WASHINGTON - The Bush administration is holding up new Medicaid financing rules due out Oct. 1 in an attempt to resolve states' objections to proposed cutbacks in aid they receive for hospitals serving mostly poor patients, lobbyists said yesterday.
A spokesman for the Department of Health and Human Services said the rules have "hit a snag." but he declined to be more specific. He said he did not know when they would be released.
Lobbyists for the hospital industry, however, said the rules stalled because of state representatives' last-minute objections to a revised section covering so-called disproportionate-share hospitals. Those hospitals, which treat an unusually large - or "disproportionate" - number of poor patients, receive extra Medicaid payments, and states have wide latitude to decide which hospitals receive that designation.
In negotiating the rules with states, the Health Care Financing Administration, an agency within the Health and Human Services Department, had agreed to drop a controversial proposal that would have severely limited the number of disproportionate-share hospitals. The states, in turn, agreed to a limit on the total amount of Medicaid money a state can collect each year for such hospitals. The amount is capped at 12% of a state's total Medicaid program expenditures for the previous year.
States already above the 12% cap were frozen at their current dollar level, while states below 12% were to be given additional "growth" payments to gradually bring them up to 12%.
Lobbyists said a draft of the regulations circulated last month contained at least two problems. One was a proposal to scale back the growth payments drastically. Another would narrowly define how a state could calculate its total annual Medicaid expenditures, thereby making the 12% figure a smaller amount than states previously thought they would receive.
Officials for the National Governors' Association could not be reached for comment. But other lobbyists said Bush administration officials have been meeting with state representatives to try to answer their concerns. "There has been a lot of back and forth in the last couple of weeks," said a lobbyist for the hospital industry.
But that lobbyist and others said that even if the problems are ironed out, the Bush administration may continue to drag its feet on the rules, in an attempt to delay them until after the Nov. 3 presidential election.
Even with the input from their representatives, states are still likely to complain about the changes when made public, and the Bush administration would prefer to delay the bad news, the hospital lobbyist said. "States are going to go nuts," said the lobbyist, who asked not to be identified.
The disagreement over Medicaid funding for disproportionate-share hospitals is only the latest in a long-running state and federal fight over the regulations, which were first proposed by the Health Care Financing Administration in late 1991.
In general, the regulations were supposed to institute changes that would curb the runaway growth of federal spending on the Medicaid program. But at the time, governors had argued that the rules were too severe and would wreak havoc with state budgets because they would become effective Jan. 1, 1992, in the middle of most states' fiscal years.
Many hospitals, in turn, would see Medicaid payments from states curtailed, thus hurting ratings on any tax-exempt bonds they may have outstanding, ratings agency officials have said.
But the health administration said the rules were necessary to prevent states from distorting the amount of Medicaid funds they were entitled to receive. For example, the rules would prevent a state from counting certain tax revenues or donations from hospitals as eligible for federal matching funds.
Late last year, the National Governors' Association and the health administration worked out an agreement designed to ease the rules slightly and delay their effective date to Oct. 1, 1992.
Legislation passed by Congress in December codified that agreement. But the pact left many issues unresolved, and over the past year the governors' group has been negotiating with health administration officials to iron out differences in those areas before the rules' publication date.
