Congress Might Be Unable To Block New Medicaid Rules That Would Shift More Costs To States

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Public Health
Article Date: 13 Feb 2008 - 7:00 PDT

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The Bush administration over the next several months will issue new Medicaid rules that would shift billions of dollars in costs to the states, after studies from the Government Accountability Office supported its assertion that states have used questionable practices to generate more federal payments than they deserve, CQ Today reports. The first regulation, to be issued March 3, would end payments for ancillary services provided under case-management plans. The administration considers these services, which can include assistance finding housing or paying utility bills, outside the scope of Medicaid. The second regulation, to be issued May 25, would limit how much states could pay health care providers; end Medicaid reimbursements for medical intern and resident salaries; end reimbursements to schools for busing Medicaid-eligible students; and limit the range of services that could be considered "rehabilitation" for Medicaid patients.

The regulations would reduce federal spending by about $12 billion over five years, according to Andrea Maresca, senior legislative associate for the National Governors Association. At a House Oversight and Government Reform Committee hearing in November 2007, CMS Medicaid Director Dennis Smith said, "There is a long and complicated history that is marked by states seeking to shift funding of the Medicaid program to the federal government," adding that the new rules "are geared to identifying and preventing the spread of new loopholes that could be used by states."

State, Lawmaker Response
Barbara Edwards, interim director of the National Association of State Medicaid Directors, said, "There is a concern that there is a reshaping to some extent of the Medicaid program -- in particular the benefits Medicaid will cover -- in ways that states are concerned will result in cost-shifting to the states from the federal government or will result in a loss of services."

However, the "prospects for blocking the proposed rules are, at best, uncertain," according to CQ Today. Senate Finance Committee Chair Max Baucus (D-Mont.) said that he would like to block many of the upcoming regulations, in addition to blocking the expiration of several moratoriums on other Medicaid regulations, but a Senate GOP aide said that there is "no chance" that Congress would pass a moratorium on the first regulation. If lawmakers are unable to pass a moratorium, states either could cut services that the federal government will not reimburse, which would place political pressure on lawmakers, or they could sue the federal government, according to CQ Today (Wayne, CQ Today, 2/11).

TCM Services
In related news, Senate Majority Leader Harry Reid (D-Nev.) and Baucus have asked HHS Secretary Mike Leavitt to rescind or delay a proposed rule that places limits on targeted case management services in Medicaid, CQ HealthBeat reports. Reid and Baucus said that the proposed rule, published Dec. 4, 2007, goes beyond the provisions of the 2006 budget savings law and prevents at-risk beneficiaries "from accessing necessary medical, social, educational and other case management services."

The law states that Medicaid will reimburse for services that fall under three categories: assessment of service needs; development of a specific care plan; and referrals to assist individuals in obtaining "needed services and monitoring." Reid and Baucus in their letter stated that the proposed rule "restricts services that may be appropriately classified within these three categories of services, and therefore contravenes the intent" of the budget law.

HHS spokesperson Christina Pearson said that TCM services have been the focus of several Office of the Inspector General and GAO audits, and "Congress has recognized it is being used to leverage Medicaid dollars to fund a variety of state and country programs" (Carey, CQ HealthBeat, 2/11).

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