HHS ‘Tough’ on Medicaid Loophole, Despite Opposition
Over "protest" from states, HHS plans to propose a new regulation this month to tighten further a Medicaid "loophole" that has cost the federal government "billions of dollars" in "inflated" matching funds, which states have used to augment their budgets and have spent on "just about anything," the AP/Los Angeles Times reports. The Bush administration hopes to cut $17 billion in Medicaid overspending during the next 10 years. HHS and Congress addressed the issue last year with regulations that went into effect this month. Under the new rules, state-owned hospitals can still receive payments at 150% of the standard rate, but they can "no longer massively inflate" the payments. This week, HHS is expected to propose cutting the 150% rate to 100% and may suggest "cutting some states off the arrangement sooner than scheduled." The AP/Times reports that "[i]t's unclear how far the administration will get, given the fierce opposition HHS met last year" from lawmakers representing states -- such as Wisconsin and Louisiana -- that have "benefit[ed] handsomely" from the loophole. Congress already has "resist[ed]," with the House refusing to "go along" with the administration's plan in its budget resolution. "The [House] budget resolution does not contain Medicaid savings," a Republican document said. According to the White House budget blueprint released last month, "The loophole has allowed states to draw down billions of dollars in federal reimbursement for hospitals and nursing homes without any assurances that these payments were used for their intended purpose" (Meckler, AP/Los Angeles Times, 3/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.