Medicaid Cost Dispute Likely Between Federal, State Officials

The Bush administration and states appear "headed for a confrontation" as CMS officials begin to "crack down" on state efforts to shift more of the cost of Medicaid to the federal government, a dispute that "will be high on the agenda" on Saturday at the National Governors Association winter meeting in Washington, D.C., the New York Times reports. Federal officials maintain that state efforts to shift more of the cost of Medicaid to the federal government, which currently covers between 50% and 70% of the cost of the program, have "driven up" federal Medicaid expenditures, the Times reports. States in many cases have used "creative bookkeeping and other ploys" to obtain large amounts of federal Medicaid funds "without paying their share" of the cost of the program, the Times reports. According to the General Accounting Office, which has added Medicaid to a list of high-risk programs, states have used "various financing schemes to generate excessive federal Medicaid matching funds while their own share of expenditures has remained unchanged or decreased."

In his proposed 2005 fiscal year budget, President Bush said that the federal government could save $1.5 billion next year and $23.6 billion in the next decade with efforts to restore the "fiscal integrity" of Medicaid. The Bush administration this month published a notice in the Federal Register to inform states that the federal government plans to require them to provide detailed descriptions of "each source of revenue" used to pay their shares of the cost of Medicaid. Under the plan, the federal government would have to approve state Medicaid budgets, and states could not receive federal funds for additional costs "unless and until the expenditures are approved" by federal officials. However, state officials have "bristled" at the plan and maintain that efforts by the federal government to limit practices such as "intergovernmental transfers" of funds would lead to "a real hardship" for state Medicaid programs, the Times reports (Pear, New York Times, 2/16).