The Clinton administration's fiscal 1998 budget is likely to include a provision to reduce Medicaid disproportionate-share payments by as much as 30% and redirect the remaining funds to targeted hospitals.
The White House is also considering reintroducing its plan to cap Medicaid payments on a per-capita basis against the wishes of some providers, consumer groups and liberal Demo-crats (Jan. 13, p. 4).
Last Congress, as an alternative to the Republican block-grant proposal that would have ended the federal Medicaid entitlement, the White House proposed a per-capita system that would keep the entitlement and limit increases each year.
But recent data have shown that Medicaid spending has slowed considerably. GOP leaders, unenthusiastic about fighting the Medicaid battle again, have abandoned their block-grant plans, and now many groups are urging the White House to leave Medicaid alone.
"The per-capita cap plan was a way to preserve the entitlement in the face of the block-grant onslaught," said Richard Pollack, executive vice president of federal affairs at the American Hospital Association. "It's a different environment now, and we wish they wouldn't do anything on Medicaid."
The wild card in the equation is the nation's Republican governors, who were the driving force behind the GOP block-grant proposal in 1995.
While the governors still want more leeway to change their Medicaid programs without federal approval, GOP aides say they are leery about trying to push a reform plan through the Senate Finance Committee, which includes several moderate Republicans skeptical of block grants.
The White House is also considering re-introducing a proposal it included in its last budget to reduce and re-target Medicaid disproportionate-share payments.
During the last budget talks, which collapsed early in 1996, the White House had called for a $39 billion reduction in Medicaid disproportionate-share payments over a seven-year period. At that time, the Congressional Budget Office had estimated that so-called DSH payments would total about $85 billion over seven years.
The remaining payments would have been targeted to institutions that had a high volume of uncompensated care and Medicaid patients. About 700 hospitals nationwide would have received the payments.
Christine Burch, executive director of the National Association of Public Hospitals, said the White House is working on a new way to redistribute the DSH payments to give more to hospitals that treat expensive Medicaid beneficiaries such as AIDS patients. It has not yet settled on a formula.