Premier Urges Thoughtful Implementation of Proposed Medicaid Payment Rule to Protect Healthcare Access
Premier Inc. has submitted formal comments to the Centers for Medicare & Medicaid Services (CMS) regarding the agency’s proposed rule addressing Medicaid Managed Care State Directed Payments (SDPs) and Medicaid Fee-for-Service (FFS) Targeted Medicaid Practitioner Payments. In its response, Premier encouraged CMS to implement the proposed changes carefully to preserve access to healthcare services, reduce administrative complexity, and support providers serving vulnerable populations.
The proposed regulation is intended to implement provisions contained in Public Law 119-21, known as the Working Families Tax Cuts Act (WFTC), also referred to as the One Big Beautiful Bill Act. Because the legislation introduces substantial changes to Medicaid financing and payment policies, Premier believes its implementation could have significant implications for hospitals, health systems, physicians, rural healthcare providers, and millions of Medicaid beneficiaries across the United States.
In its comment letter, the healthcare improvement company emphasized that while CMS is responsible for carrying out the requirements established by Congress, the agency also has flexibility in determining how certain provisions are implemented. Premier urged regulators to use that flexibility to protect patient access, promote innovation in care delivery, and minimize unnecessary burdens on healthcare providers.
Background on the Proposed Rule
The CMS proposed rule focuses on two important components of Medicaid reimbursement: State Directed Payments within Medicaid managed care programs and Targeted Medicaid Practitioner Payments under the traditional fee-for-service model.
State Directed Payments allow states to direct managed care organizations to make payments that support specific healthcare priorities, such as improving provider reimbursement, expanding access to care, strengthening rural hospitals, or advancing value-based healthcare initiatives.
Similarly, targeted practitioner payments within Medicaid fee-for-service programs provide mechanisms for states to increase reimbursement for selected healthcare providers in order to improve care delivery and address workforce shortages.
The proposed rule establishes new requirements governing these payment programs as CMS implements provisions included in recently enacted federal legislation.
Because Medicaid serves millions of low-income individuals, children, pregnant women, older adults, and people with disabilities, changes to payment structures have broad implications for healthcare delivery nationwide.
Significant Financial Impact Expected
Premier noted that estimates from the Congressional Budget Office project that implementation of Public Law 119-21 could reduce federal Medicaid spending by hundreds of billions of dollars over the next decade.
Such reductions have the potential to affect healthcare organizations that depend heavily on Medicaid reimbursement, particularly hospitals and physician practices serving economically disadvantaged communities.
Healthcare providers operating in rural regions may be especially vulnerable because many already face narrow operating margins, workforce shortages, and financial challenges.
Lower reimbursement levels could increase pressure on providers already struggling to maintain essential healthcare services.
Premier expressed concern that changes to Medicaid payment policies should not unintentionally reduce healthcare access for patients living in underserved communities.
The organization therefore encouraged CMS to carefully evaluate implementation decisions to minimize unintended consequences.
Protecting Congressional Intent
One of Premier’s primary recommendations is that CMS should avoid implementing policies that extend beyond the authority explicitly granted by Congress.
According to the organization, Section 71116 of Public Law 119-21 establishes specific parameters regarding Medicaid payment reforms.
Premier argued that regulatory implementation should remain closely aligned with those statutory provisions rather than introducing additional restrictions or requirements not specifically authorized by legislation.
Maintaining consistency with congressional intent, the organization believes, would provide greater regulatory certainty while avoiding unnecessary disruptions to existing Medicaid programs.
Healthcare organizations often require stable reimbursement policies to support long-term planning, workforce investments, and patient care initiatives.
Clear implementation consistent with statutory language may therefore reduce uncertainty across the healthcare system.
Maintaining Established Payment Methodologies
Premier also recommended that CMS continue using methodologies that have historically supported the calculation of Medicare-based Upper Payment Limits (UPLs) within Medicaid fee-for-service programs.
Upper Payment Limits serve as important benchmarks that help determine the maximum federal matching funds available for certain Medicaid provider payments.
Existing methodologies have been used for many years and are familiar to both states and healthcare providers.
Premier argued that retaining established approaches would promote consistency, reduce confusion, and simplify implementation for Medicaid agencies and healthcare organizations.
Introducing entirely new calculation methods could require significant operational adjustments while increasing administrative complexity for states.
The organization therefore encouraged regulators to build upon existing payment frameworks whenever possible.
Supporting Value-Based Care
Another major focus of Premier’s recommendations involves preserving opportunities for value-based care.
Healthcare payment systems increasingly emphasize value-based reimbursement models that reward providers for improving patient outcomes, enhancing quality, reducing unnecessary utilization, and coordinating care more effectively.
Many State Directed Payment programs currently support these innovative payment arrangements.
Premier urged CMS to establish explicit carve-outs within the final rule that allow states to continue using Medicaid payments to advance value-based healthcare initiatives.
The organization argued that limiting flexibility could slow ongoing healthcare transformation efforts designed to improve both quality and efficiency.
Protecting value-based care programs would allow states to continue investing in innovative healthcare delivery models despite broader changes in Medicaid financing.
Addressing Healthcare Disparities
Premier also emphasized the importance of maintaining flexibility for states to direct additional resources toward underserved communities.
Healthcare disparities remain significant across many regions of the United States.
Rural communities frequently experience shortages of physicians, nurses, specialists, behavioral health professionals, and healthcare facilities.
Urban underserved neighborhoods similarly face barriers related to provider availability, transportation, and healthcare affordability.
State Directed Payments have often been used to strengthen healthcare infrastructure within these communities.
Premier encouraged CMS to preserve this flexibility so that payment programs can continue supporting providers serving vulnerable populations.
Without targeted funding mechanisms, existing disparities could widen as reimbursement pressures increase.
Preserving Disaster Relief Flexibility
Natural disasters, public health emergencies, hurricanes, floods, wildfires, and other crises frequently create unexpected healthcare demands.
During such emergencies, healthcare organizations often require additional financial support to maintain operations while responding to rapidly changing patient needs.
Premier recommended that the final Medicaid payment rule include carve-outs allowing continued availability of disaster-related funding when emergencies occur.
The organization believes maintaining flexibility for emergency financial assistance will strengthen healthcare system resilience while supporting hospitals and providers responding to future crises.
Emergency funding mechanisms have played important roles during recent natural disasters and public health emergencies, helping providers continue serving affected communities.
Reducing Administrative Burden
Administrative complexity remains a persistent challenge throughout the healthcare industry.
Hospitals, physician groups, and state Medicaid agencies devote substantial resources to documentation, regulatory reporting, compliance monitoring, and payment administration.
Premier urged CMS to simplify compliance requirements wherever possible as the proposed rule is finalized.
Specifically, the organization recommended streamlining documentation requirements, simplifying approval processes, and reducing reporting obligations that may create unnecessary administrative workload.
Reducing operational burden would allow healthcare providers to devote more resources toward patient care rather than regulatory paperwork.
Simplified compliance processes could also improve implementation efficiency while reducing costs for both providers and government agencies.
Transitioning Existing Payment Programs
The proposed legislation includes provisions affecting existing grandfathered State Directed Payment programs.
Premier acknowledged that statutory payment limits established by Congress must ultimately be implemented.
However, the organization recommended adopting a more gradual transition process to minimize financial disruption.
Specifically, Premier suggested rebasing the payment amount subject to annual reductions.
Under this approach, payment levels would decrease by ten percent each year until reaching the statutory funding limit required under federal law.
A rebased transition methodology, Premier argued, would provide states and healthcare providers with additional time to adjust financial planning while avoiding abrupt reimbursement reductions.
Gradual implementation may help preserve healthcare stability during the transition period.
Importance for Rural Healthcare
Throughout its comments, Premier repeatedly highlighted the potential effects of Medicaid payment changes on rural healthcare providers.
Many rural hospitals rely heavily on Medicaid reimbursement due to the demographics of the populations they serve.
These organizations often operate with limited financial reserves while maintaining essential healthcare services across large geographic areas.
Reductions in reimbursement may threaten access to emergency departments, obstetric services, behavioral healthcare, primary care, and specialty services.
Healthcare workforce recruitment also remains particularly challenging in rural communities.
Premier emphasized that payment policies should recognize these unique circumstances and preserve mechanisms allowing states to direct additional support toward rural providers.
Protecting rural healthcare infrastructure remains essential for ensuring equitable healthcare access nationwide.
Balancing Fiscal Responsibility and Healthcare Access
Premier acknowledged that CMS must implement legislation enacted by Congress while ensuring responsible stewardship of federal healthcare spending.
At the same time, the organization argued that implementation decisions should balance fiscal objectives with the practical realities facing healthcare providers and Medicaid beneficiaries.
Well-designed payment policies can promote efficiency without compromising patient access or discouraging innovation.
Conversely, overly restrictive implementation could unintentionally weaken healthcare delivery systems serving vulnerable populations.
Premier encouraged regulators to consider both financial sustainability and patient care outcomes throughout the rulemaking process.
Continuing Healthcare Transformation
The organization also stressed that Medicaid payment reforms should support broader healthcare transformation efforts already underway.
Across the healthcare industry, providers continue investing in quality improvement, digital health technologies, care coordination, population health management, and alternative payment models.
Many of these initiatives depend upon stable reimbursement structures that reward improved patient outcomes rather than service volume alone.
Premier believes preserving flexibility for innovative payment arrangements will help ensure continued progress toward a more efficient and patient-centered healthcare system.
Supporting innovation alongside fiscal responsibility may ultimately improve healthcare quality while controlling long-term costs.
As CMS reviews stakeholder feedback before issuing a final rule, Premier hopes its recommendations will contribute to implementation strategies that protect patient access while fulfilling congressional requirements.
The organization’s comments emphasize the importance of limiting regulatory expansion beyond statutory authority, preserving established payment methodologies, supporting value-based care, protecting underserved communities, maintaining disaster relief flexibility, simplifying compliance requirements, and easing the transition for existing payment programs.
Together, these recommendations seek to create a balanced implementation approach that safeguards healthcare access while allowing states and providers sufficient flexibility to continue serving Medicaid beneficiaries effectively.
Because Medicaid remains one of the nation’s largest public health insurance programs, implementation decisions made by CMS will influence healthcare delivery for millions of Americans over the coming years.
Premier’s response underscores the importance of thoughtful policymaking that considers not only fiscal objectives but also the practical realities facing hospitals, physicians, healthcare systems, and the patients who depend on Medicaid for essential medical care.
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