The Biden administration wants to crack down on private arrangements among some hospitals to reimburse themselves for taxes that help fund coverage for low-income people. It contends the practice violates federal law.
Federal regulators say these arrangements “appear designed to” redirect Medicaid dollars away from facilities that treat the poorest patients to those that “provide fewer, or even no, Medicaid-covered services,” according to a proposed enforcement plan released May 3 by the Centers for Medicare & Medicaid Services.
The practice is typically orchestrated by the lobbying groups that represent hospitals in state capitals — and is often kept secret. Not even federal regulators know how widespread it is, although programs operate in at least a few states, including California and Missouri. It’s also the subject of a Texas lawsuit that could block the federal government’s proposal.
“It does seem like these associations are finding a way to distribute the money in a really weird way,” said Joshua Gordon, the director of health policy for the Committee for a Responsible Federal Budget in Washington, D.C. “But without the transparency, we don’t exactly know what’s going on.”
Previous efforts to block these payback arrangements have gone nowhere in the face of opposition from the powerful healthcare industry and state health officials who fear that clamping down could result in less money for Medicaid, the joint state-federal health insurance program for low-income people. Several Medicaid experts predicted the latest proposal could meet the same fate, or face immediate court challenges if adopted.
The federal government’s sweeping and contentious proposal would require states to police hospitals, nursing homes, and other healthcare providers to ensure they made no private agreements to redistribute Medicaid…
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