US threatens cutoff of $385m for Medicaid

The US government is warning that it may stop sending as much as $385 million in Medicaid money it gives to Massachusetts annually if the state fails to pass healthcare legislation by early next year.

In a letter last week, the director of the federal Medicaid program urged the state to submit a plan to reduce the number of uninsured Massachusetts residents by no later than Jan. 15. To continue receiving the federal money, Romney administration officials say, the state must implement the plan by July 1.

The letter provides Governor Mitt Romney with a tool to persuade the Legislature to act on healthcare by the end of the year, but it's unclear how real the Jan. 15 deadline is.

Romney and Senate President Robert E. Travaglini have each filed healthcare bills, and House Speaker Salvatore F. DiMasi is expected to unveil his plan in a speech Friday to the Blue Cross Blue Shield of Massachusetts Foundation.

Romney and legislative leaders have said that overhauling healthcare is among their top priorities, but the issue has been complicated somewhat by the specter of Romney forgoing a reelection bid to run for president. Some Democratic lawmakers have said the Legislature is reluctant to hand Romney a victory he could use to further his national ambitions.

The letter from Dennis G. Smith, director of the Centers for Medicare and Medicaid Services, urges state leaders to come up with a definitive plan for reducing the number of uninsured in Massachusetts; Romney administration officials put that figure at more than 500,000 people.

State Senator Richard T. Moore, cochairman of the Legislature's Joint Committee on Health Care Financing, said he didn't consider the date a firm deadline, but that lawmakers will probably pass a bill by then.

''If we can do that, then that issue is moot anyway," he said.

A primary goal of Romney and legislative leaders is to shift the uninsured into managed health plans, so they have access to primary care physicians and get preventive care. That way, proponents say, the uninsured would no longer rely on the state's free-care pool, an increasingly expensive system in which people without insurance are treated for free in emergency rooms.

Romney discussed the deadline yesterday with House and Senate leaders in a meeting on the upcoming legislative agenda. Travaglini said afterward that he takes the date seriously and that lawmakers expect to meet it.

''As long as [the federal government] feels that this is some deadline that we should meet, I feel like we have a responsibility to do it, and we have the capacity do it," he said. Travaglini said he was optimistic legislators would pass a bill before they recess Nov. 16.

DiMasi's spokeswoman, Kimberly Haberlin, said the full House would probably take up a final bill early next month. DiMasi would call lawmakers back from recess to vote on it if necessary, she said.

Scott Helman can be reached at shelman@globe.com.