RPC Reg Spotlight May 24, 2011

 

Regulatory Action in Spotlight:

 

Proposed rule to review state Medicaid changes.

 

Adverse Effects:

 

  • Higher costs to the states
  • Less flexibility to control costs
  • Federal power grab

 

Response of the Obama Administration:

 

The Obama Administration continues to box states in from all sides.  States are already prohibited from changing their Medicaid eligibility rules, called maintenance of effort (MOE), which was added under the American Recovery and Reinvestment Act (Public Law 111-5) and the Patient Protection and Affordable Care Act (Public Law 111-148).  A proposed rule (76 Fed. Reg. 26342) would now require states to develop a schedule for reviewing each Medicaid covered service at least once every five years to determine whether there is adequate access to care.  These plans must be in place to the satisfaction of the Centers for Medicare & Medicaid Services (CMS) before the agency will consider approving a State’s plan to modify their Medicaid program.  This includes any provider payment reductions or restructuring.  With this proposed rule, CMS attempts to assert even greater control over Medicaid.

 

Impact on the United States:

 

Although the Obama administration speaks of flexibility, the new proposed Medicaid regulations micromanage state programs and prevent them from allocating their resources to unique situations. In a May 2, 2011 New York Times article, several state Medicaid directors reacted in bipartisan opposition. Dennis Smith, Secretary of Wisconsin’s Department of Health Services, described the new regulations as “a federal power grab…Putting states in jeopardy, by inventing a new meaning for a longstanding statutory provision, is another example of how distant and disconnected the administration is from what is happening across the country.” Douglas Porter, Washington state’s Medicaid director added, “The Administration has gone overboard, creating a system of access review that is far too complex, elaborate and burdensome.”  While Bruce Greenstein, Secretary of Louisiana’s Department of Health and Hospitals describes the proposal as leaving “…too much discretion with the federal government.  It does not clearly enunciate the criteria to be used in measuring access to care.”

 

In Closing:

 

States such as California ($25.4 billion), New York ($10 billion), and Illinois ($4.9 billion) are already suffering from record budget deficits. Given the current condition of the economy, states must be given the flexibility needed to provide health care services to their most vulnerable citizens.  The Obama Administration claims this will increase access to health care for poor people, but these regulations impose new mandates that could force states to substantially raise taxes or cut other essential spending, thereby hurting the very people they are trying to help while straining state budget woes.  The states can ill afford to have their hands tied by the federal government in this manner.

 

Relevant Legislation:

 

Rep. Gingrey introduced H.R. 1683, the State Flexibility Act.  The bill would repeal the Medicaid and CHIP maintenance of effort requirements under the American Recovery and Reinvestment Act and the Patient Protection and Affordable Care Act.  The bill was passed out of the Energy and Commerce Committee on May 12, 2011.  According to the Congressional Budget Office (CBO), the State Flexibility Act will save federal taxpayers $2.8 billion through 2016 and $2.1 billion over 10 years.