Administration Proposes Medicaid
Reforms
February 7, 2003 - Program reform, fiscal integrity,
and extended access to unspent SCHIP allotments are among
the Medicaid initiatives highlighted in President Bush's FY
2004 budget proposal. The President has identified a $3.4
billion increase in Medicaid and SCHIP outlays for FY 2004.
Included, as a core element of the President's Medicaid reform
proposal is $20 million for Medicaid anti-fraud and abuse
initiatives in 2004, with the objective of "increasing
the number of audits and evaluations of state Medicaid programs"
and "reestablishing … the importance of financial
management oversight at CMS."
It also proposes "State Health Care Partnership Allotments,"
a new Medicaid financing option for states, intended to address
the "tension between states and the federal government
over matching payments." States selecting the plan would
have all their Medicaid (including disproportionate share
hospital payments) and SCHIP funding combined and then divided
into two broad allotment categories: acute care and long-term
care. States would be required to "provide a specified
benefit package" for mandatory beneficiaries, but would
have "dramatically broader flexibility" in designing
benefit options for other populations they choose to cover.
When explaining the new financing option during a Jan. 31
press conference, HHS Secretary Tommy Thompson assured that
the current benefit package for mandatory beneficiaries would
not change.
When speaking to the issue of Medicaid reform, he stated
that "pouring more money into an outdated system"
is "not going to fix the states' problems." He added
that the Partnership program would not require federal waivers
and would allow states to transfer up to10 percent between
the acute care and long-term care allotments. Up to 15 percent
could be deducted for "management."
Under the budget proposal, $12.7 billion in additional funding
would be directed to states choosing the new financing option
(over 7 years). However, according to the President's budget,
the Partnership Allotment option would be budget neutral over
10 years, implying funding cuts in the out-years.
The Administration has also proposed extending the availability
of unspent FY 2000 SCHIP allotments. The funds, which are
scheduled to expire on Oct. 1, 2003, would be available for
an additional year. The budget proposal references "current
estimates" of approximately $830 million in funding that
would otherwise revert to the Treasury in 2003. It adds that
the proposal would save the Medicaid program $230 million
over ten years.
When asked whether pooling the Medicaid DSH payments into
the state health care allotments would put at risk hospitals
who serve the uninsured, an HHS staff member responded that
the "DSH money is still there. It's just not under the
same money stream." Another staff member said the idea
"is to convert [the allotment] from disproportionate
share specific to hospitals, to be able to use the money for
other purposes, to give health care coverage to individuals
directly rather than to go to the hospitals."
Information:
Christiane Mitchell, Senior Legislative Affairs Manager
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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