Lawmakers Warn HHS Against Medicaid Cuts

Against the will of Congress, HHS has proposed an adjustment to Medicaid funding that is expected to reduce the flow of federal money to the states by as much as $12.2 billion during the next five years.

If fully implemented, the proposal could have dire effects on patients' access to long-term care, according to a group of U.S. senators who recently sent a letter (PDF file: 4 pages / 660 KB. More about PDFs.) to HHS Secretary Mike Leavitt, asking him to desist from implementing the plan.

An administrative move proposed in President Bush’s 2007 budget, federal lawmakers rejected the plan when they passed last year’s Deficit Reduction Act, according to the senators' letter.

Under debate are limits on intergovernmental transfers, a mechanism used by many states to maximize the money they receive from the federal government. Currently, states can tax nursing homes and other long-term care facilities a 6 percent fee, money that then can be spread among physicians and other providers who serve the Medicaid population. The proposal would reduce the state tax on long-term care facilities from 6 percent to 3 percent and, in turn, reduce the federal match of state Medicaid funds by billions of dollars.

Opponents of the proposal have criticized the administration for trying to make backdoor cuts to the Medicaid program. Federal efforts to limit Medicaid funding during the past few years have resulted in state cutbacks, physician payment rate freezes and payment rate reductions.

"Cuts of the magnitude anticipated in the President's budget could force rural nursing homes to close their doors, cutting off local access to vital long-term services for elderly and disabled individuals and their families," the letter says.

Family physicians make an average of 2.8 visits to nursing homes each week and care for an average of 8.5 long-term care facility patients, according to data from the AAFP's 2005 Practice Profile Survey.

“It is clear that Medicaid and other entitlement programs can be improved and made more efficient; however, proposed administrative changes that lower provider reimbursement rates are not the correct approach. We should instead be focusing our efforts on making Medicaid a smarter and better payer for health care services,” says the letter, which was signed by a bipartisan group of 44 senators.

A group of House members sent a similar letter (PDF file: 7 pages / 4.3 MB. More about PDFs.) in May.