STATE MEDICAID DIRECTORS say regulatory changes proposed by the Bush administration for Medicaid policy will be much larger than predicted, and a new report blasts the administration for its approach to those changes.
A report issued last month by the Committee on Oversight and Government Reform for the U.S. House of Representatives came as the result of a November 2007 hearing on regulations issued by the Centers for Medicare & Medicaid Services. The report was prepared at the request of Rep. Henry Waxman (D-Calif.), who chairs the committee.
A week after the report was issued, members of the House Committee on Energy and Commerce introduced the Medicaid Safety Net Act of 2008, which would delay implementation of Medicaid regulations imposed under the Bush administration in its 2008 budget plan. Passage of the bill would effectively kill the regulations under the current administration.
The report for Waxman’s committee found that seven regulations proposed by the CMS would reduce federal payments to states by $49.7 billion over the next five years – more than three times the original $15 billion estimate made by the Office of Management and Budget.
Two regulations would reduce Medicaid reimbursements for services furnished by public hospitals and teaching hospitals. Another would restrict how states can raise revenues from the healthcare sector to fund their share of Medicaid. The other regulations narrow the scope of allowable Medicaid coverage for various services.
The report's authors said they received responses from 43 state Medicaid directors, accounting for approximately 95 percent of total Medicaid spending.
In one state's case, the estimate of lost federal funds is more than 10 times the estimate suggested by the administration. The largest hit would be felt in California, which is expected to lose $10.8 billion under the new rules.
Cost limits on public providers are estimated to have the largest impact, with the reduction estimated to total $21.1 billion over the five years.
The report also contends that the regulations will reduce federal spending by shifting costs, not by achieving greater efficiencies, and will "disrupt existing systems of care for fragile populations."
From providers' standpoint, the regulations threaten the financial stability of hospitals and clinics that treat the uninsured, will impose significant administrative burdens and costs on state Medicaid programs and aren't supported by the state Medicaid directors, particularly because their systems aren't given enough time to make adjustments to the new rules.
The report criticized the CMS for handing down the regulations without allowing for Congressional oversight.