WASHINGTON -- The Senate Finance Committee approved legislation Friday to delay for three months the Jan. 1 effective date of controversial new Medicaid financing rules, but lawmakers continued to push for a more permanent solution to the ongoing flap over the regulations.
In a surprise move, the panel decided to send to the full Senate, with no recommendation, a second bill, which would codify a comprehensive agreement worked out between the National Governors Association and the Health Care Financing administration to ease the rules and make them effective Oct. 1, 1992.
Senators and the Bush administration will now work to determine whether the agreement is acceptable to the House, the hospital industry, and other interested parties, a Senate aide said. They are racing against the clock, however. Both houses of Congress would have to act on the plan before tomorrow, when lawmakers are expected to adjourn for the year.
If it becomes clear the agreement cannot be passed before Congress recesses, it would presumably pass legislation that blocks any rulemaking by the health administration on the issue for a few months.
The Senate panel's proposal for a three-month delay is a middle ground between the Bush administration, which prefers no delay, and the House, which has approved legislation offered by Rep. Henry Waxman, D-Calif., providing for a nine-month postponement.
Senate Majority Leader George J. Mitchell, D-Maine, a member of the finance panel, said during Friday's meeting that he favors the agreement worked out between the governors group and the health agency, but if that stalls he would want to see a six-month postponement of the rules.
The controversy began on Sept. 12, when the health administration issued rules requiring the federal government to stop matching the portion of state's Medicaid funds garnered through donations, and placed tight new restrictions on the types of state taxes that can be counted toward the federal match.
Since then, members of Congress and state and local officials have worked frantically to forge some kind of compromise or lengthy delay to forestall what they say will be the harm caused to state budgets if the rules go into effect as scheduled on Jan. 1.
The governors group thought it had succeeded in reaching an acceptable agreement with the health agency earlier this month to make the rules less onerous. Under that agreement, the administration's ban on states' use of hospital donations to count toward the Medicaid match would remain in effect, but the administration backed off from its blanket ban on revenues from hospital taxes, also known as "provider-specific" taxes.
States could still count those taxes toward the Medicaid match as long as the tax uniformly applies to all providers in a class and all to business of those providers. The agreement would block states from guaranteeing hospitals that they would be reimbursed for those taxes, and it would cap total revenues from the taxes at 22% of the state share of Medicaid expenditures.
The agreement would make the rules effective for most states on July 1, 1992.
But last week state and local groups, as well as hospital industry associations, objected to the agreement, saying they had not been given a chance to review it and determine whether it was agreeable to them.
On Friday, the governors unveiled a slightly different agreement, which the Senate panel agreed to send to the full Senate without an endorsement.
The new pact contains a few key changes. For example, the rules would go into effect for most states on Oct. 1, not July 1. In addition, the cap on provider tax revenues would be 25% of the state share of Medicaid expenditures, not 22%.
Representatives of hospital and local associations who attended the committee meeting said they were reserving judgment on the new agreement until they had studied it. They also said Rep. Waxman, who heads the House Energy and Commerce Committee's subcommittee on health and the environment, was studying the agreement and would hold a hearing on it today.