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GAO Sides With Hospitals on Medicaid Payment Rule

Originally published by Reuters Health, April 10, 2002

NEW YORK (Reuters Health) — A Bush administration rule limiting matching funds that states receive from the federal government violates a statute requiring agencies to give Congress 60 days to review major rules, the General Accounting Office (GAO) has determined.

The finding supports a key assertion of hospital groups, which filed suit last month to block implementation of the so-called “upper payment limit” (UPL) rule. In part, the suit accuses Bush Administration officials of enacting the regulation before Congress had had the legally-required 60 days to review the rule.

The US Department of Health and Human Services subsequently conceded that the rule cannot go into effect on March 19 as planned and moved the effective date to April 15.

But in a letter to Sen. Edward Kennedy (D-Mass.), GAO General Counsel Anthony Gamboa said the rule could not take effect before May 14 because the Senate did not receive the rule until March 15.

Under the Congressional Review Act, agencies must delay implementation of major rules until 60 days after publishing them in the Federal Register or after a report is received by Congress, whichever comes later.

The administration denies violating the Congressional Review Act, according to a spokesman for the Centers for Medicare and Medicaid Services. The rule remains slated to take effect on April 15, he said.

The proposed rule, published January 18, reduces the amount states can pay city- and county-owned healthcare facilities from 150% of what Medicaid would pay for similar services to 100%. The change will be phased in over five or eight years for six states with long-established UPL financing programs. States with newer programs get one- to two-year transitions.

The National Association of Public Hospitals and the American Hospital Association, lead plaintiffs in the lawsuit against the administration, say the rule would result in devastating cuts, totaling $27 billion over 10 years.