In the first of an expected avalanche of post-election 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 immediately protested the action, 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.
President-elect Barack Obama has endorsed those efforts. At a news conference on Friday, he said that legislation to stimulate the economy should include “assistance to state and local governments” so they would not have to lay off workers or increase taxes.
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 current 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.