Addressing a major concern of the Bush administration, HHS is proposing to cut off Medicaid matching funds to states that use the money for other purposes, Modern Healthcare has learned. The proposal was made in letters to Vice President Dick Cheney, who also serves as president of the Senate, and Rep. Dennis Hastert (R-Ill.), the speaker of the House.
The plan would curb the use of what it calls accounting schemes by states to secure extra federal funding for Medicaid by precluding the federal government from providing matching funds that exceed the cost of care. It also would allow the federal government to reimburse states for prescription drug costs based on the average sales price rather than on the average wholesale price, as is current practice, in order to reduce costs for states and the federal government. Federal spending on Medicaid for 2004 was $175 billion, according to the CMS.
In a separate proposal, HHS would create demonstration projects that would move more Medicaid beneficiaries away from institutionalized care to community-based care. A five-year project would provide $1.75 billion to states to provide support to individuals who choose to live in their own homes rather than in an institution such as a nursing home. Another would provide $449 million over 10 years to assist family caregivers of adult beneficiaries with disabilities or long-term illnesses.
Both proposals need the approval of Congress.