CMS Issues Guidance on Prohibition Of Payments to Entities Outside United States

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States must be in compliance beginning June 1 with a provision of the health reform law that prohibits them from paying institutions or entities located outside of the United States for Medicaid items or services, the Centers for Medicare & Medicaid Services said Dec. 30.

In a letter to state Medicaid directors, CMS said that states must submit a state plan amendment (SPA) to show they are operating in accordance with the new requirement, which was included in the Patient Protection and Affordable Care Act. While the prohibition was effective Jan. 1 (with some possible exceptions), CMS said any claim audits to assure compliance would begin no earlier than June 1 and would only apply to claims submitted on or after that date.

Along with the letter CMS included a draft template for an SPA that states can use to certify their compliance with the prohibition. States must submit an SPA no later than June 30, with an effective date of June 1, according to the letter.

The letter said that for purposes of the new rule the term United States includes the District of Columbia, Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa.

In addition, the letter specifies that the prohibited payments refer to payments for medical assistance for which the state claims federal funding. The prohibition does not apply to payments for tasks that support the administration of Medicaid, such as information processing or call centers.

If a state must make changes to its Medicaid Management Information System to comply with the prohibition, it can qualify for additional federal funding, according to CMS.

The letter is available at