Medicaid Change May Have Significant Impact On Utah Health System, Salt Lake Tribune Reports

Main Category: Medicare / Medicaid / SCHIP
Article Date: 26 Mar 2008 - 12:00 PDT

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A proposed Medicaid change could "inflict a 'devastating' financial blow to Utah health care and medical education" and cut $360 million in federal funding to the state over the next five years, Utah health care officials said last week, the Salt Lake Tribune reports (Maffly/Rosetta, Salt Lake Tribune, 3/19).

The proposed rule change would limit federal Medicaid payments so that they would not exceed the cost of providing care. The rule change would apply to hospitals funded by local governments. A congressional moratorium on the rule change expires on May 25.

A national coalition of hospitals on March 11 filed a federal lawsuit to prevent the Bush administration from implementing the rule change, which would reduce payments to safety-net hospitals by $5 billion over five years. The suit asks the court to bar the rule from taking effect because it would violate federal law by adopting payment limits that Congress previously rejected.

CMS spokesperson Jeff Nelligan said the rule would preserve Medicaid's "integrity," and CMS believes the new rule "will bring greater transparency to the financing of the Medicaid program" (Kaiser Daily Health Policy Report, 3/12).

The rule change, scheduled to take effect on May 26, would result in an annual loss of $25 million, or about 3.5%, of the University of Utah Hospitals and Clinics' $700 million budget and eliminate its operating surplus, according to UUHC CEO David Entwistle. Entwistle also said UUHC likely would be forced to cut psychiatric services, pain clinics and inpatient beds. The rule change also would eliminate about $1.2 million in funding to six rural hospitals, the Tribune reports. Entwistle, in a declaration filed this month to support the federal lawsuit to stop the rule change, said, "This is too great a financial reduction for UUHC to offset without impacting programs and services."

The full effect of Medicaid rule changes proposed by the Bush administration over the five-year period could reduce Medicaid payments by $50 billion, or more than three times the Bush administration's projections, according to an analysis conducted by House Committee on Oversight and Government Reform Chair Henry Waxman (D-Calif.), the Tribune reports (Salt Lake Tribune, 3/19).

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