Bolstered by election results and hammered by rising Medicaid costs, the nation's governors for the first time are asking Congress to repeal a law that guarantees "reasonable and adequate" Medicaid payments to providers.
In the past, the National Governors' Association has sought to modify the so-called "Boren amendment" to the Social Security Act, which they say is bankrupting their Medicaid programs.
The amendment, named for former Sen. David Boren (D-Okla.), requires state Medicaid programs to pay "reasonable and adequate" rates to meet the costs of an efficiently and effectively run facility. For years, the law has given providers a legal opening to sue states that try to reduce payments under revamped Medicaid programs.
But now the NGA is asking for an outright repeal of the Boren amendment, at a time when reform of welfare programs is high on the agenda of small-government-oriented Republican governors elected in a sweep of many statehouses. The appeal is contained in a policy paper adopted by the NGA at its recent winter meeting in Washington.
It says the Boren amendment "has led to havoc in the administration of Medicaid programs....States remain frustrated in their ability to bring discipline to their budgets and have been thwarted in their attempts to achieve the (amendment's) original purpose."
HHS statistics show Medicaid cost state and local governments $41.8 billion in 1993, the last year for which HHS has published U.S. healthcare expenditures.
Carl Volpe, a senior policy analyst with the NGA, said opposition to the amendment has grown as costs have escalated.
The Boren amendment covers hospitals and nursing homes. However, nursing homes have more at stake because Medicaid provides half their revenues. By comparison, hospitals receive about 14% of their total revenue from Medicaid.
Dina Elani, reimbursement specialist for the American Association of Homes and Services for the Aging, which represents primarily not-for-profit nursing homes, said other providers can find ways to buffer the cost of caring for Medicaid patients.
But for nursing homes, Medicaid "is the market," she said.
Repealing the amendment would "eliminate a check and balance that is in the system," Elani said. "I would be happier if the states would say, `We will work with you to develop a more effective system of care delivery."'
As an alternative to the amendment, the NGA calls for a statute that would establish "safe harbors" to free the states from further regulation of their Medicaid reimbursements.
Among the NGA's suggested safe harbors is capping the Medicaid reimbursement rates at an amount equal to the Medicare-based upper payment limits, or establishing existing rates as a benchmark that can rise no faster than inflation.