Provider groups are working to strip a provision from a Medicaid reform plan that would give states free rein in deciding how to raise their matching funds for the program.
A House panel moved recently to eliminate the provision from GOP-backed reform legislation, and provider groups hope the full Senate will do the same when it takes up the bill later this week.
The provision would eliminate the rules on provider taxes and donations that were instituted in 1991 and 1993. Those regulations were established to counteract states' schemes to raise their Medicaid matching funds through voluntary donations and provider taxes.
The regulations also ensure that states spend funds earmarked for Medicaid on healthcare rather than diverting the money for other uses.
The Medicaid reform plan unanimously passed by the nation's governors last February included the same language as the GOP bill. However, an aide to a Democratic governor said many members of the Democratic Governors' Association think federal regulations are needed to ensure that some states don't drastically reduce Medicaid spending.
Provider groups, the Clinton administration and some congressional Republicans also oppose elimination of the rules, arguing that states will once again divert Medicaid money to cover budgetary shortfalls as they did before the rules were enacted.
"I don't understand why the Republican governors have continued to push this position; they all know what states are going to do, they are going to game...the program," said Thomas Scully, president of the Federation of American Health Systems.
A study by the liberal Center on Budget and Policy Priorities found that as a result of the elimination of the tax and donation rules and other changes designed to ease state Medicaid burdens, states could spend as much as $200 billion less over a seven-year period under the GOP plan than under current law.
According to the Congressional Budget Office, Medicaid spending is expected to increase from about $100 billion this year to nearly $150 billion in 2000.
Before passing the GOP Medicaid plan by a nearly party-line vote on June 13, the House Commerce Committee passed an amendment by unanimous voice vote offered by Rep. Greg Ganske, M.D., (R-Iowa) that would continue the provider tax and donation rules for a two-year period. After that, states could apply to the HHS secretary for a waiver that would allow them to eliminate the rules.
Provider groups, which supported the Ganske amendment, say the practical effect of the plan is to make it very difficult for states to get out from under the 1991 and 1993 regulations.
"Our assumption is that it is highly unlikely that any secretary of HHS is going to waive the tax and donation rules because of concerns about states cutting (Medicaid) spending," said Thomas Nickels, vice president of federal relations for the American Hospital Association.
The focus now turns to the Senate, where the Finance Committee is scheduled to take up a similar version of Medicaid reform later this week. Opponents of the GOP plan say that given the more moderate makeup of the Finance Committee, an amendment to reinstate the tax and donation regulations has a good chance of passing.
"If (Republican leaders) couldn't keep the House in line, it will be even harder to justify taking a beating in the Senate over this," said a Democratic gubernatorial aide.