Capping months of intense negotiations, the nation's governors unanimously approved a Medicaid reform plan last week, but providers said the proposal could severely reduce their payments.
Congressional leaders and the Clinton administration hailed the governors' plan as a breakthrough, but no one endorsed it outright. The states' chief executives approved the compromise at the annual winter Washington meeting of the National Governors' Association.
Clinton said the compromise would "provide flexibility and still maintain the federal guarantee" of coverage. However, he added that he had "some concerns" about basic issues such as how the guarantee of coverage would be enforced.
It was not known how much the plan would save, but Florida Gov. Lawton Chiles, a Democrat, said it would fall between the GOP's budget plan, which called for $85 billion in savings from 1996 to 2002, and the White House plan, which contained $54 billion in savings. If no changes are made, Medicaid spending is expected to total $955 billion over seven years.
The plans' creators acknowledged that it is a document that will not withstand much tinkering by Congress.
"It's a very fragile package," said Wisconsin Gov. Tommy Thompson, chairman of the NGA. "If (budget negotiators) change the major elements, I think it's going to fall apart."
Many of the compromises reached by the governors were designed to allow both Republicans and Democrats to declare victory.
Republicans got much of the flexibility they sought. While states will be required to provide nearly all the currently mandated benefits-a bow to the Democrats who said they would not accept a plan that reduced benefits-states would have more freedom to change the amount and duration of those benefits and move Medicaid patients into managed-care plans.
The Republicans also were successful in eliminating the Boren amendment and restricting who can sue states over payment levels and benefits. The amendment, named after its sponsor, former Oklahoma Sen. David Boren, required states to cover all "reasonable" provider costs. Governors say it led to inflated payments and a rash of lawsuits.
The governors' compromise would not only repeal the Boren amendment but also would take away providers' right to sue over payment levels. Provider groups said that would almost surely lead to reduced reimbursements.
"Couple the lack of a real mandate with the lack of an ironclad guarantee to a specific benefit package, and couple that with the lack of a right to sue, and it's not a package that we're real excited about," said Richard Pollack, executive vice president of federal relations for the American Hospital Association.
States would be required to submit their Medicaid plans to HHS, a provision sought by Democrats who were concerned about a part of the deal that will allow states to define who is considered disabled.
The plan would set base spending at 1995 levels, including disproportionate-share payments for treating large numbers of poor people. It would allow state spending to grow at varying rates, depending on projections of changes in Medicaid population. If a state's population grew faster than the projection, then it would be given additional payments out of an uncapped "rainy-day" fund.