WASHINGTON -- A group of House and Senate leaders has added to the furor over new Medicaid financing rules by urging the Department of Health and Human Service to withdraw the rules immediately or risk deepening the financial problems of many states.
"Withdrawal of the [rules] will avert disruption of health coverage to some of the most vulnerable among us, while affording Congress and the administration the opportunity to formulate appropriate policies," the chairmen of six congressional panels on health care said in an Oct. 7 letter to Health and Human Services Secretary Louis Sullivan.
The six were protesting a rule the department issued last month that will disallow, beginning Jan. 1, certain types of state funds that have been eligible for federal matching funds under the Medicaid program.
The letter from the six chairmen follows a storm of protest from state governments and calls last week from two House members that the regulations be withdrawn.
The letter was signed by four committee chairmen: Sen. James Sasser, D-Tenn., of the Senate Budget Committee; Sen. Lloyd Bentsen, D-Tex., Senate Finance Committee; Rep. John W. Dingell, D-Mich., House Energy and Commerce Committee; and Rep. Leon E. Panetta, D.-Calif., House Budget Committee.
It also was signed by Sen. Donald W. Riegle, D-Mich., chairman of the finance panel's subcommittee on families and the uninsured, and Rep. Henry Waxman, D-Calif., chairman of the House Energy and Commerce Committee's subcommittee on health and the environment.
Spokesmen for the Health Care Financing Administration, the agency that issued the rules, could not be reached for comment on the letter. Gail R. Wilensky, the head of the agency, is expected to testify Wednesday on the issue before Rep. Waxman's subcommittee.
The rules would require the federal government to stop matching the portion of states' Medicaid funds garnered through donations, and they would place tight new restrictions on the use of taxes that states collect from hospitals for the Medicaid program.
The health agency has said using donations to count toward the match is inappropriate because it allows a state to receive more federal aid without kicking in its own funds. State taxes can also be unfair because many states make higher Medicaid payments to hospitals who pay such taxes, in effect reimbursing then for those levies, the agency has said.
But the six lawmakers said in their letter that the rules violate the intent of Congress in drafting the law, which "gave states the flexibility to use provider-specific taxes toward their share of Medicaid costs."
They also said the rules are extremely ambiguous, especially on the question of how to treat transfers of money within a state government and between a state and local government. The chairmen noted that the department has promised clarification in the next few weeks, but they said that will be too late for the states to ready themselves for the Jan. 1 effective date of the rules.
The chairmen also echoed a concern of the National Governor's Association about the timing of the rules.
"The Jan. 1 effective date of the regulation falls in the middle of most states' fiscal years, and a mid-year change in federal matching rules will cause severe funding shortfalls in a majority of the states," the letter says.
States would be unable to adjust their budgets quickly enough to allow for any such revenues shortfall because most state legislature have gone out of session for the year and will not reconvene for several months, the chairmen noted.
But while they criticized the department for what they called a drastic change in the way state revenues are counted toward the Medicaid match, the chairmen also said they agreed with the department's basic concern: that some states may be undermining the federal-state partnership developed to pay for Medicaid.
"We understand this concern and would be pleased to work with the administration to identify questionable state practices and develop appropriate responses," the letter states.