The Bush administration's push for a block-grant approach to the Medicaid program may have stalled, but states are concerned about a proposal by the administration that would give the CMS the authority to approve state Medicaid budgets before allocating any federal funds for the federal-state financed health program.
As governors meet this week in Washington for the National Governors Association's winter meeting, that plan and the larger issue of state funding of Medicaid will likely be discussed at length. At issue are increasing concerns that states have been gaming the system in order to get more funding from the federal government for the Medicaid program, a problem that has heightened as states, facing financial crises, struggle to balance their budgets.
Senate Finance Committee Chairman Chuck Grassley (R-Iowa) last week called for a federal investigation into whether states' use of consultants to squeeze more dollars from Medicaid is resulting in fraud and abuse. According to Grassley's letter to HHS and the General Accounting Office, New Jersey is already being reviewed by HHS' inspector general's office to see whether it received $41 million improperly in Medicaid funds. The CMS is also looking at $84 million Georgia awarded to a consultant to help that state maximize the amount of federal funds it received.
In addition, the administration also wants to limit "intergovernmental transfers" of Medicaid funds-a funding method in which state and local governments share in the state's part of Medicaid funding-because the practice has led to states getting more federal Medicaid funding than they are entitled to, according to the administration.
The CMS earlier this year proposed new regulations requiring states to submit to the CMS a preliminary Medicaid budget 150 days before the start of a state's fiscal year. The CMS would then determine the appropriateness of the budget. It is looking to implement the change in time for fiscal 2005, which starts this October.
While the rumble resulting from this proposal pales in comparison to the stir caused by the administration's plan last year to block-grant federal Medicaid funds to states, critics nonetheless have characterized the move as a capping of Medicaid spending.
"It represents a fundamental change from how the program now operates," said Charles Miller, a lawyer at Covington & Burling, Washington.
Earlier this month, the National Governors Association asked HHS Secretary Tommy Thompson for more time to comment on the plan. "We believe strongly that any proposed changes to the program should be fully discussed in the spirit of the long-standing state-federal partnership," Govs. Dirk Kempthorne (R-Idaho) and Mark Warner (D-Va.) said in the letter.
Miller said the administration is hoping to achieve this year what it couldn't last year.
A message left with the CMS was not returned by deadline.