Washington Post Examines Opposition to State Medicaid Accounting Practices
The Washington Post on Friday examined the Bush administration's efforts to "clam[p] down" on accounting practices used by states to boost their federal Medicaid funding. According to the Post, one such practice in California -- in which counties and local hospitals' contributions to Medicaid are recorded to bring in additional federal Medicaid matching funds and then returned -- will bring the state close to $2 billion in additional payments, a nearly 9% increase in California's federal matching funds.
According to the Post, Illinois, Pennsylvania, Iowa and other states also have used such "creative accounting" methods for more than a decade, but the practices now are "drawing increased scrutiny" and are "at the heart of the biggest budget battle in Washington."
The Bush administration and other lawmakers say the federal government could save as much as $20 billion over the next five years by eliminating the practices. Administration officials said a new agreement between the federal government and Iowa should serve as a model for other states to reduce their own creative accounting practices (Weisman, Washington Post, 4/8).
Under the agreement, Iowa will give up about $65 million in funding acquired through the accounting practices in exchange for an equivalent federal allotment. In return, Iowa will drop a Medicaid nursing home tax and be allowed to make changes to its Medicaid program.
However, states say the accounting practices "are critical to providing medical services" to low-income residents and are "firmly against" such agreements, according to the Post. Anne Marie Murphy, the Illinois Medicaid director, said, "It's easy to label something as fraud and abuse. But the reality is these dollars go to health care" (Washington Post, 4/8).
Meanwhile, House and Senate Republican leaders are "trying to keep the divisive issue" of proposed Medicaid spending reductions "from blowing up the conference" about a fiscal year 2006 budget resolution, CongressDaily reports (Heil, CongressDaily, 4/8).
The Senate last month on a 51-49 roll call vote approved a budget resolution that includes an amendment that would remove a proposed $14 billion reduction in federal funds for Medicaid over five years and establish a commission to study and recommend potential revisions to the program. The House last month voted 218-214 to pass a budget resolution that would reduce federal funds for mandatory programs, such as Medicare and Medicaid, by $69 billion over five years (California Healthline, 4/7).
On Wednesday, a number of Republican senators reiterated their stance that a high-level Medicaid commission must be convened before they could accept any reductions in Medicaid. Senate Budget Committee Chair Judd Gregg (R-N.H.) is "just as uncompromising in his push" to restore the $14 billion in cuts, and the disagreement threatens to "derail the budget altogether," according to budget aides, the Post reports (Washington Post, 4/8).
However, Senate Majority Leader Bill Frist (R-Tenn.) late Wednesday "apparently successfully" persuaded the Republican senators "not to publicly commit to rejecting a budget resolution that includes cuts in Medicaid," according to CongressDaily. House leaders are employing similar tactics, and Republican leaders reportedly "are holding out hope that conferees will be able to find a compromise on Medicaid cuts," CongressDaily reports (CongressDaily, 4/8).