September 16, 2008

Medicaid Proposal Draws Concerns

By Steve Peoples

The state is negotiating an unprecedented Medicaid waiver from the federal government in an attempt to save money, but some congressional leaders are wary.

PROVIDENCE -- Rhode Island's unprecedented attempt to transform its health-care system for the poor has drawn criticism from key congressional leaders, who fear that closed-door negotiations between the Bush administration and Governor Carcieri may put "beneficiaries, providers, and the entire state at risk...."

In recent weeks, at least eight members of the U.S. Congress -- including the entire Rhode Island delegation -- have submitted letters urging caution and transparency as the federal Department of Health and Human Services begins to review Carcieri's "global Medicaid waiver" application.

The plan has far-reaching implications for the 180,000 disabled, elderly and low-income residents touched by Medicaid programs last year. But, if approved, it would also pave a new road for other states eager to limit the cost of expensive and sometimes controversial "entitlement" programs.

Policymakers across the nation are paying close attention.

"Rhode Island's Medicaid waiver proposal could hurt a lot of folks in need," Montana Sen. Max Baucus, chairman of the U.S. Senate Finance Committee, said in a statement released by his office. "Rhode Island's proposal and all other possible state changes to Medicaid need to be reviewed in the bright light of day, with appropriate input from Medicaid policymakers and from those who depend on the program."

Baucus co-authored a letter late last month to Health and Human Services Secretary Michael O. Leavitt with Sen. Jay Rockefeller, the West Virginia senator who chairs the Senate Health Subcommittee.

"Medicaid provides a federal guarantee of health benefits for those in need," Rockefeller said in a statement. "And that guarantee cannot be negotiated away through secret pacts between the Bush administration and governors seeking to cut Medicaid."

A Rockefeller spokesman confirmed yesterday that Bush administration officials would hold a private briefing on Rhode Island's proposal for congressional leaders later this week.

Rhode Island is trying to do what no state has done before. Therefore, it's unclear exactly how the federal review process will play out.

A Centers for Medicare & Medicaid Services spokesman yesterday refused to answer questions about a timeline, the location of the meetings, or who would be in attendance. Nor would he respond to congressional concerns about transparency.

"We're looking very closely at the Rhode Island proposal," said Jeff Nelligan, director of media affairs for the CMS. He repeated the statement several times when asked specific questions.

The Carcieri administration met with CMS' regional office in Boston late last week, according to state Department of Human Services Director Gary Alexander. It was their first formal meeting since the July 29 formal submission of the "global waiver" proposal.

Alexander said state leaders would meet with CMS officials from the Baltimore national office in the "next couple weeks" to begin formal negotiations. They have yet to schedule the meetings.

"When you're dealing with the federal government -- it's a large bureaucracy -- it's hard to know what their timeline is," Alexander said.

In theory, the waiver concept is relatively simple.

The governor will agree to limit all spending on Medicaid programs for the next five years. In exchange, the Bush administration will grant Carcieri broad authority to change health- care programs that consume roughly $1.8 billion in state and federal spending this year, or 25 percent of the total state budget.

The governor has outlined dramatic changes to the state's long- term care system for the elderly and disabled, but changes may also affect subsidized transportation programs for the disabled and elderly, health insurance for low-income children and their parents, and prescription drug coverage for seniors.

General language in the 91-page waiver application outlines possible waiting lists for services, in addition to new co-pays for low-income residents.

But most details -- including the size of the five-year spending cap and "escape clauses" that would allow Rhode Island to back out of the deal -- will be decided in private negotiations. Rhode Island's General Assembly would have 30 days to veto any tentative agreement that is reached.

Alexander acknowledged that the congressional concerns -- and the looming change in the White House -- may delay the process.

"There are criticisms, but the people that are offering the criticisms don't have any real solutions," he said. "They're entitled to their opinions, but the system is broken and we've got to fix it ... They're just throwing stones."

But as the national debate plays out, state legislators are growing more anxious that the delay will jeopardize $67 million in promised budget savings this year. Any substantial delay could knock the budget out of whack, forcing "significant supplemental appropriations, significant service reductions to human service programs," or other changes, House Finance Committee Chairman Steven M. Costantino recently wrote in a letter to the Carcieri administration.

"It has come to my attention that the global waiver application is encountering significant congressional concern, and possible opposition," Costantino wrote, asking the administration to provide a detailed "Plan B" for reaching budget targets.

Carcieri has yet to provide such details, although Alexander said yesterday that a Plan B is nearly complete. Any alternative plan "will be onerous and will take a long time," he said. "That's what we're trying to avoid."

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Originally published by Steve Peoples, Journal State House Bureau.

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