Clarification of Medicaid Outpatient Hospital Benefit Might Have ‘Severe’ Effects, Editorial States

The "Bush administration has callously decided to reduce Medicaid payments to hospitals for their outpatient services," and the "impact on the poor and the hospitals that serve them could be severe," a New York Times editorial states (New York Times, 11/12).

On Friday, the administration issued a clarification on the definition of outpatient hospital services under the Medicaid outpatient hospital benefit. Under the clarification, outpatient hospital services do not include those that Medicaid beneficiaries could obtain outside of a hospital (Kaiser Daily Health Policy Report, 11/10). The clarification will allow hospitals to "continue to provide such services," but they "will now be reimbursed at the much lower rates for other Medicaid providers," the editorial states.

However, "hospital leaders and state Medicaid officials have a much darker view of the consequences" of the clarification, which they maintain might "force safety-net hospitals with huge Medicaid burdens to cut outpatient dental and vision care and various services for children, among other reductions," the editorial states, adding, "That could be a serious blow in many poor neighborhoods where there are few if any private practitioners willing to take Medicaid patients."

The editorial states, "Financially stressed states are urging the White House to increase the federal contribution to Medicaid for at least the next two years, to help them ride out a potentially long recession." The editorial concludes, "Whatever its precise impact may be, this new rule heads in the wrong direction," so the "incoming president and Congress should heed their call for help -- and overturn this potentially damaging new rule" (New York Times, 11/12).