CMS officially withdraws controversial fiscal accountability rule

January 12, 2021

Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, M.D., on January 7, 2021, announced that she had taken official action to withdraw the proposed Medicaid Fiscal Accountability Rule (MFAR), which would have cut state and federal Medicaid funding by as much as 50% in all 50 states. 

Dr. Verma has initially indicated in September that CMS would be withdrawing the proposal due to concerns raised by state and provider partners about "potential unintended consequences" of the proposed rule, which require further study. It remains unclear whether the agency will be abandoning the proposal in its entirety, or if CMS will move forward in the future with some sort of modified “fiscal accountability” regulation after a study.

The California Medical Association (CMA) strongly opposed this proposal, which would have significantly reduced California’s Medicaid funding, exacerbating provider shortages and undermining patient access to medical care. The proposal would have been a substantial shift in the state-federal Medicaid partnership and a reversal of more than two decades of policy that allowed states different options for financing our share of medical care in order to receive federal Medicaid matching dollars.

In February 2020, CMA led all of the state medical societies and 12 national specialty societies in sending a letter to CMS urging the agency to withdraw the proposed rule and to instead work with states, physicians and patients on alternatives that will not only ensure efficient use of taxpayer dollars, but that will also protect patient access to Medicaid services.



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