Governor Paterson Applauds Obama

Governor David A. Paterson today applauded U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius for proposing to rescind regulations that would have restricted states’ flexibility to administer the Medicaid program, shifted costs from the federal government to states, and significantly reduced funding for critical Medicaid providers, including state agencies, school districts, critical health providers and beneficiaries.

“Over the past several months, my administration has worked closely with the federal government to ensure that any new regulations would accommodate New York’s health care issues, and the Obama administration’s actions reflect our concerns,” Governor Paterson said. “Today, the Obama administration helped to remove obstacles that would have limited New York’s and other states’ flexibility, and could have impeded states from providing the most effective health care possible in the right setting at the right price. These regulations ran counter to the goals of providing the most cost-effective health care possible, and we applaud their ruling.”

Governor Paterson continued: “Even after this action, however, there remain regulations that could have significant fiscal impacts to New York’s graduate medical education program and governmental providers, and could jeopardize essential health care services to our most vulnerable citizens. We urge the Administration to fully repeal these regulations as well.”

Governor Paterson also urged HHS to modify the Medicaid Disproportionate Share Hospital Audit Rule, which retroactively changes long-standing Federal policies and imposes costly administrative burdens on states and hospitals.

The regulations proposed to be fully or partially rescinded involve outpatient hospital services, targeted case management and school-based health services:

• Outpatient Hospital Services: This rule would have unreasonably restricted what Medicaid can reimburse under the hospital outpatient benefit to include only those services Medicare reimburses for outpatient hospital services. Over time and with Federal approval, the Medicaid outpatient benefit has been expanded to meet the unique needs of that population. Under the rescinded rule, hospitals would have not been reimbursed under the outpatient Medicaid benefit for such things as: hospital based physician services; routine vision services; annual checkups; vaccinations; school-based services; and rehabilitation services.
• Targeted Case Management: This rule would have sharply limited New York’s ability to provide case management services that assist disabled and chronically ill beneficiaries in accessing medical, social and educational services. It would have eliminated Federal funding for certain services, placed limits on others and required states to make substantial and costly changes to their billing and reimbursement services. Further, this proposal would have restricted funding for New York’s Bridges to Health (B2H) waiver for foster children which was approved in 2006.
• School-Based Health Services: This rule would have eliminated Medicaid funding for school based administration expenditures and costs related to transportation of school-age children between and home and school. Under the rule, CMS would have eliminated a longstanding policy of providing federal matching payments for administrative activities when performed by school employees or contractors and for transportation services between home and school for school-aged children with an Individualized Education Program (IEP) or an Individualized Family Services Plan (IFSP) under the Individuals with Disabilities Act (IDEA).

Governor Paterson also applauded HHS for delaying the Health Care-Related Tax Rule for one-year, but urges full repeal. This regulation would have allowed HHS to subjectively disallow federal funding and undermine clearly established rules that were agreed to by states, Congress and previous federal administrations.