Medicare Compliance & Reimbursement

To fulfill promise of $60 billion, there may be no other way

Speaking to reporters Feb. 2 after his first speech as Health and Human Services Secretary, Mike Leavitt promised that the administration would not cap federal Medicaid payments for mandatory services to mandatory beneficiaries. But he pointedly did not make the same promises about optional populations and benefits.
In 2003, the administration proposed capping federal payments for optionals in return for greater state flexibility, and many expect the administration to make the same proposal this year.

Indeed, Leavitt said governors have flocked to waiver agreements essentially containing the caps-for-flexibility deal. Nevertheless, he wouldn't confirm that the administration will repropose the optional caps, and statements later in the week by Leavitt and Centers for Medicare and Medicaid Services Administrator Mark McClellan suggested that the administration may not reintroduce its 2003 ideas.

But even if the administration does not propose federal caps on optional spending, that does not ensure that caps will not be enacted in the end. That's because Congress' fiscal year 2006 budget resolution may include "reconciliation instructions," a procedural device that instructs each committee to achieve a specified level of savings in programs under its jurisdiction.

Some congressional staffers are warning that the Congressional Budget Office would score Leavitt's $60 billion savings measures - particularly his crackdown on state accounting gimmicks - as saving considerably less than Leavitt estimates. For example, one Democratic Senate staffer said Feb. 3, "I called CBO and said 'I'd like to sit down with you and find out what these proposals are that get us to $60 billion.' The CBO called back and said, 'I have no idea what those proposals are; they're nothing that we've been looking at.'"

If Leavitt's Medicaid savings numbers make it into a reconciliation bill, Congress may find that the only way to get a high enough CBO score is to impose caps: "There's no other way to get that sort of savings," the staffer said.