Healthcare lobbyists said last week that a new Medicaid reform plan devised by the nation's governors could result in lower payments to providers.
The Medicaid plan, which was endorsed by the National Governors' Association earlier this month, would eliminate federal rules regulating how much states must reimburse providers and take away providers' rights to take states to court. That could prompt states to take advantage of the lack of rules and trim Medicaid payments, providers contend.
But the governors say the rise in Medicaid costs will never be slowed unless states are given more control over Medicaid benefits and payments.
Like the Republican budget plan vetoed by President Clinton last year, the governors' compromise includes a number of controversial provisions opposed by most hospital groups including:
Eliminating the rules on provider taxes and donations that were instituted in 1991 and 1993. Those laws were enacted to counteract state schemes that raised states' matching funds through voluntary donations and taxes on providers. The regulations also ensure that the states spend the funds on Medicaid rather than diverting them to other uses. Eliminating the provision would return states to the days when they could divert Medicaid money to cover other budgetary shortfalls and reduce overall Medicaid spending.
Overturning the Boren amendment, which requires states to reimburse providers for all reasonable costs.
Reducing the highest federal matching rate. Under current law, the most any state has to put up of its own money is $1 for every federal Medicaid dollar received. But the governors' plan would reduce the required state match to 80 cents for every dollar.
Taken together, provider groups say the provisions would reduce the amount of state funds spent on Medicaid and eventually lead to lower provider reimbursements.
"There is no doubt that (hospitals) are very exposed," said Charles DeBrunner, executive director of the National Association of Urban Critical Access Hospitals. "There would be less money coming from the federal government to the states and less requirement on the states to put up their own money and no guarantee of adequate (reimbursement) rates."
One provision included in the governors' plan that was not part of the GOP budget is the elimination of providers' right to sue states over payment rates or benefits or over questions relating to which services are covered.
"There will be nothing to ensure a reasonable level of payments; the first time a recession hits, (states) are going to reduce Medicaid funds," said Thomas Scully, president of the Federation of American Health Systems. "(The governors) want to make sure that providers shouldn't have any legal remedy against anybody in any state or any country or any world or any universe."