D.C. action could doom state senator's plans for more Medicaid help

Two Nebraska members of Congress cast doubt Saturday over the future of North Platte state Sen. Mike Jacobson's two-year effort to steer more federal Medicaid dollars toward the state's hospitals and rural health care providers.

Third District U.S. Rep. Adrian Smith of Gering and U.S. Sen. Pete Ricketts of Omaha separately spoke with The Telegraph while in North Platte for the annual Nebraskaland Days parade.

Both said they're concerned about protecting rural health care but also about curbing abuses of the recyclable "provider assessment" taxes on which Jacobson-sponsored bills passed this year and last depend to capture more than $1 billion more in Medicaid help.

"I think there's a concerted effort that we don't shortchange providers," Smith said, but "there is the broader issue of some states aggressively expanding Medicaid enrollment."

Ricketts spoke more sharply as senators mull chopping the maximum rates for the selectively applied provider taxes by nearly half.

"States like California and New York are abusing the system, keeping the money and not passing it on (and) using it to fill holes in their general budgets" instead of covering Medicaid costs, the former Nebraska governor said.

"So what we need to do is reform the system and find other ways to help rural hospitals."

Jacobson, who is recovering from a fall related to treatments for metastatic skin cancer, said via text that the fate of his 2024 and 2025 measures "is now in the hands of Congress."

But "rural Nebraska needs this assessment (rate) at the highest level possible," the District 42 lawmaker said ahead of Ricketts' and Smith's visits for Nebraskaland Days.

Jacobson and state officials have waited a year for the U.S. Centers for Medicare & Medicaid Services to approve its take on the nationally popular framework for getting more aid for the combined state-federal health plan for low-income U.S. residents.

The approach typically refunds each year's provider assessments, which serve as a state's matching funds, as part of providers' higher Medicaid payments.

To use the framework, states must have expanded their Medicaid programs under former President Barack Obama's Affordable Care Act to cover most adults younger than 65 with incomes up to 138% of the federal poverty level. That was set at $21,597 a year for 2025.

Nebraska is one of 41 states that has adopted the ACA expansion — in its case, by voter approval of an initiative law to that effect in 2018.

Jacobson's Legislative Bill 1087, passed in 2024, charges Nebraska hospitals 6% of their net patient revenue to access higher Medicaid payments.

This year's LB 527, aimed at assisting rural health providers other than hospitals, similarly charges 6% of non-Medicare "direct writing premiums" under a health maintenance organization's "certificate of authority."

But the Senate Finance Committee has proposed slicing the top provider tax rate from 6% to 3.5% — and thus limiting the Medicaid payments it could trigger — as part of the upper house's version of a massive tax "reconciliation" bill sought by President Donald Trump.

Federal spending is finalized by Congress' annual appropriations process, but Trump's "Great Big Beautiful Bill" address the tax-policy side, said Smith, a senior member of the House of Representatives' Ways and Means Committee.

The House, which narrowly passed its version May 22, chose to freeze additional uses of the provider-tax mechanism without cutting its top allowed rate.

It's not clear what that would mean for Jacobson's intended Medicaid reimbursement plans if the House approach becomes federal law. He has said he hopes for federal approval before Congress approves the tax bill.

Some Republicans have denounced the provider-tax mechanism as a "loophole" and "money laundering" as they press for hundreds of billions of dollars in federal budget cuts. Trump has said he wants to preserve Medicaid benefits.

The Centers for Medicare & Medicaid Services has issued a proposed rule to rein in reimbursements triggered by states' provider assessments.

A May 12 CMS press release mentions waivers approved by former President Joe Biden's administration for California, Michigan, Massachusetts and New York. It says they would let those states overcollect Medicaid funds and use the difference for unrelated programs, like California's provisions for Medicaid coverage for noncitizens.

But Smith said "Nebraska has managed very well" in implementing its voter-directed Medicaid expansion.

"I want to see federal policy reward good decisions by the states rather than bad decisions by the states," he said.

Medicaid beneficiaries above the poverty line have outnumbered those below it since 2000, Smith said, but those numbers have risen greatly since the ACA allowed states to expand coverage.

"What we need to see is more of an emphasis on enrolling people in private insurance," he said.

Smith touted a bill he introduced in May with cosponsors from both parties as a way to help rural health care outside the provider-tax plans.

H.R. 3164 would reinstate a COVID-19 pandemic provision that reimburses pharmacists that accept Medicare for their testing and treatment of COVID, influenza, RSV and strep throat for Medicare's typically over-65 patients.

"Medicaid already does it, and commercial-pay insurance companies often reimburse those (costs) as well," Smith said.

The bill would set such reimbursements at 85% of what physicians taking Medicare would be reimbursed for their services.

Smith said the Ways and Means Committee should "work up" H.R. 3164 and advance it to the House floor soon.