House Speaker May Stall Medicaid Loophole Closure Efforts

House Speaker Dennis Hastert (R-Ill.) hopes to attach a measure to Congress' largest appropriations bill to delay closure of a Medicaid loophole, through which Hastert's home state of Illinois derives about 10% of its health care budget, the AP/Chicago Tribune reports. Under the loophole, states pay local- or county-owned provider facilities more than the actual cost of services, receive inflated matching funds from the federal government, and then require providers to return the extra state funds while pocketing the extra federal funds; the practice is expected to cost about $2 billion this year, with a quarter of those expenses going to Illinois. Anonymous House officials from both parties confirmed that Hastert wants to attach to a $350 billion-plus spending bill for federal health, welfare, labor and education programs a measure that would delay plans to close the loophole (Carter, AP/Chicago Tribune, 10/21). HCFA earlier this month released a proposal to phase out the loophole over a five-year period, while Senate Finance Committee Chair William Roth (R-Del.), who says the loophole could cost the government $127 billion over 10 years, has introduced a measure to close the loophole within two years. Last week, Roth, joined by Senate Majority Whip Don Nickles (R-Okla.) and Democratic Sens. Richard Bryan (Nev.) and John Dingell (Mich.), wrote to Senate Majority Leader Trent Lott (R-Miss.), stating their opposition "to any effort to undermine or weaken the proposed regulation. Any attempt to block HCFA in its efforts to begin to stem the abuse will weaken Medicaid in the long run." The letter continues, "We cannot stand by and let that happen. We will be carefully monitoring all legislation considered between now and adjournment to see that no effort is made to undermine HCFA's proposed regulation" (AP/Houston Chronicle, 10/21). While Hastert's office would not comment specifically on the speaker's next steps, spokesperson John Feehery said, "We're looking at a lot of different options to restore fairness for Illinois hospitals" (AP/Chicago Tribune, 10/21).