Executive Committee Home

June 27, 2006

The Honorable Michael O. Leavitt
Secretary
U.S. Department of Health and Human Services
200 Independence Avenue, S.W.
Washington, D.C. 20201

Dear Secretary Leavitt:

The bipartisan Governors' Medicaid Workgroup worked together with you last year to develop a series of positive Medicaid reforms that were enacted in the Deficit Reduction Act (DRA). This reform effort was successful because of our shared commitment to promote policies that focused on enhancing and sustaining the Medicaid program while also producing savings for both the federal government and the states. However, the administrative changes to Medicaid proposed in the fiscal year 2007 (FY07) budget are cost shifts to states that governors oppose. The proposed policies would reduce funding for Medicaid just as states are working to redesign their programs to utilize the reform tools contained in the DRA. The Administration should instead join with governors to develop further reforms that would continue to enhance and improve Medicaid while saving money for both the federal government and the states.

The policy changes that have been proposed include: a major reduction in allowable provider taxes; limits on payments to government providers; and changes to reimbursement policies for rehabilitation services as well as school-based administration and transportation. Not only would the proposals shift cost to states, they would diminish long-standing, legitimate state funding mechanisms that CMS has previously approved.

Such changes in state plans would impose a huge financial burden on states and impede our progress in implementing the current reform options and continuing to look for further reforms that benefit both the federal government and states. Therefore, governors urge you to reconsider implementing these proposed administrative changes and continue to work with states to develop mutually beneficial reforms for the future.

Thank you for your ongoing support of states and for your attention to this important issue.

Sincerely,