WASHINGTON -- The Bush administration last week proposed tightening what is says are lax regulations that allow state to inflate the number of hospitals within their borders that serve more than their share of poor people and are entitled to extra Medicaid payments.

The proposal, which comes on the heels of other efforts by the Health Care Financing Administration to limit federal Medicaid payments to states, would further harm state finances and could endanger the credit quality of some states and hospitals, according to state and local lobbyists and rating agency officials.

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