Medicaid cuts could affect ed. funding

Kevin Freking

WASHINGTON — Democrats have made it clear: They don’t support recommendations from President Bush that would shave an estimated $77 billion from government health programs for seniors and the poor.

But Bush doesn’t need lawmakers’ support for some of the changes that he wants to make to Medicare and Medicaid. He could get about $23 billion in savings over the next five years by issuing new federal regulations, and students are among those who could be hit by the regulatory changes.

School districts get reimbursed for arranging speech and physical therapy for Medicaid-eligible students. For example, when a student with autism gets speech therapy, the school can seek reimbursement for scheduling the therapy, confirming it gets done and transporting the student to the therapist, said Mary Kusler of the American Association of School Administrators.

The president’s regulatory proposal would eliminate Medicaid reimbursement for those services, she said. The administration estimates the savings at $3.6 billion over five years.

Kusler said students would still get the therapy needed to help them learn, as schools have no choice in the matter. However, schools may have to cut back other programs to offset the loss of federal funding.

“This would transfer the burden onto local school districts and local taxpayers,” Kusler said.

George Wilson, superintendent for public schools in Monroe County, Ky., said federal reimbursements connected to therapy are crucial to helping his district pay for school nurses.

“The kids that need the nurses the most will be hurt the most when they’re not available,” Wilson said. “We certainly would beg that they not eliminate our ability to bill for those services.”

Medicaid is the federal-state partnership that provides health coverage for about 55 million poor people. The federal government will spend more than $200 billion on it this year, while states will spend about $150 billion.

Under the Bush plan, Medicaid cuts also would hit teaching hospitals ($1.8 billion), publicly owned hospitals and nursing homes ($5 billion) and providers of rehabilitation services for the mentally and developmentally disabled ($2.3 billion).

Health care providers acknowledge they may have a much harder time stopping the regulations than they would any bills in Congress.

“Clearly, the president’s budget has met with extensive skepticism on Capitol Hill. Clearly, the budget moving forward is highly unlikely,” said Tom Nickels of the American Hospital Association. “As a result, initiatives that can be done through regulation are very troublesome.”

Health and Human Services Secretary Mike Leavitt referred to the changes during congressional hearings earlier this month as “savers.” He notes that Medicare is expected to grow 6.5 percent annually during the next five years, while Medicaid will grow at a 7.3 percent clip. The regulations would barely dent those growth rates.

But those assurances do not comfort Dr. Spencer Foreman, president of Montefiore Medical Center in New York City. The elimination of Medicaid payments for medical education would mainly affect about 400 hospitals, he notes.

His hospital, the third-largest teaching hospital in the country, stands to lose tens of millions of dollars annually. The loss of money would force him to lay off staff and would make it harder to train future doctors, Foreman said.

“We’ve now come to the conclusion — everybody, the government, the industry — that the country [will be] facing a major doctor shortage in the next 25 years, particularly in specialty-trained physicians,” Foreman said. “Now, in order to save a few bucks, we’re going to gut the facilities that train these physicians. How does that make sense?”

The regulation on therapy services for students has not yet been issued. Nor has the regulation on graduate medical education. That’s not the case with a proposed rule that would affect government-owned hospitals and nursing homes.

Medicaid officials say it’s unfair that some states generate extra federal funding without putting up more of their own money. The states make large payments to county-owned hospitals and nursing homes, even as counties are required to return some of the money to the state.

The Bush administration wants to crack down on such transfers by limiting Medicaid reimbursement so that it cannot exceed the cost of providing a particular service. The American Hospital Association says about 1,200 hospitals, mostly in rural or inner-city areas, would be affected.

Nickels said the association doesn’t dispute the need to do away with accounting procedures designed to generate more federal dollars. He said the government is already clamping down on such payments.

However, to say that publicly owned hospitals cannot charge more than the cost of providing a service puts them in a difficult spot, Nickels said.

When hospitals treat patients with private insurance, they charge enough to offset the lower payments they get when they treat the poor and uninsured. But many public hospitals serve a high percentage of the poor and uninsured, so they don’t have a way to offset Medicaid’s lower payments.

“These are public facilities that need to be able to revamp themselves and improve. Technology is a big thing in health care,” Nickels said. “We’re going to say to these hospitals, ‘You don’t get additional dollars to invest in information technology.’”

The administration has emphasized that the proposed change is about fairness and treating states equally.

Medicaid also covers a range of mental health services that can help people get therapy in a community setting and avoid costly institutional care. The administration wants to clarify what rehabilitation services Medicaid will cover. The savings are estimated at $2.3 billion over five years.

Dennis Smith, a senior official at the Centers for Medicare and Medicaid Services, told lawmakers previously that the definition of rehabilitation services was so broad that there was a risk of abuse.

However, just how the administration will clarify the definitions is a mystery. The budget provides little clue. Health care providers say they have no idea of what the regulations would say. Medicaid officials declined to elaborate.

(Associated Press)