The House Energy & Commerce Committee is planning a series of hearings on the best ways to relieve struggling state Medicaid programs.

The committee expects to hold its first Medicaid hearing within the next month, with others to follow throughout the year. Staff is gathering data on how states are running their Medicaid programs, including their use of waivers to fund pharmaceutical assistance.

The committee hopes the hearings will shed light on whether the waiver process is working as it was intended, given that some states now spend a significant portion of their Medicaid budgets on covering otherwise non-Medicaid eligible populations. A recent appellate court ruling striking down the "Healthy Maine" drug program focused on the waiver process (¹ Also see "Maine To Resubmit Medicaid Waiver To HHS After Court Strikes Plan Down" - Pink Sheet, 6 January, 2003., p. 17).

Committee Republicans will be investigating whether there are ways other than waivers to provide states with greater flexibility in their drug assistance efforts.

With states clamoring for budgetary relief, the issues of the size of the federal contribution to the Medicaid program and whether the core benefit package should be restructured are also likely to surface.

Some committee Democrats are also said to be interested in changing how Medicaid rebates are calculated. A proposal to base the formula on average wholesale price, rather than average manufacturers price, is one possibility. The change was originally proposed in President Bush's FY 2003 budget (² Also see "CMS Proposes Medicaid Rebate Increase By Tying Formula To AWP, Not AMP" - Pink Sheet, 11 February, 2002., p. 3).

The committee's work is not likely to have an immediate relief effect; some Energy & Commerce members are indicating a reluctance to spend more federal dollars on a state "bail out" before the hearings are complete. Legislation could move in May or June, possibly attached to a Medicare drug benefit.

In the short run, the states could get help from the Senate, where Sen. John Rockefeller (D-W.Va.) introduced a bill (S 138) to provide a one-time $20 bil. grant to help finance increases in Medicaid spending. The legislation is being co-sponsored by new Finance Committee Republican Sen. Gordon Smith (Ore.) (see ³ Also see "Senate Medicare Rx Bill Will Be Shaped By Cmte. With Four New Members" - Pink Sheet, 13 January, 2003. ).

Medicaid Waivers, State Relief Issues To Be Featured In House Hearings

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