By Alex Wayne, CQ Staff
April 3, 2008 -- Educators, public health officials, and hospital administrators told lawmakers Thursday that new Medicaid regulations prepared by the Bush administration would reduce health care for poor schoolchildren, nursing home residents, and pregnant women, among others.
At a House Energy and Commerce Subcommittee on Health hearing, Democrats blasted the regulations, promising to pass legislation (HR 5613) by committee Chairman John D. Dingell, D-Mich., that would block the new rules.
Administration officials, Republicans, and politically conservative health analysts described the regulations as a reasonable response to improper Medicaid spending by some states, and said the rules would not affect "medically necessary" care for any Medicaid patient.
Medicaid is a joint state–federal health program for the poor in which the federal government pays about 57 percent of the costs–an estimated $204 billion in fiscal 2008. For years, the relationship has been punctuated by tension between states and Washington over who should bear more of the burden. That conflict has escalated this year, as the administration seeks to implement at least seven new regulations that states complain would shift billions in costs to them.
Governors and state health officials are lobbying Democratic congressional leaders to halt the regulations. Democrats are eager to help, but have not yet managed this year to enact any obstacles to the rules, the first of which took effect March 3.
"These regulations go beyond any justifiable point to curb any abuses in the system and instead would shift costs to the states and prohibit federal support for legitimate expenditures on behalf of Medicaid beneficiaries," said Dingell.
A bipartisan group of senators announced Thursday that they had introduced their own bill (S 2819) to block the new rules.
The seven regulations at issue would together save Medicaid about $17.8 billion over five years, according to the Congressional Budget Office. The new rules are intended to:
- Limit state Medicaid payments to public hospitals.
- Narrow the services the government would pay for under case management plans some states provide patients.
- Prohibit federal reimbursement for the costs of transporting Medicaid-eligible children to school and administering Medicaid services at schools.
- Narrows the types of "rehabilitative" services that the federal government would pay for.
- End federal Medicaid reimbursement for students at teaching hospitals.
- Narrow outpatient hospital services that would be eligible for federal reimbursement.
- Limit taxes that some states charge health providers as a way to reduce Medicaid's draw on their budgets.
State officials described most of the rules as overly broad, and complained they had little opportunity to discuss them in advance with the administration. Dingell said that of thousands of comments the Centers for Medicare and Medicaid Services (CMS) received on the rules, only a handful were identified as "positive" by the agency.
"These proposals appear to have unintended consequences on good programs and will limit legitimate services to vulnerable people," said Barbara Coulter Edwards, interim director of the National Association of State Medicaid Directors.
But Dennis G. Smith, Medicaid director at CMS, criticized Dingell's bill, which he said would have a broader effect than simply blocking the new rules and might hamper ongoing efforts to monitor waste and abuse in Medicaid.
"These rules will help ensure that Medicaid is paying providers appropriately for services delivered to Medicaid recipients; that those services are effective; and that taxpayers are receiving the full value of the dollars spent through Medicaid," Smith said. He said that the administration "strongly opposes" the bill, an indication that President Bush would veto it.
A CMS spokesman said the agency would respond to all comments received on the proposed rules, and might alter them before issuing final regulations.
Smith provided the committee a list of dozens of reports by the Department of Health and Human Services' inspector general that he said had helped inspire the regulations.
James Cosgrove, the acting director of the Government Accountability Office's health care division, also told the committee that the GAO had for years documented improper schemes by states to collect additional Medicaid reimbursements from the federal government.
But Smith was largely without allies in the hearing. Only two Republicans asked questions–the subcommittee's senior Republican, Nathan Deal of Georgia, and Michael C. Burgess of Texas, both of whom expressed support for the regulations.
And under questioning from Dingell, Cosgrove admitted that GAO had not studied the specific regulations at issue or the abuses that Smith alleged had inspired them.
Dingell's bill would postpone the seven regulations until April of next year, when a new president will be in office. He urged the subcommittee's chairman, Frank Pallone, Jr., D-N.J., to have his panel approve the bill soon.
A Pallone spokesman said that the subcommittee plans a markup "in the coming weeks." CBO estimates that Dingell's bill would cost about $1.65 billion, because the budget office has already assumed the savings from the regulations in its "baseline" financial projections. Dingell aides say the expense will be balanced with a cost-cutting measure that would require electronic verification of assets of people applying for Medicaid.
The Senate bill—by Edward M. Kennedy, D-Mass., John D. Rockefeller IV Jr., D-W.Va., and Olympia J. Snowe, R-Maine—would postpone the seven regulations targeted by the Dingell bill, plus two others, one regarding a board that hears appeals of HHS policies and another concerning the State Children's Health Insurance Program.
The Senate bill also would provide states $12 billion in emergency aid to cover budget shortfalls, including $6 billion for Medicaid. The aid would be targeted to states that have experienced job losses and increases in food stamp participation and home foreclosures.