Bush Administration Rule Reducing Medicaid Payments Blocked

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Judge James Robertson ofthe U.S. District Court for the District of Columbia on Friday delayed the implementation of arule that would reduce Medicaid reimbursements to safety net hospitals andclinics by about $5 billion over the next five years, the AP/Washington Post reports (AP/Washington Post,5/24).

The case involves a lawsuit filed by a national coalition of hospitals thatincludes Alameda County Medical Center, the National Association of Public Hospitals and Health Systems, the American Hospital Association and the Association ofAmerican Medical Colleges. The rule, which would apply to hospitals funded by local governments,would require that federal Medicaid reimbursements do not exceed the cost ofcare provided by the facilities. According to the plaintiffs, the rule wouldlimit the ability of the hospitals to offset the cost of care for uninsuredpatients through higher Medicaid reimbursements. A congressional moratorium on therule expired on May 25. The lawsuit asked the court to prevent implementationof the rule after the moratorium expires (KaiserDaily Health Policy Report, 3/12).

According to Robertson, Congress passed the bill that established themoratorium on May 24, 2007, but, before President Bush signed the legislation, HHSSecretary Mike Leavitt "rushed a typo-ridden final rule" to the Office of the Federal Register for publication (AP/WashingtonPost, 5/24). However, because CMS did not submit a requirednotification to Congress until May 25, 2007 -- the day that the law took effect-- the rule violated the moratorium, Robertson said (Reichard, CQ HealthBeat, 5/23). In his decision, Robertsonwrote, "In this case, the court is asked to decide whether a maneuver bythe Executive Branch deliberately designed to outfox a clear directive ofCongress was successful. The answer is no" (Russell, San Francisco Chronicle, 5/24).

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The decision requires CMS to republish the rule, which would take effect aftera 60-day comment period (Rosetta, Salt LakeTribune,5/24). The delay allows Congress time to pass a supplemental war appropriationsbill (HR 2642) that would extend the moratorium until April 2009 (CQHealthBeat, 5/23).

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Amy Weitz, a spokespersonfor the California Association of Public Hospitals andHealth Systems,said, "Basically, the court is saying that the Bush administration and CMSacted improperly," adding, "But it doesn't stop them fromimplementing the rule two months from now. We still need Congress to actquickly to extend the moratorium" (Bohan, Bay Area/San Jose Mercury News, 5/26). Larry Gage, president ofthe National Association of Public Hospitals and Health Systems, said thatCongress should "move ahead swiftly to extend the moratorium" on therule.

CMS spokesperson Jeff Nelligan said that "we are still reviewing thedecision," adding that Robertson ruled on a "technicality"related to the effect of the moratorium and "did not rule against us onthe substance of the rule." In addition, he said, "We remainconvinced that the rule will ultimately be upheld on its merits by thejudge." Leavitt on Thursday said that CMS voluntarily would delay theeffective date of the rule, as well as a second regulation related to Medicaidreimbursements for hospitals, until Aug. 1 (CQ HealthBeat, 5/23).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.

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