Wednesday, April 14, 2004
Medicaid funding tricks raise questions
["Medicaid policy faces scrutiny," Associated Press, The Wichita Eagle, 10 April 2004.]
States have long sought to "game" the Medicaid system in order to draw down as much federal funding as possible. Kansas is no exception. As budgets have grown tighter at the state level, these efforts have only increased. However, with budgets growing tighter at the federal level as well, a crackdown appears to be on its way:
Disputes with federal officials could cost Kansas $50 million to $75 million annually in federal Medicaid funds, Gov. Kathleen Sebelius said Friday.
Sebelius said the federal Centers for Medicare and Medicaid Services is questioning some of Kansas' policies on reimbursing doctors and hospitals who care for poor and disabled Kansans covered by Medicaid.
"Basically, there is a war between the Centers for Medicaid Services and states around the country. Practices, policies, procedures that have been long recognized, long in place, never questioned, are coming under question on all fronts."
The Centers for Medicaid Service has a different take on the matter:
Thomas Lenz, associate regional administrator for the centers, in Kansas City, Mo., said other governors have leveled similar criticisms as the agency examines "creative financing mechanisms" used by some states to attract more federal dollars.
"There has been a strengthening of the financial management oversight of Medicaid," Lenz said after Sebelius' news conference.
Lenz said the federal agency typically has two major issues in reviewing states' practices.
One, he said, is whether states pass some dollars through a public institution like the KU Medical Center and recapture them for use elsewhere in the budget, picking up extra federal funds along the way.
Another issue, Lenz said, is whether states are having Medicaid cover services not traditionally covered by that program -- such as foster care.
This dispute reveals some underlying problems with the funding of Medicaid. First, the 60-40 split creates a powerful incentive for states to spend more than they should in order to pull down more federal funding. Of course, taxpayers are paying for all of it, and they end up the ultimate loser in this situation. Now, as states are beginning to realizing that they are having trouble maintaining their ever larger 40 percent portion, panic is setting in.
The 60-40 split also creates an environment where the "creative financing" Mr. Lenz spoke of has become the common practice Governor Sebelius refers to. The fact that the federal government has largely ignored these practices up until now has fostered a belief that such behavior was tolerated, if not encouraged.
The larger issue, though, is that such disputes draw attention away from the fact that all the creative financing in the world will not transform Medicaid into a sustainable program. Unless reforms aimed at controlling escalating costs are put in place, Medicaid will bankrupt the state of Kansas.
[Matthew Hisrich, Staying the Course: Medicaid Reform in Kansas, The Flint Hills Center for Public Policy, February 2004.
Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," Submitted to Members of the Kansas State Legislature.]
["Medicaid policy faces scrutiny," Associated Press, The Wichita Eagle, 10 April 2004.]
States have long sought to "game" the Medicaid system in order to draw down as much federal funding as possible. Kansas is no exception. As budgets have grown tighter at the state level, these efforts have only increased. However, with budgets growing tighter at the federal level as well, a crackdown appears to be on its way:
Disputes with federal officials could cost Kansas $50 million to $75 million annually in federal Medicaid funds, Gov. Kathleen Sebelius said Friday.
Sebelius said the federal Centers for Medicare and Medicaid Services is questioning some of Kansas' policies on reimbursing doctors and hospitals who care for poor and disabled Kansans covered by Medicaid.
"Basically, there is a war between the Centers for Medicaid Services and states around the country. Practices, policies, procedures that have been long recognized, long in place, never questioned, are coming under question on all fronts."
The Centers for Medicaid Service has a different take on the matter:
Thomas Lenz, associate regional administrator for the centers, in Kansas City, Mo., said other governors have leveled similar criticisms as the agency examines "creative financing mechanisms" used by some states to attract more federal dollars.
"There has been a strengthening of the financial management oversight of Medicaid," Lenz said after Sebelius' news conference.
Lenz said the federal agency typically has two major issues in reviewing states' practices.
One, he said, is whether states pass some dollars through a public institution like the KU Medical Center and recapture them for use elsewhere in the budget, picking up extra federal funds along the way.
Another issue, Lenz said, is whether states are having Medicaid cover services not traditionally covered by that program -- such as foster care.
This dispute reveals some underlying problems with the funding of Medicaid. First, the 60-40 split creates a powerful incentive for states to spend more than they should in order to pull down more federal funding. Of course, taxpayers are paying for all of it, and they end up the ultimate loser in this situation. Now, as states are beginning to realizing that they are having trouble maintaining their ever larger 40 percent portion, panic is setting in.
The 60-40 split also creates an environment where the "creative financing" Mr. Lenz spoke of has become the common practice Governor Sebelius refers to. The fact that the federal government has largely ignored these practices up until now has fostered a belief that such behavior was tolerated, if not encouraged.
The larger issue, though, is that such disputes draw attention away from the fact that all the creative financing in the world will not transform Medicaid into a sustainable program. Unless reforms aimed at controlling escalating costs are put in place, Medicaid will bankrupt the state of Kansas.
[Matthew Hisrich, Staying the Course: Medicaid Reform in Kansas, The Flint Hills Center for Public Policy, February 2004.
Stephen A. Moses, "Project Proposal: Controlling Medicaid Long-Term Care Costs," Submitted to Members of the Kansas State Legislature.]
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