WASHINGTON -- A tentative agreement between federal regulators and representatives of the National Governors' Association to ease and delay new Medicaid financing rules has been rejected by most governors and many public interest groups, witnesses at a Senate hearing said yesterday.
The House, meanwhile, was on the verge late yesterday of voting on legislation that would delay for nine months the Jan. 1, 1992, effective date of the regulations, which would prevent certain types of state funds from being eligible for matching dollars under the Medicaid program.
In its present form, the compromise worked out between the governors group and the Health Care Financing Administration "will not be supported by a majority of the states," Robert Chambers, the speaker of the West Virginia House, told a hearing of the Senate Finance Committee.
"It will be devastating to most states, and certainly to West Virginia," said Mr. Chambers, who was speaking as a representative of the National Conference of State Legislatures.
"It has become obvious in the last few days that the complexity of the issue precludes a timely compromise," said Richard Dixon, chief administrative officer of Los Angeles County, Calif., who spoke on behalf of the National Association of Counties. "No one should be lulled into a false sense that an acceptable compromise can be achieved soon"
The regulations were issued by the Health Care Financing Administration on Sept. 12, and require the federal government, beginning Jan. 1, 1992, to stop matching the portion of states' Medicaid funds that are garnered through donations from hospitals. They also placed tight new restrictions on the types of state taxes that can be counted toward the federal match.
The agency clamped down further a few weeks later when it issued a clarification to the rules that stated many types of transfer payments from other levels of governments to states could not be counted toward the Medicaid match.
The agency also proposed another set of rules designed to stop the practice by some states of inflating the number of hospitals within their borders that treat an inordinate number of Medicaid patients and are entitled to extra Medicaid payments.
After the rules were issued, the governors group estimated states could lose a total of $5 billion next year in Medicaid funds they had been counting on, a loss that would cripple their finances and that could imperil their credit ratings. Hospitals' credit ratings could suffer because their Medicaid payments from states would ber cut.
After receiving those complaints, Congress began drafting the legislation to delay the effective date that the House was close to voting on yesterday.
The Senate has not acted on its version of the bill, but Senate Finance Committee Chairman Lloyd Bentsen, D-Tex., said during yesterday's hearing that he favored a much shorter extension, lasting only a few weeks. "I'm interested in having a short moratorium, to keep the pressure on all sides" to forge a compromise on the rules, he said.
While the drive to postpone the effective date was going on, the National Governors' Association was negotiating behind the scenes with the health agency to work out such a compromise. Last week, the governors group said the two sides had reached a tentative agreement.
But several witnesses at the hearing said many governors do not support the agreement, and associations representing other levels of municipal government and the hospital industry were unhappy about being left out of the negotiations.
The compromises made "were developed without the participation of the affected community--either provider or consumer," said Randall L. O'Donnell, chief executive officer of the Arkansas Children's Hospital.
"My own governor in Arkansas did not support the tentative agreement he received from NGA's staff last week," said Mr. O'Donnell, who testified on behalf of the National Association of Children's Hospitals and Related Institutions Inc.
Even if all parties involved reach a compromise on the Medicaid rules, the health agency cannot promulgate rules without actioin by Congress. The issues addressed in the negotiations go beyond the scope of 1990 Medicaid legislation that the regulations had been designed to implement.
For that reason, lawmakers are continuing to press the idea of passing legislation to delay the rules beyond the Jan. 1 effective date and return next year to work out an agreement at that time.
