- CMS proposed rule would impose new restrictions on payment mechanisms used by state Medicaid programs
- CMS issues guidance on the use of RARCs under the No Surprises Act
- AMA urges OMB to preserve merit-based federal grantmaking and protect investments in medical research, public health, and the physician workforce
- More articles in this issue
CMS proposed rule would impose new restrictions on payment mechanisms used by state Medicaid programs
On July 17, the AMA submitted a comment letter (PDF) in response to a Centers for Medicare & Medicaid Services (CMS) proposed rule that would impose new restrictions on two payment mechanisms used by state Medicaid programs: state directed payments in Medicaid managed care and targeted practitioner payments in Medicaid fee-for-service. While certain provisions of the proposed rule would implement restrictions mandated by Public Law 119-21 (also known as the “One Big Beautiful Bill Act” or “OBBBA”), the AMA highlights that the proposed rule exceeds statutory requirements in several areas and could hinder states’ ability to maintain adequate reimbursement rates for Medicaid services.
The AMA’s letter notes that the proposed rule is being introduced during a period of significant change within Medicaid, including many new requirements and restrictions enacted as part of the OBBBA. The letter urges CMS to revise the proposed rule to avoid imposing limitations beyond those required by the OBBBA. The AMA further emphasizes that Medicaid reimbursement rates are often insufficient, and the payment mechanisms the rule targets are essential for Medicaid programs to operate efficiently and economically, as well as to ensure both an adequate provider network and high-quality care for beneficiaries.
CMS issues guidance on the use of RARCs under the No Surprises Act
On July 17, CMS released new guidance (PDF) on the use of Remittance Advice Remark Codes (RARCs) related to the No Surprises Act (NSA). This guidance implements a requirement in the recently issued Independent Dispute Resolution Operations final rule (PDF) which, among other changes, requires plans to use claim adjustment reason codes (CARC) and RARCs on paper or electronic remittance advice in response to a claim for payment for items or services furnished on or after Jan. 1, 2027, by an entity with which it does not have a direct or indirect contractual relationship. The CARCs and RARCs are intended to communicate whether an item or service is subject to the NSA’s surprise billing and Federal Independent Dispute Resolution (IDR) process provisions. The AMA has long supported the use of these codes to help increase transparency of payment and help clarify eligibility for the NSA dispute process or a state law.
While the guidance clarifies that plans may continue, for now, to use the CARC they deem most appropriate for any claim adjustment, it identifies which RARCs are to be used for purposes of the final regulations, the circumstances in which each RARC is to be used, and technical instructions to facilitate their use.
In terms of compliance and enforcement, CMS states in the guidance that if a plan does not comply with the requirements, physicians and providers may initiate the open negotiation period within 30 days of receiving the initial payment or notice of denial of payment for otherwise qualified IDR items and services. Alternatively, if a plan fails to comply with the requirements, and it results in a physician or provider lacking the information necessary to initiate the 30-business-day open negotiation period by the deadline, they may request an extension to initiate the federal process. Physicians can also submit a complaint to CMS.
AMA urges OMB to preserve merit-based federal grantmaking and protect investments in medical research, public health, and the physician workforce
On July 10, the AMA submitted comments (PDF) to the Office of Management and Budget (OMB) on proposed revisions to the Uniform Guidance, the government-wide framework for federal grants and other financial assistance. Because federal grants help drive the research behind new treatments, generate the evidence physicians rely on in patient care, and support programs that train the physician workforce, the proposal, OMB-2026-0034, would have far-reaching consequences for patients, physicians, and the nation’s health.
Key AMA recommendations
In its comments, the AMA called on OMB to:
Preserve rigorous, merit-based review of grant proposals. The proposed rule would require agencies to consider alignment with current administration priorities when designing grant programs and would require political appointees to review discretionary award decisions before agencies issue awards. The AMA urged OMB to withdraw those proposals and strengthen the existing merit-review framework by requiring agencies to use objective, neutral and program-specific review criteria and to establish stronger qualification standards for reviewers.
Remove proposed ideological and subject-matter restrictions. The AMA raised concerns that the proposal’s award-selection and grant-administration restrictions could allow agencies to reject, narrow or terminate otherwise meritorious research or programs based on the topics they address, the populations they serve or how their work is characterized. The AMA urged OMB to preserve agencies’ ability to support work grounded in scientific merit, statutory purpose and expected public value.
Protect the ability to study which interventions work for which patients. The AMA recommended that OMB withdraw language that could restrict federally funded research examining how policies, treatments, technologies, algorithms and interventions perform across patient populations. Physicians must be able to ask whether a drug, device, diagnostic tool or intervention works safely and effectively for the patients they treat.
Protect ongoing federally funded work. The AMA opposed the proposed expansion of discretionary termination authority and the creation of a new stop-work authority. These provisions could allow agencies to halt or end federally funded work after recipients have hired staff, enrolled participants, built partnerships or begun collecting data—potentially harming patients, wasting taxpayer dollars already invested in research and data collection, and driving scientific talent away from the United States.
Reduce burden and expand access to funding opportunities. The AMA supported provisions that would make federal funding opportunities easier to find, understand and navigate, including requiring agencies to post opportunities on Grants.gov, write notices in plain language, and make pre-application assistance available to all potential applicants. The AMA also supported encouraging multi-year awards, which can reduce repeated application and reporting cycles while giving recipients greater stability for long-term research, training and public health initiatives.
Protect avenues for disseminating federally funded knowledge. The AMA urged OMB to continue allowing reasonable publication, open-access, journal, periodical and conference costs, which are critical to ensuring that federally funded knowledge reaches the physicians, researchers and policymakers positioned to translate evidence into clinical practice and public policy.
Next steps
As OMB reviews comments and develops the final rule, the AMA will continue advocating for a federal grantmaking framework that preserves merit-based review, protects ongoing federally funded work, and sustains the research, training and public health investments that help drive medical progress and improve patient care.
