On January 12, the Bush Administration proceeded with its plans to circumvent Congress by implementing billions of dollars in Medicaid cuts through a damaging regulation affecting state Medicaid programs and safety net providers across the country. NYS's public providers are among those facing the heaviest losses under the proposed rule, with an anticipated cut of several hundred million dollars. Officially published in the Federal Register on January 18 with a 60-day comment period, the proposed regulation enacts one of President Bush's FY 2007 budget proposals and is projected by the Administration to save $3.9 billion in Medicaid funding over five years.

The regulation will amend the so-called upper payment limit (UPL) by placing a cap on payments to public hospitals and nursing homes equal to each individual provider's Medicaid costs. The UPL calculation would no longer be based on the entire public hospital sector in a state in the aggregate, and would not be based on what Medicare would have paid for the services, but would be changed to an individual provider calculation and would be based solely on Medicaid costs, with no reference to what Medicare would have paid. Such a policy would eliminate the ability of public institutions to obtain even a modest margin, which is essential to help offset the cost of treating the uninsured.  

None of these policies was included in the House or Senate FY 2007 budget resolutions, and hundreds of lawmakers have stated their opposition to such proposals in letters to the Administration. Further, the Centers for Medicare & Medicaid Services had previously reviewed and approved New York's Medicaid payment system and verified that all of the money the City and State received through this funding mechanism was wholly appropriate. Regardless, the Administration chose to promulgate this damaging rule. GNYHA will work vigorously to oppose its implementation and has already engaged key lawmakers to weigh in with the Administration.

Already, Congressman Charles Rangel, Dean of the New York Congressional Delegation and  Chairman of the powerful House Ways and Means Committee, has expressed his concern about the proposed rule to top officials with the U.S. Department of Health and Human Services. GNYHA is grateful to Congressman Rangel for his efforts.