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CMS Finalizes Rule to Protect Medicaid Provider Payments

CMS Finalizes Rule to Protect Medicaid Provider Payments
Final rule ensures Medicaid providers receive complete payments as required by law

The Centers for Medicare & Medicaid Services (CMS) today 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.

CMS received more than 7,000 comments from the public, healthcare providers, unions, state agencies, and advocacy groups during the comment period for the proposed rule.  CMS took the comments into consideration when finalizing its proposal. 

“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.”

Section 1902(a)(32) of the Social Security Act generally prohibits States from making payments for Medicaid services to anyone but the provider. The statute provides only a few specific exceptions to this requirement, such as allowing payment to be made in certain circumstances pursuant to an employment relationship, to medical facilities and billing agents, and under court-ordered wage garnishments.

In 2014, CMS revised the Medicaid Provider Reassignment Regulation to provide for a new exception to the direct payment requirement for certain providers, which primarily include independent in-home personal care workers. This new regulatory exception authorized a state to make Medicaid payments to third parties on behalf of certain providers . After further review, CMS has determined that 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. Therefore, CMS is finalizing the rule to remove this impermissible exception.

To view the Final Rule, click here:


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