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DEPT. OF HEALTH & HUMAN SERVICES: AGREEMENT REACHED ON MEDICAID FINANCING

                   DEPT. OF HEALTH & HUMAN SERVICES:
                AGREEMENT REACHED ON MEDICAID FINANCING
    WASHINGTON, Nov. 21 /PRNewswire/ -- After three weeks of intense negotiations, the National Governors' Association and the Administration have reached agreement on Medicaid financing through the use of provider donations and taxes.
    "The dialogue established with the governors will lead to further positive discussions on health care reform through innovative and creative state experimentation," said HHS Secretary Louis W. Sullivan, M.D.
    "We have worked hard to reach this accord with the governors to replace the regulations set to take effect on Jan. 1," announced Gail R. Wilensky, Ph.D., head of the Health Care Financing Administration.  HCFA is expected to provide almost $65 billion in Medicaid funding to states in fiscal year 1992.
    "It would be regrettable if Congress blocked a good-government policy step that benefits all states and protects essential health care services," Wilensky added.
    The Administration and the governors have expressed concern, however, that while Congress has urged such an agreement, lawmakers now appear unwilling or unable to consider it.
    The agreement includes provisions that:
    -- Allow on-going federal reimbursement for up to 25 percent of the state share of Medicaid for provider tax programs that are broadly based (uniformly applied to all providers and all business of those providers);
    -- Limit the overall amount of add-on payments for disproportionate share payments to 12 percent of total Medicaid spending in 1993 and after; and
    -- Protect, for a limited time, the existing state tax, donation and disproportionate share programs.
    The Administration entered into discussions with the governors after members of Congress severely criticized its Oct. 31 regulation that implemented provisions of legislation enacted in the fall of 1990. On a bipartisan, bicameral basis, members had urged the Administration to develop legislative alternatives that would not disrupt state budgets and Medicaid programs.
    Nonetheless, on Tuesday, Nov. 19, the House of Representatives passed a moratorium on the Administration implementing its Oct. 31 final rule regarding provider donations and taxes.
    The Administrative strongly opposed the House action on budgetary and programmatic grounds, indicating that inappropriate state use of donations and tax programs, if left unchecked, could increase the federal deficit by up to $50 billion through fiscal year 1996.
    Secretary Sullivan said, "We have come to closure on this issue through dialogue and agreement with the governors.  Having the Congress act is an important step in stabilizing Medicaid.  Once we have stabilized Medicaid, we can move on to exploring more fundamental reform through innovative and creative state experimentation."
    The Senate Finance Committee is scheduled to consider legislation regarding Medicaid donations and taxes on Friday, Nov. 22.
    -0-        11/21/91
    /CONTACT:  Bob Hardy of HHS, 202-245-6145/ CO:  U.S. Department of Health and Human Services ST:  District of Columbia IN:  HEA SU: JT -- NY120 -- 6169 11/21/91 19:46 EST
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Publication:PR Newswire
Date:Nov 21, 1991
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