New Final Rule Targets Pass-Through Payments

January 2017 ~

CMS has finalized a rule related to pass-through payments in Medicaid managed care. The new rule will prevent increases in pass-through payments as well as the addition of new pass-through payments.

As summarized in the Federal Register, the new final rule “finalizes changes to the pass-through payment transition periods and the maximum amount of pass-through payments permitted annually during the transition periods under Medicaid managed care contract(s) and rate certification(s). This final rule prevents increases in pass-through payments and the addition of new pass-through payments beyond those in place when the pass-through payment transition periods were established, in the final Medicaid managed care regulations effective July 5, 2016.”

Under the rule, increased or additional pass-through payment programs are limited to those in place when final Medicaid managed care regulations took effect July 5, 2016. Only states with managed care contracts submitted to CMS by July 5 would be allowed to continue pass-through payments during the specified transition period.

The final rule applies to all states with Medicaid managed care plans. According to CMS, at least 16 states make pass-through payments for hospitals of about 3.3 billion on an annual basis.

The transition period will allow states currently using pass-through payments time to gradually introduce and implement changes to avoid disrupting financial support for state safety-net providers. Hospitals will be allotted a 10 year transitional period. Physicians and nursing facilities will be allotted a 5 year period to phase-out pass-through payments.


Source(s):  Federal Register; Modern HealthcareHealthcareDIVE; Becker’s;
New Call-to-action