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Pallone and Wyden to Verma: CMS’s Attempt to Entrench Harmful Medicaid Changes is Illegal

Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) and Senate Finance Committee Ranking Member Ron Wyden (D-OR) wrote to outgoing Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma today requesting that the agency rescind a batch of letters it sent to states earlier this month attempting to make it harder for the incoming Biden Administration to reverse illegal and harmful Medicaid changes championed by the Trump Administration. 

According to press reports, CMS asked states to quickly sign onto a new agreement outlined in the letters establishing a nine-month process for CMS to withdraw federal approval of experimental changes to Medicaid programs known as section 1115 demonstrations. Under the Trump Administration, CMS has approved a number of controversial section 1115 demonstrations, including a recently unveiled block grant funding scheme for Tennessee and several work requirement programs that have been repeatedly struck down in the courts.  

“While the letters claim to establish the procedures the Trump Administration will follow to withdraw approval of section 1115 demonstrations, they are nothing more than a hastily-drafted, transparent attempt to tie the hands of the Biden Administration for at least nine months, and entrench your shameful Medicaid legacy after your time as CMS Administrator has ended,” Pallone and Wyden wrote to Verma.

In their letter, the Committee leaders explain that current CMS regulations already establish that the process for withdrawing approval of 1115 demonstrations will be outlined in the special terms and conditions of the demonstration approval, and that altering that process can only be done by changing the regulations or amending the special terms and conditions. Since these letters do neither, Pallone and Wyden write that they are not actually legally binding. 

“Despite your efforts to camouflage these letters as something novel, a simple examination of their function reveals they are impermissible sub-regulatory guidance,” Pallone and Wyden continued. “Unfortunately for CMS, sub-regulatory guidance cannot override or repeal existing regulations. That can only be done through rulemaking.”

Under existing regulations, CMS does not have the authority to alter the terms and conditions of section 1115 demonstrations through sub-regulatory guidance. 

“Accordingly, these letters are impermissible under existing regulations and states cannot rely on the assertions or supposed commitments that they contain,” Pallone and Wyden concluded. “Fortunately, as with your previous efforts to undermine the Medicaid statute, these letters plainly violate federal law and, therefore, cannot stand. We respectfully request that you rescind these letters immediately and allow the nation, and the Medicaid program, to heal from your repeated attempts to undermine this critical program.”

To read the full letter, click here

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