A delegation of top South Carolina officials flew to Washington this week and persuaded the federal government not to withhold millions in Medicaid dollars -- for now.
After meeting with Gov. Mark Sanford, the state's congressional delegation and top legislators in U.S. Sen. Lindsey Graham's office, the Center for Medicare and Medicaid Services said it wouldn't deny the state $125 million in funds that are used to reimburse hospitals that care for the indigent.
What's more, state officials said the federal agency indicated it will give South Carolina an additional year before the program is cut, so "we really expect we'll be fine until July 2005," said Ken Shull, president of the South Carolina Hospital Association.
"I think we have avoided what would have been a budget disaster," Graham said.
Still, the government didn't let South Carolina off the hook for good. It still believes that it and other states are improperly drawing down federal funds to boost the size of the program.
State officials went into the meeting fearing the government would cut the program this year, which could have hammered the finances of a number of hospitals and even put some out of business.Now, the extra year and a half will give the state time to negotiate with the Center for Medicare and Medicaid Services on new rules states will have to follow to draw down federal Medicaid dollars, or at least prepare for a change in the regulations.
At issue is a pool of state and federal Medicaid money that states use to reimburse hospitals for the care they give to the uninsured. Thirty percent of this money comes from the state.
The federal government contributes the rest, based on the state's contribution.
That pool added up to $375 million in South Carolina last year, $262 million from federal dollars. The federal government has long felt that states abuse this funding mechanism. States, spurred by hospitals that have come to depend on the money, fight hard to keep the funds intact.
Most of South Carolina's contribution to the pool comes from public hospitals, three large ones in particular: the Medical University of South Carolina, Palmetto Health Richland and the Green-ville Hospital System.
The federal government wanted to tighten the definition of a public hospital, and it put 22 facilities on notice that their status was under review. It told one hospital, Palmetto, that it was no longer considered public.
Without that hospital's substantial contribution to the pool, combined with other ways the government planned to tighten the state match, South Carolina faced losing as much as $125 million in this year's program, according to one estimate.
The potential loss was big enough to draw to Washington a delegation that included Sanford, House Speaker David Wilkins, state Sen. Hugh Leatherman, chair of the Senate Finance Committee, and state Rep. Rick Quinn, R-Columbia, the House majority leader.
Along with help from South Carolina members of Congress and Graham, the group managed to win the temporary reprieve.
"We got some resolution, some agreement that there would be a transition period in this discussion as we resolve (our) differences," said Frank Adams, a spokesman for the state Department of Health and Human Services, South Carolina's Medicaid agency. "There's no going back retroactively to make financial demands on the state. And we've started a dialogue that's been missing."
