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Congressman Gene Green

Representing the 29th District of Texas

Medicaid Funding for Safety-Net Hospitals Will Not Be Disrupted

August 13, 2004
Press Release
Washington, DC - Rep. Gene Green (D-Houston) today released a letter from Center for Medicare and Medicaid Services (CMS) Administrator Mark McClellan confirming Texas compliance with regulations governing Medicaids Disproportionate Share Hospital (DSH) program.  Dr. McClellans letter is a response to correspondence Rep. Green initiated urging CMS not to penalize lawful programs, like Texas, in its effort to crack down on states that are unlawfully diverting Medicaid funds.
            Calling DSH payments essential to the survival of every urban public hospital, every teaching hospital and more than 100 rural hospitals across the state, Rep. Green and eight Democratic members of the Texas Congressional Delegation stressed that the Texas IGT program is the best existing example of a lawful, bona fide DSH program, compliant in every detail with state share provisions and IGT requirements.
            Medicaid is financed by the states, with the federal government providing matching funds.  The states finance their Medicaid spending partially through Intergovernmental Transfers (IGT), whereby funding from major counties or hospital districts is utilized throughout the state. Several states have been investigated for employing questionable Medicaid accounting practices in an apparent attempt to obtain additional federal dollars to be spent on purposes other than Medicaid.   As a result, the CMS has proposed to restrict the use of certain IGTs.  Citing threats to safety-net hospitals, Rep. Greens letter urged CMS not to institute a new, sweeping IGT policy that would effectively penalize Texas for the illegal actions of other states.
            DSH payments represent 18 percent of all Medicaid hospital payments in Texas, Green wrote.  We are concerned that the CMS proposal would disrupt an effective, lawful IGT, like that administered in Texas, where all dollars are spent on health care for the poor and uninsured.  Additionally, we question CMSs legislative authority to implement such a radical proposal that has the potential to disintegrate the hospital safety net in our state.
            In his response, Dr. McClellan confirmed that Texas has administered its DSH program in a lawful manner.
            After thorough review of the State plan amendment requested by Texas, for DSH payments, we have determined that it complies with the necessary statutory requirements.  This means that our review of State financing mechanisms should have no impact on DSH payments to hospitals in Texas, Dr. McClellan wrote.
            The House Energy and Commerce Committees Health Subcommittee has held several congressional hearings on the use of IGTs to fund state Medicaid payments.  As a senior member of the Health Subcommittee, Rep. Green has consistently urged CMS officials to hold harmless law-abiding states, such as Texas, when devising new proposals to curb IGT abuses.