A new CMS final rule prevents increases in pass-through payments and the addition of new pass-through payments. The rule excludes payments already in place as of July 5, 2016.
The 5- to 10-year transition periods the rule provides give states that already use pass-through payments time to slowly implement changes and avoid disrupting financial support for state safety-net providers.
At least 16 states make pass-through payments for hospitals of about 3.3 billion on an annual basis, according to CMS.
The final rule will stop the flow of billions of dollars in supplemental funding to hospitals, clinics, and physicians that serve vulnerable patient populations. At least one leading hospital group has already expressed disappointment with it. “We are disappointed that CMS chose to finalize a rule that further limits pass-through payments, and could adversely affect both those hospitals dependent on supplemental payments and the patients they serve,” Tom Nickels, executive vice president of the America Hospital Association told Modern Healthcare.
In a previous rule published last summer addressing Medicaid managed care regulations, CMS instructed states that the payments must stop but gave hospitals at least 10 years to phase them out. States have typically used these payments to support providers who care for a large number of Medicaid patients, according to management consulting company Milliman.
CMS is treating the final rule like business as usual, though affected providers—those who serve the most vulnerable populations—will no doubt sorely feel the effects.