Tuesday, May 3rd, 2011 - 8:17
Tuesday, May 3, 2011 - 08:41
The administration has proposed a new rule that would limit state's abilities to cut Medicaid reimbursement payments in a move that is likely raise tensions with the states.
The Obama administration has proposed a new rule limiting states' ability to cut Medicaid reimbursement rates as part of an ongoing effort to ensure that the poor gain access to coverage in reality, not just on paper, according to The New York Times. The move, however, would largely remove one of the few tools that states have at their disposal to reduce their Medicaid costs as the federal-state program ramps up under health reform.
The proposed rule, to be published in the Federal Register on Friday, would require states to document that reducing Medicaid rates would not lead to more difficulty in finding care, as doctors may decide to stop treating Medicaid patients if their reimbursement rates drop. Medicaid rates continue to be well below Medicare rates, and some states have been eyeing further cuts, while others have largely exhausted that avenue to reduce costs.
Under health reform's Medicaid expansion, eligibility will be extended to childless adults up to 133 percent of the Federal Poverty Level in 2014. In the meantime, states must follow so-called "maintenance of effort" requirements that prevent them from adjusting eligibility levels. States have complained that health reform will lead to increased Medicaid costs that will strain their budgets, and have searched for creative ways to reduce their expenditures. The federal government will pay for the full costs of the Medicaid expansion in the states the first three years, but states must pay to cover those who are currently eligible but not covered and will be paying for 10 percent of the costs of the expansion by 2020.
The Department of Health and Human Services has, in some cases, dispatched teams of officials to certain states to help them decide on these tools.
The new rule would mean that one of the few tools at states' disposal would largely no longer be available. States are already voicing opposition toward what they view is a lack of flexibility, even as the administration has promised to be more flexible with cash-strapped states.
Once again, the coverage promises of health reform -- giving an additional 31 million people access -- will clash with economic and budget concerns. Look for a renewed debate between states and the federal government over this proposed rule in the coming months.