Far-reaching Medicaid changes proposed by the Bush administration could cost Massachusetts more than $100 million a year and make it harder for tens of thousands of low-income and disabled residents to get healthcare, according to state officials, analysts, and advocates.
The proposed federal regulations could also hurt efforts to enroll uninsured children in the Medicaid program, a critical part of the state's initiative to ensure that nearly all residents have health insurance.
The Bush administration has announced the changes one at a time since the start of the year, saying they are essential to curb abuses in the $346 billion healthcare program, which is funded by both the federal and state governments. About 50 million low-income and disabled Americans, including more than 1 million in Massachusetts, are served by Medicaid.
Congress has temporarily blocked two of the changes, but some others could go into effect by Jan. 1 despite opposition by the National Governors Association, hospital officials, and advocates in many states.
Federal funding that supports training new doctors would be cut. In addition, the proposed rules would reduce federal spending on rehabilitation for people with mental and physical disabilities, support services for schoolchildren with special needs, and hospital outpatient care for all Medicaid members. The moves could force Massachusetts to restrict some services - such as day pro grams for people with developmental disabilities - or pick up more of the cost.
The state's Medicaid director, Thomas Dehner, said the restrictions on rehabilitative care are particularly problematic. "Without those services, certain individuals will get worse and end up costing us all more money," Dehner said. "It is very bad policy."
But Dennis Smith, director of the Center for Medicaid & State Operations in the Bush administration, said the state's view was mistaken.
"Over time, states have found different ways to shift their cost of Medicaid over to the federal government. It's our responsibility to push back," he said, to ensure that payments are limited to "medically necessary services for Medicaid-eligible people." He said states have stretched the definition of rehabilitation and have, for example, billed Medicaid for school construction under the guise of Medicaid care for children. He also said Medicaid money shouldn't be used to pay for care at hospitals that can be provided elsewhere.
"This is $11 billion [in savings] over five years," he said. "Federal Medicaid will spend $1.2 trillion over that five-year period. We're talking about less than 1 percent."
The cut in Massachusetts would come out of an $8 billion federal and state Medicaid budget this year, about half of which comes from Washington. But it comes as the state faces rising costs for its landmark health insurance initiative.
Jennifer Pease's parents are among those who fear the fallout of cuts in day programs. Pease, 45, suffers from temporal lobe epilepsy, which arrested her development at about the level of a 2-year old, according to her father, Leander. Pease lives in a group home, but spends every other weekend with her father and mother, Barbara.
From morning until mid-afternoon each weekday, Pease attends the CLASS training and activity center in North Reading, funded by MassHealth, the state Medicaid program. At the center last Friday, Pease worked on hand-eye coordination and social skills in a "ping-pong" game played with seven other developmentaly disabled people and a foam orb the size of a soccer ball. Staff had to help her hold and swing the soft, lightweight paddle. Later, she strung colorful beads on a cord, working intently against powerful upper-body tremors.
During one-to-one time with staff, Pease walked with determination several hundred yards to a restaurant for lunch. Senior instructor Trudy Dow steadied Pease, who tilted unsteadily to the left and had to be coaxed up a small curb. When Dow started working with Pease about 18 months ago, Pease couldn't make it to Wendy's. But now they are focused on maintaining her walking strength.
The Bush administration would cut guaranteed funding for such "day habilitation" programs that mix socialization with other training. States could apply for limited coverage, but might not be able to serve as many people, unless the state made up the difference. In addition, the administration would not pay for any kind of rehabilitative care unless it resulted in patient improvement, not just maintenance.
Leander Pease said his daughter would probably not meet that last test. But without the day program, he said, she would sit in her group home and deteriorate. "She needs to be out and about," he said. "She needs to be walking. Without that, she'd have to go into a nursing home. That would be a terrible outcome."
The proposed change could cut a significant portion of the $100 million the state gets for rehabilitative services, Dehner said, although he could not provide an estimate.
Steven Schwartz, executive director of the Center for Public Representation, a nonprofit law firm in Massachusetts that advocates for mental health and disability rights, suggested the policy change could harm tens of thousands of Massachusetts residents with mental illness, including delaying state action to fulfill a recent court order mandating more community treatment options.
Another proposed rule affects Medicaid services to schoolchildren getting special education and could cost Massachusetts up to $45 million a year, said Dehner, who submitted state testimony to the Bush administration last week opposing the rule. The change would prohibit use of federal funds to pay public school employees to help children and their families apply for Medicaid, help them find appropriate therapists, or bus them to or from school.
"This provision would close off a very important outlet for reaching people potentially eligible for MassHealth" and the state's new subsidized health insurance program, both part of the drive for near-universal coverage, said Robert Seifert, former executive director of the Massachusetts Medicaid Policy Institute and currently senior associate at the Center for Health Law and Economics at UMass Medical School.
The Bush administration has also proposed limiting federal coverage of outpatient services in hospitals, which could eliminate or reduce payments for a broad range of care, including physican services, dental care, physical therapy, and blood work, according to Joe Kirkpatrick, vice president of the Massachusetts Hospital Association. Many MassHealth members get primary care and these other services at hospitals committed to serving the poor, Kirkpatrick said. While hospitals aren't wavering in that commitment, he said, they may have to cut back if funding is reduced. He estimated the potential loss "in the $10 million range."
Another rule would eliminate the $38 million in federal funding that helps pay for training more than 4,500 interns and residents in Massachusetts. That would force hospitals to find other ways to support these doctors, who serve many Medicaid patients.
Two other provisions would restrict how states can raise their share of Medicaid payments by limiting both taxes on healthcare providers and transfers among government agencies.
The Bush administration "is seeking to protect its budget and itself at the expense of state Medicaid programs and Medicaid beneficiaries," Dehner said.
Although the administration can impose regulations without Congressional approval, Republicans and Democrats in Congress are fighting the changes. Congress imposed a moratorium until May on cutting doctor-training money and limiting state funding options. US Representative Henry Waxman, a California Democrat, held a hearing Nov. 1 to draw attention to the rules, which he said "would have a devastating impact on the healthcare safety net."
Congress also tried to stall the rules on rehabilitative and school-based care with a moratorium in a bill funding children's insurance, but Bush has promised to veto the bill. US Senator John Kerry, a Massachusetts Democrat, said he and others are looking to include the moratorium in some other bill that Bush is unlikely to veto.
Alice Dembner can be reached at dembner@globe.com.
