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Pelosi Bill Slips In $6 Billion Slush Fund

Posted By Dennis Smith On November 3, 2009 @ 4:49 pm In Obamacare | Comments Disabled

Last week, Speaker Pelosi and the House leadership introduced their 1,900 page health care monstrosity, H.R. 3962 [1]. But they have not taken the bill to the House floor as they prepare yet another version called a “manager’s amendment.”

This manager’s amendment will sweep in new provisions targeted to specific members of Congress in order to get their support on behalf of some special interest group. These will be a style of earmarks that may be hard to trace back to its source. Some will be undecipherable, directing more favorable Medicare reimbursement to a particular hospital or the new taxes on a medical device manufactured in a particular congressional district will mysteriously be lowered. The same sort of deal-making will occur on the Senate floor. National advocacy groups that insist there should be no profit in health care will need smelling salts by the time the bill is completed.

One such earmark suddenly appeared in H.R. 3962 in Section 1745, “Nursing Home Supplemental Payment Program.” This provision did not exist when the Committee on Energy and Commerce had completed its work. Section 1745 creates a new $6 billion slush fund with the Medicaid program to dispense to nursing homes.

This new fund has several unique characteristics that set it apart from the normal operations of Medicaid. First, payments to Medicaid nursing homes are made through states and require a state to match the federal funds. Under this section, there is no state money and the decision as to what facilities will receive the money will be made by Secretary Sebelius (and therefore no state involvement in decision making). Although the legislation provides $1.5 billion for each year in the period 2010-2013, the Secretary could hold the money for 2010 and 2011 and make big lump sum payments in 2012. Second, she does not have to go through any formal rulemaking process to award the funds. Third, her decision is final and is not subject to any type of review. This is important because facilities that receive the money will have a comparative advantage over its competitors. Finally, the Secretary will be required to tell the respective committees of Congress which facilities received the money, but is not obligated to tell anyone else.

It would be interesting to know who asked for this provision and was powerful enough to get $6 billion when the leadership decided to dump more people into Medicaid as a cost saving maneuver and the bill cuts Medicare payments to nursing homes. If a health care bill is enacted this year, the timing will likely place it around Christmas. Yes, Virginia, apparently there is a Santa Claus.


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[1] H.R. 3962: http://www.heritage.org/research/healthcare/upload/hr3962.pdf

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