Some Lawmakers Want to Block Bush Medicaid Loophole Rule
Members of Congress from both chambers and both parties are "vowing to block or at least delay" a proposed rule announced by the Bush administration last week to phase out the Medicaid loophole, CongressDaily/AM reports. The result could be a "repeat of last year," when Congress successfully "watered down" a proposal by the Clinton administration to "severely curtail" states' use of the upper payment limit, under which states can inflate their Medicaid payments to public facilities, receive "artificially high" matching funds from the federal government, then take back the excess payments from the facilities and use the extra funds for any budgetary purpose. The Clinton administration rule reduced the upper payment limit that states could pay public hospitals to 150% of the Medicare rate under Medicaid. But CMS Administrator Tom Scully announced last week that the agency will seek to reduce the upper payment limit to 100%, effectively closing the loophole. He said that the 150% level was "well-meaning, but it's turned out to be a hole you can drive a truck through."
Many lawmakers say that closing the loophole would hurt public hospital systems, as states that have used it to pay for health services would see their federal funding greatly reduced. "I've got hospitals out there that if they are taken back to 100%, they fold," said Sen. Blanche Lincoln (D-Ark.), who has introduced language in the Senate's version of the economic stimulus bill to delay for six months implementation of the proposed rule. CongressDaily/AM reports that the rule has particularly upset lawmakers from California, which uses loophole funds to subsidize the state's emergency and trauma care system. "This longstanding program is a cornerstone of financial support for the state's health care safety net, and all federal Medicaid dollars are used exclusively for health care purposes," 47 members of the California House delegation wrote in a letter to House leaders, adding, "Therefore, any steps taken to rightfully eliminate abuses of the Medicaid program under UPL should not undermine California's program." Scully, however, said the plan to close the loophole would go forward. "If Congress wants to change it, they're going to have to finance it," he said (Rovner, CongressDaily/AM, 11/28).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.