Lawmakers, Administration Officials Discuss Medicaid Regulations at Hearing

Democratic members of the House Energy and Commerce Subcommittee on Health on Thursday criticized new Medicaid regulations proposed by the Bush administration and said they would pass legislation to block the regulations from taking effect, CQ Today reports (Wayne, CQ Today, 4/3). The regulations, proposed by the Bush administration, would prohibit states from using federal Medicaid funds to help pay for physician training, place new limits on Medicaid payments to hospitals and nursing homes operated by state and local government, and limit coverage of rehabilitation services for people with disabilities, including those with mental illnesses (Kaiser Daily Health Policy Report, 3/17).

The Congressional Budget Office estimates that the regulations would save about $17.8 billion over five years (CQ Today, 4/3). However, states say the regulations would cost them $50 billion over five years. Energy and Commerce Committee Chair John Dingell (D-Mich.) and Rep. Tim Murphy (R-Pa.) have introduced legislation (HR 5613) that would place a one-year moratorium on the regulations. The first regulation took effect March 3, and four others are under a moratorium that expires this summer (Johnson, CongressDaily, 4/3).

Dingell at the hearing said, "These regulations go beyond any justifiable point to curb any abuses in the system and instead would shift costs to the states and prohibit federal support for legitimate expenditures on behalf of Medicaid beneficiaries" (CQ Today, 4/4). He added, "When one reviews how [CMS] dealt with comments submitted on the regulations, it appears that there was no intention of working with states or other beneficiary groups to find common ground." Dingell noted that CMS has received thousands of comments protesting the regulations and that only a handful of the comments were identified as "positive" by the agency (CongressDaily, 4/3).

Barbara Coulter Edwards, interim director of the National Association of State Medicaid Directors, said, "These proposals appear to have unintended consequences on good programs and will limit legitimate services to vulnerable people" (CQ Today, 4/4).

Administration Response
CMS Medicaid and State Operations Director Dennis Smith said the legislation would impede the administration's efforts to "apply fiscal accountability in Medicaid" because the measure "would not simply delay implementation of these regulations, but it could jeopardize policies and interpretations that predate these regulations" (CongressDaily, 4/3). He added, "These rules will help ensure that Medicaid is paying providers appropriately for services delivered to Medicaid recipients; that those services are effective; and that taxpayers are receiving the full value of the dollars spent through Medicaid." According to Smith, the administration "strongly opposes" the bill, an indication that President Bush might veto the legislation (CQ Today, 4/3).

Prospects
According to CongressDaily, the bill "faces hurdles, including a $1.6 billion cost that must be offset and possible Senate opposition." Subcommittee Chair Frank Pallone (D-N.J.) said one option for moving the legislation would be to attach it to another must-pass measure, but he added that lawmakers "haven't made any decisions" (Johnson, CongressDaily, 4/3). Pallone said the subcommittee plans to mark up the bill "in the coming weeks."

A bipartisan group of senators on Thursday announced that they had introduced a bill (S 2819) to block the new regulations. The bill -- introduced by Sens. Edward Kennedy (D-Mass.), John Rockefeller (D-W.Va.) and Olympia Snowe (R-Maine) -- would postpone the seven regulations targeted in the House bill, in addition to two others. The bill also would provide states with $12 billion in emergency aid to cover budget shortfalls, including $6 billion for Medicaid (CQ Today, 4/3).