CMS Final Rule Blocks States from “Diverting” Provider Medicaid Payments to Third Parties
May 2019 ~
CMS, in early May, released the Medicaid Provider Reassignment Regulation final rule removing a state’s ability to divert portions of Medicaid provider payments to third parties outside of the scope of what the statute allows. Under the rule, CMS is revoking the authority of states to “divert” certain Medicaid provider payments to a third party to fund other costs on behalf of the provider “for benefits such as health insurance, skills training, and other benefits customary for employees.”
This reassignment authority that was granted in a 2014 rule had originally been intended to “enhance state options to provide practitioners with benefits that improve their ability to function as health care professionals.” In the final rule published on May 6, CMS states that, after further review, “the new exception created by the 2014 rule is not authorized by the statute and may have resulted in provider payments being diverted in ways that do not comport with the law”.
While individual practitioners may purchase or contribute to the items previously allowed under this authority through transactions separate from their Medicaid reimbursement, CMS contends that states may not redirect payment that the statute requires be made directly to the practitioner.
“The effect of this final rule is the elimination of one method of getting payment from A to B. It in no way prevents healthcare workers from purchasing health insurance, enrolling in training, or paying dues to a union or other association,” CMS wrote in the new rule.
“State Medicaid programs are responsible for ensuring that taxpayer dollars are dedicated to providing healthcare services for low-income, vulnerable Americans and are not diverted in ways that do not comply with federal law,” said CMS Administrator Seema Verma. “This final rule is intended to ensure that providers receive their complete payment and that any circumstance where a state redirects part of a provider’s payment is clearly allowed under the law.”
The Medicaid Provider Reassignment Regulation final rule will be effective as of July 5, 2019.