Print Page | Contact Us | Sign In
Medicaid Fiscal Accountability Rule

 Medicaid Fiscal Accountability Rule


Update: CMS withdrew the proposed MFAR on September 14, 2020.



THE LATEST NEWS (updated 1/15/20)

The LeadingAge National Office has weighed in on the Medicaid Fiscal Accountability Regulation Rule by sending the letters below.  PLEASE SEE HERE

Note that the letters themselves are also posted, along with the map.


Medicaid Proposed Rule Will have Significant Impact on Nursing Home Provider Taxes and Supplemental Payments

Medicaid Fiscal Accountability Rule (MFAR) Explained

It’s much more than supplemental payments!


On November 18, CMS published the Medicaid Fiscal Accountability Regulation (MFAR) Proposal on the Federal Register. This proposed rule would make significant changes to key parts of state Medicaid financing structures for nursing homes and hospitals. Changes that could force a large number of communities to close their doors shortly after the rule becomes effective.

Fact Sheet: 2019 Medicaid Fiscal Accountability Regulation (MFAR)


For nursing homes, including Life Plan Communities (LPCs)/Continuing Care Retirement Communities (CCRCs) with nursing homes/health centers, the most significant proposed changes are to provider taxes and supplemental payments.


This article provides a summary of key provisions of the MFAR proposal as they relate to nursing homes.


Write a letter to your Indiana State Congressional Delegates.  Here are sample letters for your reference.

Not sure who to send your letter to?  Download this list or search for your Congressman here.


Let CMS hear from you on the newly proposed rule that will significantly alter the IGT/Supplemental Payment Program forever.  More comments are needed!

COMMENTS BY LEADING AGE INDIANA ON Proposed Rule CMS - See the CMS Letter (January 21, 2020)

Click here for Instructions and sample text that you can submit to CMS electronically through their website.

Implications for Provider Taxes

  • Provider taxes would not be banned outright under the proposed rule; however the new CMS definitions would make it very difficult for participants to comply.
  • CMS would have significant latitude determining whether a provider tax and any provider tax exclusions or “discounts” would comply with the proposal if finalized. This could very well mean that exclusions or lower taxes for CCRCs, for example, could be eliminated.
  • CMS proposes new language in MFAR that would allow CMS to more closely look at arrangements between providers, states and other relevant entities – including arrangements not in writing or legally enforceable – to determine if providers have “reasonable expectation that the taxpayer will receive a return of all or any portion of the tax amount.” If CMS reaches that conclusion, provider taxes could be further jeopardized.
  • Finally, all provider taxes for which a state wants to receive federal matching funds would sunset every three years under the proposal. States could renew at the end of the three-year period but would need to get CMS’ approval to do so.

This rule also would put into place the new definitions 60 days following adoption which could cause significant problems for current operations to continue.


Implications for Ownership Arrangements

  • The proposal also has the potential to put ownership transfers between private organizations and government entities under increased scrutiny.
  • Under current policy, UPLs are calculated by provider types (e.g., nursing homes) and ownership type. There are three categories: state government, nonstate government and private ownership. When supplemental payments are calculated, they are differentiated by these groups.
  • CMS asserts that private providers have been making arrangements with county and other nonstate governments to transfer ownership to the government entity while maintaining operational control of the facility. Doing so potentially allows the provider to receive a higher supplemental payment if the amount available in the nonstate government category, for instance, is higher than the private ownership category.
  • The proposed rule includes criteria CMS would use to determine which category a facility would fall into if there was a private-government ownership transfer, including who is responsible for the facility’s operations.

Next Steps

LeadingAge Indiana is continuing to assess the impact of the MFAR proposal on its members and the residents they serve. We will work with our state partners in the Indiana Health Care Association, Indiana Hospital Association, Hoosiers Owners and Providers for the Elderly, Suburban Health Organization and State of Indiana to determine the implications of the proposal and provide feedback to CMS, including through comment letters. We will also develop resources for our members to educate them on the MFAR proposal and how they can participate in the rulemaking process.

Listen to our January 9 webinar with J. Michael Grubbs, Partner, Barnes & Thornburg, designed to help you better understand MFAR and it's potential impact on your organization.





Contact Us

P.O. Box 68829
Indianapolis, IN 46268-0829
(317) 733-2380 (phone)
(317) 733-2385 (fax)