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  • Washington Highlights

    CMS Releases Final Rule on Medicaid Managed Care Pass-Through Payments

    Washington Highlights


    January 19, 2017—The Centers for Medicare and Medicaid Services (CMS) Jan. 17 released the Use of New or Increased Pass-Through Payments in Medicaid Managed Care final rule. The 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 May 2016 Medicaid managed care final rule.

    Pass-through payments may continue under the Medicaid Managed Care Organization (MCO) contract, but those payments must be phased out within 10 years for hospitals and 5 years for physicians. Additionally, a new maximum of permitted pass-through payments is established for each year of the transition period. CMS also prohibits retroactive adjustments to managed care contracts and rate certifications to add new pass-through payments or increase existing pass-through payments. 

    CMS finalized provisions limiting the availability of pass-through payments during the transition periods to states. This was for states that had such payments in managed care contracts and rate certifications that were submitted for review and approval on or before July 5, 2016. If the managed care contract and rate certifications for the rating period had not been submitted to CMS on or before July 5, 2016, then the payments would have to be in the contract or rate certification that was most recently submitted to CMS for review and approval.

    CMS made it clear that it will not approve a retroactive adjustment or amendment to add new pass-through payments or increase those that currently are in place.


    Len Marquez
    Senior Director, Government Relations
    Telephone: 202-862-6281
    Email: lmarquez@aamc.org