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Medicaid Reg Moratorium, More FMAP Funds May Fuel New SCHIP Push

February 5, 2008 -- House Democrats may combine more Medicaid funding for states and a moratorium on administration-imposed Medicaid regulations with legislation to expand the State Children's Health Insurance Program (SCHIP), a House Democratic leadership aide said Tuesday.

Pursuing such a strategy may help House Democrats secure enough support from House Republicans and Republican governors in Democrats' push to enact SCHIP legislation this year, said the aide, who asked not to be identified.

Late last month, House Democrats failed to override President Bush's second veto of a children's health insurance bill. The Jan. 23 override failed, 260-152 — 15 votes short of the two-thirds majority required, so garnering more Republican votes is key to overriding a Bush veto.

Lawmakers and governors have complained about several of the administration's new Medicaid regulations, including one issued last August that prohibits states from extending Medicaid coverage to children in families with incomes above 250 percent of the federal poverty line without first showing that 95 percent of those eligible below 200 percent of poverty have been enrolled in the program. Some health care analysts have said that standard is impossible to meet, because it is difficult to locate and enroll all individuals at that income level.

Separately on Tuesday, Senate Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., urged the Department of Health and Human Services to revise a rule that the senators said would prevent some Medicaid beneficiaries, such as children in foster care, from accessing necessary medical, social and other services by limiting or preventing access to health care providers. In a letter, Reid and Baucus wrote that the interim regulation, which the Centers for Medicare and Medicaid Services (CMS) issued in December, "extends far beyond the scope of Congress' intent and will result in needless harm to beneficiaries with disabilities or chronic health conditions."

At a November House Committee on Oversight and Government Reform hearing on the administration's Medicaid regulations, a witness from the Government Accountability Office testified that states have a long history of devising Medicaid financing arrangements that inappropriately increase federal Medicaid matching payments. Dennis Smith, head of the federal Medicaid program at the CMS, told the panel that the proposed rules aim to protect the fiscal integrity of Medicaid.

If the economy continues to worsen, however, the Medicaid regulations will make it impossible for governors to not cut benefits or reduce eligibility for Medicaid at a time when more people may need the program, the House Democratic leadership aide said in remarks to Academy Health's National Health Policy Conference. The aide also said that worsening economic conditions also will necessitate a temporary increase in federal Medicaid payments similar to what Congress enacted in 2003.

Some Senate Democrats have tried but failed to include "federal medical assistance percentage" or FMAP money in an economic stimulus package now pending before the chamber. Last month Raymond Sheppach, executive director of the National Governors Association, said that an FMAP increase is a top priority for governors on a bipartisan basis.

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