Controversial Medicaid Changes Postponed Until Next Year

Medicaid regulation changes that would have cut programs, including care coordination for people with mental illness and funding for teaching hospitals, have been delayed until next spring. APA has opposed these regulatory changes.

Congressional negotiators overcame White House opposition to the Medicaid provisions by dropping language that would have allowed pharmaceutical companies to sell deeply discounted birth-control products to college health centers and certain family-planning clinics without impacting the Medicaid drug rebate program.

Specifically, the delay affects six of seven packages of administrative changes that the Bush administration had planned to implement.

The six packages of changes would cut Medicaid costs through a number of steps, including restricting coverage of rehabilitation services for Medicaid-eligible people with disabilities, barring schools from providing“ administrative services” for Medicaid-covered children, restricting what states may cover as hospital outpatient Medicaid services, eliminating Medicaid support for graduate medical education, restricting the ways in which states may raise funds to support their share of Medicaid, and sharply limiting Medicaid payments to public hospitals and other “safety net” providers, according to Henry Waxman (D-Calif.), chair of the House Oversight and Government Reform Committee.

The delay was approved as part of a supplemental war appropriations bill (HR 2642). The regulations will not have to undergo any additional administration review or public comment periods, and if no further congressional action is taken, the regulations could take effect as early as April 1, 2009.

APA and other medical organizations opposed the changes, which are designed to cut future Medicaid growth, on the ground that they would limit care for Medicaid beneficiaries. Expected to be especially harmful were reductions proposed for targeted case management (TCM), which coordinates services and treatment for many beneficiaries with serious mental illness transitioning from inpatient settings to the community (Psychiatric News, June 20).

“Those are the linkage services that keep people on their medications and in supportive housing,” said Lizbet Boroughs, deputy director of APA's Department of Government Relations. “It's basically the linchpin of holding the patchwork of public services together for people.”

Officials at the Centers for Medicare and Medicaid Services (CMS) said that the six packages of regulations were aimed at eliminating services that Congress never intended to fund. The changes also would have saved an estimated $17 billion of Medicaid's expected five-year spending total of $1.2 trillion, according to CMS.

The regulation changes drew widespread opposition in Congress after the Congressional Budget Office estimated that the TCM changes alone would cut Medicaid payments to states by almost twice as much as the $760 million over five years that was intended by the Bush administration.

The Association of American Medical Colleges (AAMC) led the opposition to the proposed regulation that would have eliminated $1.78 billion in Medicaid funding for graduate medical education. The AAMC also objected to the change because it contained plans to cut $3.87 billion in Medicaid funding for safety-net providers, such as teaching hospitals and physicians, who provide much health care to the indigent.

The delay in implementing these regulations “maintains the vital funding teaching hospitals need to support the training of new physicians,” said Darrell Kirch, M.D., president and CEO of the AAMC, in a written statement.

The delay is the second enacted by Congress, which previously had pushed back by one year the original implementation date of May 25, 2007, for most of the regulations.

Supporters of the delay said they hope it provides time for Congress and the next administration to review the regulations and replace them.

“We must not rush to cut services to beneficiaries,” said Rep. Carolyn Maloney (D-N.Y.) in a statement on the rule delay. “Instead, Congress must have the opportunity to thoughtfully and deliberately evaluate what is happening in the states and address any concerns.”

The text of the Medicaid rule delay can be accessed at<http://thomas.loc.gov> by searching on the bill number, HR 2642. ▪