NCSL Health Chair Testifies On Medicaid Rulemaking

April 3, 2008. New Jersey Assemblyman Herb Conaway, chairman of the National Conference of State Legislature's (NCSL) Standing Committee on Health provided testimony before the Subcommittee on Health of the House Committee on Energy and Commerce in support of H.R. 5613, Protecting the Medicaid Safety Net Act of 2008. H.R. 5613 seeks to place a one-year moratorium on rules promulgated by the Centers for Medicare and Medicaid Services (CMS) which would affect select services and benefits within state Medicaid programs. NCSL policy opposes regulatory actions which seek to make significant policy changes within the Medicaid program and circumvent the legislative process. The following is the text of Assemblyman Conaway's testimony ( Adobe PDF Download PDF Version);

Chairman Pallone and Distinguished Members of the Subcommittee:

I am Dr. Herb Conaway, Jr., chairman of the New Jersey State Assembly Health and Senior Services Committee. Today I am testifying on behalf of the National Conference of State Legislatures (NCSL) where I serve this year as chairman of the NCSL Standing Committee on Health. NCSL is a bi-partisan organization representing the 50 state legislatures, the legislatures of our nation's commonwealths, territories, and possessions and the District of Columbia.

I hope that one day I will appear before you to discuss ways to expand coverage; to improve the quality of benefits and services to Medicaid beneficiaries and to share best practices in the provision of state of the art care to our most vulnerable citizens. But today I appear before you to express NCSL’s support for H.R. 5613, Protecting the Medicaid Safety Net Act of 2008. This bill will delay until March 2009 the implementation of the following Medicaid rules (whose cumulative effect will be to severely reduce critically needed services to the most vulnerable among us):

Ø      Health Care-Related Taxes (Effective April 22, 2008)

Ø      Elimination of Reimbursement Under Medicaid for School Administration Expenditures and Costs Related to Transportation of School-Age Children Between Home and School (Effective February 26, 2008. A moratorium was imposed in the Medicare, Medicaid, and SCHIP Extension Act prohibiting Secretary Leavitt from taking any action to implement the provisions of the rule prior to June 30, 2008)

Ø      Optional State Plan Case Management Services (Effective March 4, 2008. Four states, including New Jersey, have filed suit to delay the implementation of this rule.)

Ø      Clarification of Outpatient Clinic and Hospital Facility Services Definition and Upper Payment Limit

Ø      Coverage of Rehabilitative Services (Effective October 12, 2007. A moratorium was imposed in the Medicare, Medicaid, and SCHIP Extension Act prohibiting Secretary Leavitt from taking any action to implement the provisions of the rule prior to June 30, 2008)

Ø      Cost Limit for Providers Operated by Units of Government and Provisions to Ensure the Integrity of Federal-State Financial Partnership. (The U.S. Troop Readiness, Veteran's Care, Katrina Recovery and Iraq Accountability Appropriations Act imposed a one-year moratorium on the implementation of this rule that will expire May 25, 2008)

Ø      Graduate Medical Education. (The U.S. Troop Readiness, Veteran's Care, Katrina Recovery and Iraq Accountability Appropriations Act imposed a one-year moratorium on the implementation of this rule that will expire May 25, 2008)

Last year NCSL strongly supported the moratoriums pertaining the these rules and regulations. This year our sense of urgency has increased as the economy continues to decline and many states, New Jersey among them, face unprecedented budget shortfalls. The impact of these rules going into effect and taking billions of dollars out of the Medicaid program will strike a devastating blow to states as they struggles to maintain critical services.

NCSL has been and remains concerned about the “regulatory activism” being exercised by the Centers for Medicare and Medicaid Services (CMS) within the U.S. Department of Health and Human Services. By regulatory activism we mean, moving a regulatory agenda and promulgating regulations: (1) that are unsupported by legislative activity; (2) that are not imposed pursuant to direction from Congress; or (3) that exceed authority provided in legislation. Over the past several months, significant changes in Medicaid law and policy have been put forth through regulation, letter, and other administrative activities. Some of the rules were first put forward as legislative proposals that Congress failed to embrace. While these provisions failed as legislation, they sit before us today as rules ready to be implemented unless legislation is enacted to stop them. It is important to note that while this legislation would delay the implementation of seven rules, there are additional CMS rules forwarded to State Health Officials that are also of concern to states. In fact, my state and others have filed suit to stop the implementation of some of the provisions of the August 17^th letter to State Health Officials that essentially changes the income eligibility standards for the State Children's Health Insurance Program (SCHIP) and Medicaid without so much as a respectful nod to the Congress. The other regulation would give the Secretary of the U.S. Department of Health and Human Services broad authority to overturn decisions of the Departmental Appeals Board. A very problematic proposal.

Regulatory activism as exercised by CMS effectively transfers legislative powers to the executive branch and compromises the process by which states and other stakeholders provide input. What results is a legislative process that is fundamentally compromised. This should be stopped. (Some examples of “regulatory activism” have been provided on a separate sheet).

While NCSL strongly supports H.R. 5613 and urges its adoption, we recognize that it is a short term solution. Unless action is taken to address these rules in a more permanent fashion, next year at this time we will be back asking for more delays. We cannot continue to seek delays and to spend limited state resources to fight these rules in the courts. The Medicaid program and its beneficiaries deserve better.

States need: (1) stability in Medicaid policy and financing; (2) uniform rules; (3) consistent application of the rules; and (4) transparency in the policymaking process. The federal government must allow states the flexibility needed to administer a cost-effective Medicaid program. States should be able to; (1) raise matching funds using local government funds as provided in current law; (2) provide coordinated care to vulnerable populations in a cost effective manner by allowing the various state agencies that serve those individuals to work together; (3) provide some Medicaid administrative services in schools, using trusted school employees and/or contractors that can receive Medicaid reimbursement; (4) define rehabilitative services in a way that will not disenfranchise hundreds of Medicaid beneficiaries currently receiving those services; (5) establish a hold harmless test for Medicaid provider taxes and donations that is more objective than those proposed in the rule; and (6) maintain Medicaid reimbursement for Graduate Medical Education and ensure the availability of the next generation of primary care physicians. Stakeholders in and out of government must strive to make the state-federal partnership work.

Finally, unless the economy vastly improves over the next several months, states can anticipate a surge in Medicaid enrollment that will be extremely difficult to support. With this in mind, we urge you to study options to include a provision establishing emergency assistance to states within the Medicaid statute. The provision would upon some triggering event, such as recession, natural disaster, act of terrorism, or public health emergency, provide additional financial assistance to states through an enhanced federal match or some other mechanism the effect which would terminate with the resolution of the triggering event. This is a complex, but critical component to support the fiscal security for the Medicaid program in difficult times. NCSL looks forward to working with Congress and the Administration to identify options and to establish and implement an emergency assistance program.

NCSL supports the addition of an “Emergency Assistance” provision to the Medicaid statute that would help states retain and maintain the health care safety net for the nation’s most vulnerable citizens during the most extremely challenging times.

I thank you for this opportunity to share our perspectives with you and look forward to answering any questions you may have.

Joy Johnson Wilson, Federal Affairs Counsel and Senior Committee Director--Health Cmte, (202) 624-8689
Rachel Morgan RN, BSN, Senior Policy Specialist, State-Federal Affairs, (202) 624-3569