Fourth delay in care plan sought

US balks at hike proposed in yearly Medicaid funding

Federal regulators are balking at the state's proposal to increase Medicaid spending by up to $1 billion a year over the next three years, and this and other sticking points prompted Massachusetts yesterday to request another two-week extension of its healthcare funding package.

The federal payments, which are crucial for keeping the state's landmark health insurance law afloat, were set to expire June 30, but the state has received three extensions, and a fourth would postpone the deadline for reaching an agreement until Aug. 25.

At stake in the negotiations between state and federal officials is more than $11 billion in federal funds over three years, money earmarked for dozens of healthcare programs in Massachusetts in addition to the state's crown jewel: its two-year-old near-universal health coverage law that has provided insurance to more than 350,000 residents.

Medicaid is a state and federally funded program that provides healthcare assistance to low income people. Over the past decade, Massachusetts has been granted waivers from Medicaid rules to expand assistance to residents who wouldn't otherwise be eligible for coverage.

Federal rules require that the expanded coverage not cost more than would have been spent without the waivers, and the figure itself is one area of disagreement, according to a key legislator and other people familiar with the talks.

"If we don't get everything we are looking for in the waiver, we would either have to come up with the money through [state] reserves, or we would have to cut benefits," said Senator Steven Panagiotakos, chairman of the Senate Ways and Means Committee.

Panagiotakos, who has been regularly briefed by the administration of Governor Deval Patrick, declined to discuss specifics but said state negotiators seemed cautiously optimistic about the progress of the discussions. But he said that the two sides are still in disagreement over funding for several key programs in the massive spending blueprint, and that if Massachusetts did not get what it requested for any one of those programs, it could have a large impact on the state budget.

Several others familiar with the talks said that the state is pushing for higher spending because it expects at least 50,000 more residents to sign up in the next year for Commonwealth Care, a subsidized health insurance program for lower-income residents ineligible for Medicaid.

The higher-than anticipated enrollment in Commonwealth Care has stretched state funds, and the dispute with federal regulators comes at a time when Massachusetts has little wiggle room, with a tight budget and declining revenues.

Yet the state's Medicaid proposal for the next three years shows a growth in spending each year that is roughly double what it had been in years past.

Another critical point of disagreement between state and federal negotiators, people familiar with the talks say, is the way Massachusetts has counted the number of children enrolled in MassHealth, the name of the Massachusetts Medicaid program. They said federal regulators believe the state has, for years, incorrectly listed many children under MassHealth when they should have been counted under a program called the State Children's Health Insurance Program, which is not funded by Medicaid.

The difference made it appear that Massachusetts had a much larger number of children in MassHealth, and that made the state eligible for more federal reimbursement in its Medicaid program.

The Patrick administration has declined to discuss details of the sensitive negotiations. But late Wednesday, a federal government spokeswoman released a statement that indicated the talks were nearing completion.

"The US Department of Health and Human Services has extended an offer to the State that is faithful to the intent of the original . . . Medicaid [waiver]," said the written statement from Christina Pearson, agency spokeswoman.

"The offer continues HHS' commitment to the shared principles of health care reform under the (Medicaid waiver) program and maintains its support for the Commonwealth as the State continues to be an innovator in this endeavor," the statement continued.

But Patrick administration officials denied that any offer had been extended. Shortly after that, Pearson backed off the statement that an offer had been extended.

"There is not a formal offer on the table," Pearson said in an e-mail on Thursday. "What we did provide recently was more feedback, specifics, and ideas on how to proceed. Since it is an ongoing dialogue, we will not have further comment on our discussions."

Kay Lazar can be reached at klazar@globe.com.