Medicaid reform is waiting on Medicare pact

The Bush administration still wants Medicaid to become more economical.

By Joel B. Finkelstein, AMNews staff. Nov. 10, 2003.

Washington -- Despite meeting with initial resistance from Democrats, the Bush administration is pushing for Medicaid reform that would provide relief up front but impose "fiscal responsibility" on states down the road.

Congress will not be able to begin work on Medicaid reform until it has completed work on legislation to establish a Medicare prescription drug benefit, staff from the House Energy and Commerce Committee said at a recent meeting. But Medicaid will be high on the priority list next year.

States faced with budget shortfalls have turned to Medicaid to cut costs. Reducing reimbursement rates for physicians and others is often at the top of the list.

A state relief package passed by Congress in May helped avert some planned Medicaid cuts. That bill also took the steam out of the administration's Medicaid reform effort for this year. But the administration's proposal will serve as a good starting point next year, Republican staff said.

The plan would offer states more leeway in administering programs and give them several billion dollars in extra funding to revamp Medicaid. But that money would be distributed unevenly over seven years, and some governors worry that it would only postpone their financial problems.

The Bush administration has made strides in letting states customize programs. The Centers for Medicare & Medicaid Services has processed more than 3,000 Medicaid waivers and plan amendments in the past two years, said Leslie V. Norwalk, CMS deputy administrator.