MEDICAID: Roth Wants Loophole Closed

      Senate Finance Committee Chair William Roth (R-Del.) urged HCFA in a hearing yesterday to close a Medicaid loophole that allows states to boost their federal reimbursements by "artificially inflating the amount they pay health facilities owned by local governments." GAO and HHS witnesses testified that this practice, while not technically illegal, was "abusive and unethical" and has cost Medicaid $2.3 billion in the last quarter alone. Roth said, "If unchecked, we face a situation that fundamentally undermines the fiscal integrity of the Medicaid program and circumvents the traditional partnership of financial responsibility shared between the federal and state governments" (Rovner, CongressDaily, 9/6). States exploit the loophole by charging the maximum amount for services provided at a local or county-owned facility "even though the services may actually cost substantially less." The states then pocket the difference between federal government reimbursements and the amount they actually paid for services. Timothy Westmoreland, director of the HCFA's Center for Medicaid and State Operations, said that while some states used this surplus to fund health care projects, others have used it for non-health care-related programs (Carter, AP/Philadelphia Inquirer, 9/7). Roth's efforts to close the loophole have met resistance from fellow Finance Committee members who hail from states that take advantage of the practice. Sen. Daniel Patrick Moynihan (D- N.Y.), for one, said the loophole "has greatly expanded the number of uninsured individuals receiving care" (CongressDaily, 9/6).