State Told to Pay Medicaid Share

SEATTLE -- Federal officials have threatened to stop sending billions of dollars
in Medicaid money to Washington state if it doesn't provide $37.4 million in
supplemental payments to elderly and disabled people this year.

The state risks losing more than $2.5 billion if it does not comply with Social
Security Administration requirements by year's end, Commissioner Jo Anne
Barnhart in Baltimore said in a May 9 letter to the federal Department of Health
and Human Services.

That's 40 percent of the state Department of Social and Health Services budget,
including health care, in-home care, nursing homes and aid to disabled persons.
But a spokesman for Gov. Gary Locke said the state isn't really in danger of
losing all that money.

"We don't believe it is at risk, and we believe we will be able to work things
out with the federal government," said Ed Penhale of the governor's budget
office in Olympia.

The commissioner's letter said state officials were short $8.5 million last year
in required supplemental payments to elderly, blind and disabled people who
receive federal aid known as Supplemental Security Income.

That amount must be made up during this year's grace period. In addition, the
state must spend its required annual amount of $28.9 million this year but is
not nearly on track to do that, Barnhart said.

"It is a serious situation, and the state of Washington needs to submit a
compliance plan to SSA for approval," said Dan Ferrell, regional communications
director for the Social Security Administration. He would not elaborate.
Washington state's legislators decided last year to cut off state supplemental
payments to 95,000 of 100,000 people receiving aid, Barnhart's letter said.

"Although Washington began paying a new small group of recipients, total state
expenditures dropped precipitously," the letter said.
In a March 26 letter, Regional Commissioner Carl Rabun of the Social Security
Administration told state officials that the decision to stop payments "had a
tremendous impact on our state's aged, blind and disabled citizens."

"The potential to harm the thousands of individuals who rely on Medicaid
assistance presents a new concern," Rabun said. "Failure to spend the $37.4
million will be devastating to our state's most vulnerable populations."
For the state, Stan Marshburn, DSHS chief financial officer, said talks have
been ongoing with federal officials and a compliance plan has been submitted.

"We knew this was happening and we've been working on it for 18 months," he
said. "We will maintain our standing and everything's going to be fine."
He said Washington's legislators decided to stop the small $15 to $25 payments
to federal aid recipients and focus the money on developmentally disabled people
who are most needy.

About 7,000 people receive state supplemental payments under the new program, he
said.

"And we're adding another couple of thousand to get us up to the spending
level," he said. But all additions must meet federal approval.
It's still unclear how many people -- and who -- will be included in the new and
expanded list of recipients, he said.

Those already receiving supplemental aid include about 3,150 developmentally
disabled persons, said Linda Rolfe, director of the developmental disabilities
division of DSHS. They need relatively expensive care, costing an average of
$400 to $500 a month and ranging as high as $6,000 a month for someone who needs
a place to live with 24-hour care.

So far this year, the state has paid $8 million in supplemental aid to
developmentally disabled persons, she said. That amount is expected to rise to
$14 million to $15 million by year's end as more people are enrolled, she said.
Also, about 3,600 people who have spouses ineligible for the federal supplement
are receiving about $100 a month, said Roxie Schalliol, director of the Division
of Employment and Assistance programs in the DSHS. About 95 other people who are
grandfathered in since 1974 also receive payments.

She said her division spent just under $1 million for the first quarter of the
year.

Dave Daniels, operating budget chief for the department, said the state will
have enough money to cover required payments. Both House and Senate versions of
the next state budget include $10 million to help, and the rest of the money is
available, he said.