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Lawmakers and Lobbyists Urge Action in Congress to Prevent Medicaid Cuts

By Mary Agnes Carey, CQ HealthBeat Associate Editor

December 5, 2006 -- A bipartisan group of House and Senate lawmakers, nursing home industry officials, and the nation's governors are urging Congress to stop the Bush administration's implementation of regulations that would trim Medicaid payments by $12.2 billion over the next five years.

Nursing home officials say one of those proposals—reducing the allowable provider tax from 6 to 3 percent—would reduce Medicaid reimbursements to nursing homes by $1.57 billion within one year. Limiting the extent to which states can tax providers, such as nursing homes, hospitals, and facilities for the mentally disabled, which would in turn reduce federal Medicaid matching payments.

"The implications are severe for the fragile elderly and disabled in our states. It will jeopardize seniors' access to quality nursing home care," Stuart Shapiro, president and chief executive officer of the Pennsylvania Health Care Association, said at a news conference Tuesday.

"It turns economic stability upside down," said Bruce Yarwood, president and chief executive officer of the American Health Care Association, a trade group representing long-term care providers.

Lawmakers said states likely would have to cut services to offset the funding shortfalls. "It means one less nurse or a nurse stretched thinner or one less therapist," said Rep. Shelley Moore Capito, R-W.Va., who also spoke at the news conference. Capito said her state would lose $45 million in Medicaid funding under the administration's plan.

Separately Tuesday, Department of Health and Human Services Secretary Michael O. Leavitt said the administration plans "no changes" in its proposal. "The administration's been clear in what they've planned to do and why they plan to do it and we'll see how it plays out," Leavitt said before addressing a national conference on long-term care.

Matt Salo, director of the National Governors Association's Health and Human Services Committee, said the administration's proposed changes also have implications for Medicaid funding in other areas, such as rehabilitation systems and how Medicaid interacts with school-based health programs.

Salo said the NGA, which opposes the administration's plan, has asked Office of Management and Budget Director Rob Portman to meet with the group to "talk about the impacts of what this might be before we move forward."

Administration officials are expected to issue regulations soon to implement the changes, which would most likely take effect in May. Yarwood said legislation to extend expired tax breaks or to stop a scheduled 5 percent cut in Medicare payments to physicians are potential legislative vehicles.

Yarwood said his group also is reviewing its options for a legal challenge if the regulations are implemented.

Lawmakers on both sides of the aisle also have asked the administration to not move forward with their proposed Medicaid changes. In June, 44 senators asked Leavitt to not make the spending cuts, stating that the reductions would force some rural nursing homes to close and limit services to the mentally disabled as well as harming some hospitals. In May, 82 House members also asked HHS to not make the changes.

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