In a presentation to state Medicaid directors, CMS recently clarified how it plans to exercise its enforcement discretion under its April 22, 2024 (CIB). In that CIB, CMS announced it will not enforce its policy prohibiting provider assessment programs involving private, voluntary mitigation or pooling arrangements for any existing arrangements in effect as of April 22, 2024, but that any new provider payment redistribution arrangements “may result in CMS disapproval of state Medicaid payment proposals and/or disallowance of Federal Financial Participation (FFP).” To determine whether an arrangement is new, CMS indicated it would likely regard as new and, therefore, subject to disapproval, deferral, or disallowance, any arrangement involving the following:
- New SPAs, SDPs, 1115s, Tax Waivers: The redistribution arrangement is itself new or tied to a new payment or tax program.
- Magnitude of Tax or Payment Change: Any increase in an SDP, payment, or tax assessment that is not aligned with historic practices when compared to other prior SDPs, prior payments, or taxes.
- Tax Structures: The structure of the tax changes in a fundamental, unanticipated or non-routine manner.
- Part/Whole: Statewide initiatives, such as a change in authority or delivery system, where the redistribution, tax, or payments are altered from the predecessor system.
- Legislative or Regulatory Tax Change: State legislative action or state regulatory and/or administrative action that is a significant departure from prior practice.
Although the provision in the final managed care rule requiring states to collect provider attestations of compliance with the prohibition on redistribution arrangements will not be enforced until January 1, 2028, CMS has indicated that states may nevertheless require providers to submit such attestations as a method of detecting existing or new arrangements. CMS also shared a set of five questions it may ask states to facilitate its assessment of whether a payment or tax program involves a new arrangement.