January 16, 2008

Lawmakers Eye Medicaid Boost For States

Lawmakers writing an economic stimulus package plan to include a temporary increase in federal Medicaid matching rates for states worth several billion dollars, according to aides familiar with the negotiations.

The provision would boost state funds for Medicaid almost immediately and help governors ride out the economic downturn. The administration has signed off on similar language in the past, although it is unclear whether the White House would continue to support a new round of Medicaid increases despite state support for them. The Medicaid provision is being modeled on language in the last economic stimulus package, in which states got a 1.5 percent increase in the matching rate for six quarters. Lawmakers also want to require that states use the extra money only for Medicaid.

For Medicare, Senate Finance Chairman Max Baucus wants to put off for 18 months a 10-percent physicians' pay cut set for July 1. This would cost $12 billion to $15 billion over five years, according to a Democratic committee aide. Offsets to that package could take the form of cuts to home oxygen and durable medical equipment, as well as changes to rules governing private Medicare Advantage plans. Baucus also favors cutting payments for home health care and skilled nursing facilities, but those cuts will be harder to push through. The House will wait for the Senate to act on a Medicare package before weighing in, according to aides.

Any changes to Medicare Advantage could draw a veto threat from the administration, but the Democratic aide said Baucus wants to put the ideas on the table and wait for a White House response. Finance ranking member Charles Grassley, R-Iowa, opposes across-the-board Medicare Advantage cuts, but last year he agreed to language regulating Medicare Advantage marketing. The White House threatened to veto a six-month patch to the physicians' pay cut over the marketing provision, causing lawmakers to yank it at the last minute.

Baucus and Grassley are considering other changes to Medicare Advantage plan regulations as a way of eking out offsets for an 18-month package, according to aides. If the administration stands firm against any changes to Medicare Advantage, negotiators may be forced to scale back their proposal if they plan to continue abiding with PAYGO rules.

-FAWN JOHNSON, CongressDaily

Posted at 5:11 PM
Posted to: Bush Administration, Congress, Economy, Health
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