Medicaid's rule changes are drawing fire

Public hospitals, states and other stakeholders say the CMS proposals would renege on billions of dollars in established Medicaid commitments.

By Doug Trapp, AMNews staff. Nov. 19, 2007.

Washington -- Six proposed administrative changes to federal Medicaid funding are overdue steps to halt inappropriate federal spending, according to one side of a developing debate. They're unwarranted cuts to much-needed care, the other side argues.

The Medicaid rules, issued by the Centers for Medicare & Medicaid Services, would reduce federal Medicaid spending by at least $11 billion (0.9%) over five years. They are CMS' attempt to ensure that it's paying for medically necessary services and that those services have a legally defined federal matching fund requirement, said Dennis Smith, director of the agency's Center for Medicaid and State Operations.

"If the answer is yes to all of those, we pay," Smith said Nov. 1 at a House Oversight and Government Reform Committee hearing on the issue.

Summarized broadly, the rules would end federal Medicaid matching dollars for graduate medical education, for juvenile justice and for administrative expenses in schools, such as certain program outreach efforts. They also would limit federal Medicaid matching funds for government-owned hospitals to the actual cost of services, among other changes.

Issue stakeholders -- such as hospitals, school nurses and state Medicaid officials -- said the changes would further strain an already fraying health care safety net, especially damaging the ability of medical centers to train new physicians and hospitals' ability to care for the indigent.