Medicaid services for outpatients cut

WASHINGTON — In the first of an expected avalanche of postelection regulations, the Bush administration on Friday narrowed the scope of services that can be provided to poor people under Medicaid's outpatient hospital benefit.

Public hospitals and state officials protested, saying it would reduce Medicaid payments to many hospitals at a time of growing need.

The new rule conflicts with efforts by congressional leaders and governors to increase federal aid to the states for Medicaid as part of a new economic action plan.

The rule narrows the definition of outpatient hospital services to exclude those that could be provided and covered outside a hospital.

In a notice published Friday in the Federal Register, the Bush administration said it had to clarify the definition of outpatient hospital services because the ambiguity had allowed states to claim excessive payments.

"This rule represents a new initiative to preserve the fiscal integrity of the Medicaid program," the notice said.

John Bluford, president of Truman Medical Centers in Kansas City, Mo., said: "This is a disaster for safety-net institutions like ours. The change in the outpatient rule will mean a $5 million hit to us. Medicaid accounts for about 55 percent of our business."

Alan Aviles, the president of the New York City Health and Hospitals, the largest municipal health care system in the country, said: "The new rule forces us to consider reducing some outpatient services like dental and vision care. State and local government cannot pick up these costs. If anything, we expect to see additional cuts at the state level."

In May, the White House said it wanted to avoid the rush of "midnight regulations" that had occurred at the end of other administrations.

But Bush administration officials said this week that they still intended to issue, or relax, many economic, environmental, health and safety rules before they leave office Jan. 20.

Medicaid, financed jointly by the federal government and the states, provides health insurance to more than 50 million low-income people.

Services can often be billed at a higher rate if they are performed in the outpatient department of a hospital rather than in a doctor's office or a free-standing clinic. Hospitals generally have higher overhead costs.

The rule takes effect on Dec. 8, six weeks before Bush leaves office.