OBBBA Changes Medicaid Improper Payment Penalties, Increasing State Financial Liability
The Obligation-Based Budgeting and Accrual (OBBBA) legislation changes how improper payment penalties apply to state Medicaid programs under the Payment Error Rate Measurement (PERM) program. According to the National Health Law Program analysis, the changes expose states to significantly increased financial liability when their Medicaid error rates exceed federal thresholds. The modifications alter long-standing PERM rules that determine when CMS can impose financial penalties on states for payment inaccuracies. NHeLP provides recommendations for states to mitigate potential adverse effects from the new penalty structure.
State Medicaid agencies face heightened financial risk from federal penalties if their payment error rates trigger the new OBBBA thresholds, potentially affecting program operations and budgets.
Finance
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