States see bigger hit from Medicaid changes

States estimate that proposed changes to Medicaid would cost them about $50 billion in federal aid over the next five years, nearly four times the administration estimate, according to a Democratic congressional report.

The nation's governors have vigorously protested the proposed Medicaid changes. They say it would amount to a shift in costs that would have to be made up by the states.

The rules cover a myriad of services. For example, one proposed regulation would limit Medicaid reimbursement to public hospitals to no more than the cost of providing a particular service. Another would prohibit billing Medicaid for the costs of medical interns and residents. Another would eliminate Medicaid payments to schools for transporting certain students directly from home to school and back. The students get health services that are covered through Medicaid, the nation's health care program for the poor.

Federal officials said the changes are designed to ensure that providers don't bill the program for more than the costs of providing care and that states pay their fair share of the program.

The report was prepared by the Democratic staff on the House Committee on Oversight and Government Reform.

"As the economy tips into recession, the last thing we should be doing is taking federal funds from states, especially funds that are supposed to help people with their health and medical expenses," said the committee chairman, Rep. Henry Waxman, D-Calif.

He urged the administration to reconsider the regulations.

Dennis Smith, director of the Centers for Medicaid and State Operations, said the committee's survey lacked credibility and had too may gaps and assumptions.

"We don't see states changing their budgets based on these kinds of assumptions," Smith said.

Overall, the federal government will spend more than $1.2 trillion on Medicaid over the next five years. The administration projects that if all the changes it seeks were enacted, the federal government would save about $13 billion over those five years.

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On the Net:

Committee on Oversight and Government Reform report: http://oversight.house.gov/documents/20080303111450.pdf