Now Hiring: Home Health Care. The U.S. is seeing record numbers of unemployment claims filed each week, but for the home health care industry — historically challenged to build the workforce needed to meet demand — there’s a hiring surge.

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