Providers find "troubling" Medicaid proposal in 2005 budget

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President Bush's fiscal year 2005 budget includes a "troubling" Medicaid provision buried deep within, some providers feel.

The administration has taken on intergovernmental transfers, funding mechanisms that draw federal matching funds. Officials believe there has been too much gaming of the system by states' artificial acts to pump up qualifying matching amounts. The budget proposal says the administration wants to "further improve the fiscal integrity of Medicaid by curbing IGTs that are in place solely to undermine the statutorily determined Federal matching rate."

Washington already has acted to close the "upper payment limit" loophole. Other targets of this federal tightening could be states' bed taxes and other processes that inflate federal matching funds.

The budget "proposes to cap Medicaid payments to individual State and local government providers at the cost of providing services to Medicaid beneficiaries and restrict the use of certain intergovernmental transfers."

Bush's proposal would purportedly save $1.5 billion in fiscal 2005 and $9.6 billion over five years.

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