Medicare Compliance & Reimbursement

Seventy-nine senators, led by Finance Committee chair Chuck Grassley (R-IA) and senior panel Democrat Max Baucus (MT), urged Hill conferees in a March 27 letter not to include any Medicaid funding cuts in the fiscal year 2004 congressional budget resolution. Also on the 27th, members of Congress heard the same plea in a separate letter from a group of 30 health care provider organizations ranging from the National Association of Community Health Centers to the Federation of American Hospitals, which represents investor-owned hospitals.

The House resolution contains "reconciliation" instructions directing the appropriate committees to cut $265 billion over 10 years in "waste, fraud, and abuse" from entitlement programs, of which an estimated $93 billion would come from Medicaid. House Budget Committee chair Jim Nussle (R-IA) originally proposed $470 billion in entitlement cuts, but was forced by intense political pressure to eliminate the more than $200 billion of that total that would have come from Medicare.

The House entitlement cuts, neither proposed by the Bush administration nor included in the resolution the Senate passed March 26, represent a key area where negotiators must bridge differences between the fiscal plans of the two chambers. Discretionary spending is another such area: The House proposes a decrease of more than $200 billion over 10 years in non-defense discretionary funding, roughly double the cuts contained in the administration and Senate budget frameworks.

In addition, the House accommodated the entire $726 billion in tax cuts that the president proposed to stimulate the economy, but the Senate halved Bush's package, making room for only $350 billion in tax cuts.

The provider organizations called it "inconceivable that $93 billion can be cut from the Medicaid program merely by cracking down on 'waste, fraud, and abuse.' To attain such sums, the very heart of the Medicaid program would have to be cut," they maintained. The 79 senators, who run the gamut from liberal to conservative, said in their letter to Republican and Democratic leaders of the budget panels that federal funding reductions would force financially strapped states to implement even deeper Medicaid cuts than they already have, adding "millions more to the ranks of the uninsured."

The senators noted that their body had recently overwhelmingly adopted a "sense of the Senate" resolution supporting more, not less, Medicaid funding for states.

In a March 20 letter to House Commerce Health Subcommittee chair Michael Bilirakis (R-FL), responding to complaints that the Medicaid cuts were too deep, Nussle promised to "bring the level of mandatory spending for Medicaid for FY 2004 up to the level which will not require any reductions from the Congressional Budget Office baseline levels." Nussle said he would work with Commerce "to ensure that the level of savings the committee is required to achieve is attributable to waste or fraud, with no negative impact on Medicaid recipients."

However, many observers have expressed skepticism about the letter's significance. The Center on Budget and Policy Priorities' Richard Kogan, for example, told reporters March 25 that, "by itself, the letter means nothing," since the House budget resolution actually contains a small net increase in FY 2004 Medicaid funding, with big cuts coming in later years.