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Dingell Seeks to Block Bush Medicaid Regulations

By Alex Wayne, CQ Staff

March 14, 2008 -- House Energy and Commerce Chairman John D. Dingell is seeking to block new Medicaid regulations by the Bush administration that have been criticized by many lawmakers and governors.

Separately, a child advocacy group issued a report Friday declaring that the new regulations would harm health care for children, especially those with disabilities.

Dingell, a Michigan Democrat, has previously criticized the administration's proposed Medicaid rules. They generally seek to prevent states from claiming federal reimbursement for services the government doesn't think should be provided under Medicaid.

Dingell's new bill (HR 5613), introduced late Thursday, would postpone seven of the rules for one year - potentially killing them, depending on who is president by then.

"The restrictions the administration is imposing on Medicaid are harmful and will undoubtedly put the health of thousands of our most vulnerable children at unnecessary, indefensible risk," Dingell said in a statement.

Medicaid is a joint state–federal entitlement for the poor in which the federal government pays about 57 percent of the costs. The federal share is estimated to total about $204 billion in fiscal 2008. States and the federal government have long argued over which should bear more of the program's costs, a dispute that has intensified in the last years of Bush's presidency.

The Government Accountability Office (GAO) has found that many states have used creative ways to collect more federal reimbursement for Medicaid services than they deserved, sometimes using the excess to pad their budgets. Governors say they have stopped the practices that the GAO criticized, but the Bush administration counters that its new regulations are necessary to prevent new schemes.

Dennis G. Smith, director of the federal Center for Medicaid and State Operations, said misuse of Medicaid funds is rampant, with some states using the program's money for unrelated purposes such as building schools, paying parole officers, and funding foster care.

Combined, the Office of Management and Budget says, the regulations would reduce federal spending on Medicaid by about $15 billion over five years.

"We should be doing a better job for people who rely on our programs, and for people to sort of accept less, the expectations that we have created, you are shortchanging the very people the program's designed to serve," Smith said in an interview. "We have certainly conveyed our willingness to work with Congress on these issues, but I think that in the absence of congressional action we certainly believe we have not only the authority but the obligation to address these issues."

It is not clear what lawmakers think about the regulations. While many Democrats and some Republicans have said they oppose them, legislation to block the new rules has not advanced up to now.

One of the regulations that Dingell wants to postpone took effect March 3; the rest are scheduled to be implemented over the course of the year. The regulations seek to limit reimbursement for several services, including salaries for interns and residents at hospitals; transportation to school and school-based Medicaid services; foster care and child welfare services; and case management services states provide to some Medicaid patients.

One regulation would limit Medicaid payments to public hospitals; another would limit taxes that some states levy on Medicaid providers as a way of reducing the program's draw on state budgets.

Smith said the administration has no intention of delaying the regulations on its own just because of congressional concerns.

First Focus, a child advocacy group, issued a report Friday stating the new regulations would be particularly harmful to children. The report, written by Sara Rosenbaum, chairwoman of the department of health policy at George Washington University, concludes the regulations would undermine a Medicaid program aimed at ensuring that low-income children with serious health needs are identified at an early age and treated intensively through adolescence.

"[W]hile the regulations pose a direct threat to programs and services for children of any age, and whose special needs arise from any cause, the most endangered group of children may be those who were born prematurely and at very low birthweight, and who may require both immediate and ongoing services throughout their lives as a means of achieving maximum rehabilitation from birth injury," Rosenbaum wrote.

She recommended a broad moratorium on the new regulations, like the one Dingell introduced Thursday.

Smith said Rosenbaum's report "mischaracterizes the regulations and the impact of the regulations," and uses the early childhood health program as a "smokescreen." Rosenbaum made no mention of the "abuses" that the administration's Medicaid regulations are intended to rectify, Smith said.

"These rules represent less than 1 percent of federal spending," Smith said. "If we can't take on these issues, then how are we going to take on the bigger issues that everyone has been talking about this past week?"—referring to an overhaul of entitlement programs.

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