The Rhode Island House is expected to vote today to require legislative oversight on a Medicaid waiver that went into effect last month.

The waiver, which was negotiated between Gov. Donald Carcieri's administration and the federal government, caps Medicaid costs at $12.1 billion over a five-year demonstration period.

In return for capping its Medicaid costs, the state gets greater flexibility in how it delivers services that Carcieri expects to save the state $358 million during the five-year period.

Separate oversight bills in the Senate and House have been approved in committee and the Senate bill could go before a full Senate vote as soon as this week. Both bills would create an oversight board that would have to approve changes to the state's Medicaid program.

Carcieri spokeswoman Amy Kempe said that the governor was committed to working with the Assembly to implement the waiver.

Although the waiver is already in place, the details of its implementation are still being worked out. The governor's office is pushing for a shift away from nursing home care toward more home care for elderly Medicaid patients requiring long-term care. Currently, about 90% of Rhode Island's elderly Medicaid patients get long-term care through nursing homes compared to a national average of 60%, Kempe said.

The governor's office is also looking to shift medical care for children and vulnerable populations away from acute care toward more primary care and preventative care.

The federal government currently pays 52% of Medicaid spending in the state under its matching funds formula, known as FMAP, with the state picking up the remainder. If the state gets FMAP under the federal stimulus package, the additional funds would reduce the state's percentage of Medicaid expenditures.

The change comes as Rhode Island is trying to close large deficits in its current fiscal year and fiscal 2010, which begins July 1. The state faces a current fiscal year gap of $357 million and a projected fiscal 2010 gap of $453 million. The state's unemployment rate is 10%, the second highest in the nation after Michigan.

"States are constantly wrestling with the issue of Medicaid funding because it's often one of their biggest spending items," said Moody's Investors Service analyst Nicole Johnson. "It's a difficult time to be trying to reduce spending because the economy's getting worse, not better. There could be pressure to grow their program because more people could qualify."

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