Medical Device Daily Washington Editor

The tug-of-war between state and federal governments over Medicaid funding continues, and the recently published study by the Lewin Group (Falls Church, Virginia) supports the complaint by states that Uncle Sam is too stingy with the Medicaid dollar.

Financed by the Medicaid Health Plans of America (MHPA; Washington), the study concludes that "the federal government's formula for calculating supplemental Medicaid matching funds for states can serve as a barrier to managed care expansion in the Medicaid program," according to the accompanying press release.

Joel Menges, vice president at Lewin and the principal author of the study said that the calculation "forces an unfortunate choice in many states between preserving existing UPL (upper payment limit) funding streams and expanding the use of managed care contracting." The Lewin study examined expansions of managed care in Florida, Georgia, California and Texas.

The Lewin report recommends that the Centers for Medicare & Medicaid Services (CMS) peg its annual ceiling on UPLs to inflation and "in proportion to any changes in overall Medicaid eligibility and/or patient volume."

Beyond the use of a cap on federal costs, "the hospital UPL funding mechanism should remain the same," the Lewin report says, and should pay for "any Medicaid hospital patient day or discharge equally, regardless of whether it occurs in the fee-for-service or capitated setting."

Such a policy would limit "federal exposure" to UPL outlays and would remove a barrier to expanded use of capitation. Another study author, Aaron McKethan, a senior associate at Lewin, said that such an approach would "give state leaders the flexibility to carefully consider how, and to what extent, managed care contracting makes sense" for that state's Medicaid program instead of "having to factor in potential losses associated with federal UPL financing."

In Congressional testimony in 2004, George Reeb, the assistant inspector general for CMS told the House Energy and Commerce's health subcommittee that intergovernmental transfers were still a problem for the Medicaid program and alleged that "the states' use of intergovernmental transfers (IGTs) as part of the enhanced payment program was only a financing mechanism designed to maximize the federal share of Medicaid while avoiding the federal/state matching requirements."

This statement was based on the Office of the Inspector General 's discovery that "billions of Medicaid dollars were returned by these providers to the states" via IGTs and that some of those "were deposited in the general fund or earmarked" for services other than those approved in the state's plan.

Thomas Johnson, the executive director of MHPA told Medical Device Daily that the intensity of services under Medicaid has probably picked up, largely due to older citizens with disabilities. As for the intergovernmental transfers that have been the subject of congressional interest, Johnson said that such transfers have provided additional funding for Medicaid and that they have been subject to "proper monitoring and enforcement."

"We have not called for the elimination of IGTs, just for those funds to be used properly," Johnson said.

Prospects fade for rollback of Part B doc fee cuts

As the 109th Congress draws to a close, cuts for Medicare Part B physician fees seem ever more likely to hold despite GOP opposition expressed in a House hearing earlier this year (Medical Device Daily, Oct. 2, 2006).

The 5.1% cuts are part of the sustainable growth rate (SGR) package that the Centers for Medicare and Medicaid Services has to implement in order to corral Medicare spending. However, lobbying by the American Medical Association (AMA; Washington) and others has had some effect on Capitol Hill and Rep. Joe Barton (R-Texas), the outgoing chair of the House Energy and Commerce committee, recently said that he favored "totally scraping the SGR system" and "starting from scratch."

The notion of a wholesale jettison of SGR might find fans on the Medicare Payment Advisory Commission (MedPAC), but is unlikely to gain momentum due to the difficulty of cobbling together an alternate cost-restraining paradigm (MDD, Oct. 10, 2006).

Proponents of rollbacks to the SGR cuts began losing their optimism when word leaked out that Congress will probably resort to continuing resolutions to deal with remaining spending bills. One idea making the rounds is to attach a Medicare Part B bill to a tax cut measure, H.R. 5970, but the prospects for that avenue seem less than rosy due to the perception that such a move could derail that bill altogether. H.R. 5970, sponsored by Rep. Bill Thomas (R-California), would boost the dollar value of bequeathed estates that is exempt from taxation. Support for the bill, however, is not seen as strong enough to carry other legislation.

Part of the snag on a rollback is based on jurisdiction. The chairs of the Senate Finance Committee, the House Ways and Means Committee, and the House Energy and Commerce Committee would all have to sign off on a bill to push back the cuts, and this is simply too large a task to complete between Dec. 5, when Congress reconvenes, and the Christmas holiday.

John Stone, the press secretary for Rep. Charlie Norwood (R-Georgia), who has gone on record as opposing cuts to Medicare spending, told Medical Device Daily that Norwood "remains hopeful that we can do something with it." Stone said that the Republican leadership is indeed inclined toward cobbling together continuing resolutions on the remaining spending bills and allow some issues to move along to the 110th Congress, adding that "it is extremely difficult, if not impossible" for the House to come to some agreement on all the political issues that are still on its plate with the amount of standing business to be handled.

AMA chairman Cecil Wilson, MD, said in a prepared statement that the association is "working diligently with members of Congress to stop the Medicare physician payment cuts this year." The association's press secretary, Mollie Turner, told MDD that "we're not giving up." AMA has reportedly spent $750,000 on lobbying to pressure Congress to eliminate the cuts.