Children's Hospital fights Medicaid-fund reduction

WASHINGTON — Cutting the deficit always sounds like a good idea. But there are winners and losers whenever Congress and the National Governors Association start looking for ways to save money.

This time the collateral damage could include Children's Hospital & Regional Medical Center in Seattle, which could lose more than $6 million for uncompensated care if the House budget bill is not altered this week.

The hospital's D.C. lobbyist and its trade association have been doing battle on Capitol Hill to reverse a new Medicaid funding formula for the states and the federal government.

The change — which the states say would help control skyrocketing Medicaid costs — was part of the budget measure the House narrowly passed Nov. 19.

As Congress prepares to return to work Tuesday, the pressure is coming down on freshman GOP Congressman Dave Reichert of Auburn to buck Republican leaders who have mandated budget slashing. The National Association of Children's Hospitals has asked its supporters to contact 18 key members of Congress, including Reichert, to get the House to change the bill when it begins conferences with the Senate in the next few days.

The House bill gave states the right to curtail Medicaid to children who receive "optional" assistance, or demand co-payments and deductibles from their families. Optional Medicaid patients can include those kids whose families are just above the poverty level. They could face bankruptcy if hit with long-term or crisis medical costs, which is why the Senate isn't imposing cost sharing, said Peters D. Wilson, vice president for public policy at the National Association of Children's Hospitals.

Washington was one of the first states to cover "optional" Medicaid families. Some 20 percent of all children who receive Medicaid nationally are in the "optionally eligible category," Wilson said.

Children's may not only lose Medicaid assistance to needy children but also about $400,000 earmarked for its Center for Pediatric Bioethics, the first such center in the nation. The hospital's longtime lobbyist in D.C., T.J. Petrizzo, said he thinks Congress will reinstate "earmarked" funds for medical-research institutions such as the pediatrics center. However, he is concerned that in the crunch to produce a leaner budget, Medicaid payments for children whose parents make slightly more than the federal poverty level could fall through the cracks.

"It's the early-childhood prevention programs and screening programs that save kids lives, and that save the government a lot of money later, that end up on the chopping block," he said.

Dr. Tom Hansen, the new president and CEO at Children's Hospital, said that loss of Medicaid funds would have repercussions beyond the hospital's neediest patients. More than 40 percent of its patients receive some kind of state-federal assistance, he said.

"Cuts in Medicaid impact our choices and what we can do for everybody," said Hansen, noting that Children's serves four states.

Loss of income could mean reducing services, leading to longer waiting times for major surgeries. And it means that in ranking spending, "Investments such as those for new diagnostic procedures are impacted," Hansen said.

Reichert was targeted by Children's supporters, said Wilson of the National Association of Children's Hospitals, because "the House leadership will pay especially close attention to such pivotal voters." The House bill passed by only a two-vote margin, he noted.

Pointing to Reichert's refusal to endorse drilling in the Alaska Wildlife Refuge, Wilson added, "Representative Reichert has demonstrated himself to be a strong, independent-minded member of the House."

Reichert is willing to confront his GOP leaders on the issue, said his spokesman Mike Shields.

"Dave is not going to back cuts to Medicaid children at this hospital," Shields said. Reichert, who has participated in Christmas projects at the hospital, has a personal connection, Shields said, because of the care Children's gave to a relative in the past.

Shields called the situation in Congress "budget bulimia: it's binge and purge. They've been bingeing on spending for years; now someone tells them they look fat, and suddenly they're purging themselves of important programs."

Petrizzo said that this coming week will be crucial because once Congress returns to work, the Senate and House must complete the budget bill with matching cuts.

In its version of the budget-reconciliation bill, the Senate did not include Medicaid cuts. But the House did; it has defended this measure by citing complaints from the National Governors Association that Medicaid costs are soaring. The governors want more flexibility in reducing Medicaid payments.

House and Senate staff members were locked behind closed doors this past week, arm wrestling over budget cuts in the bills.

Meanwhile, children's hospitals and family-medicine advocacy groups are angry that the same House bill that set up the Medicaid cuts for some child care gave a break worth roughly $125 million to pharmaceutical companies.

The makers of antidepressants, led by the manufacturer of the drug Prozac, the Eli Lilly Co., successfully lobbied Congress to prevent states from steering Medicaid patients to cheaper antidepressant medications as part of the budget cuts, according to recent news stories.

Steve Ellis of Taxpayers for Common Sense, a D.C. watchdog group, said, "The House favored the large industries in looking for quick solutions."

Washington state, under Gov. Gary Locke, a Democrat, attempted to change Medicaid funding in 2003 in a way similar to that being considered in Congress. But Locke backed down after he was hit with opposition from the entire bipartisan delegation, including all three Republicans.

"These children's hospitals are indispensable in our country," Wilson said.

Seattle Children's may represent only one hospital in a four-state area but it handles 50 percent of the sickest kids, he said.

Children's hospitals nationally have a high percentage of Medicaid patients. They also are responsible for more than half of the specialized pediatric heart surgeries, organ transplants and child cancer care.

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com