The Obama administration expressed strong support for repealing the 1099 reporting provision included in the healthcare law but is concerned about how the cost of the measure is offset in House and Senate legislation. 

"The administration strongly opposes the House’s offset to pay for this repeal, which would undo an improvement enacted with nearly unanimous support in the Medicare and Medicaid Extenders Act that eliminated an egregious "cliff" in the tax system affecting middle income taxpayers," according to Statement of Administration Policy released Tuesday night.

The House's Republican-proposed offset would recapture improper overpayments of exchange subsidies established under the new healthcare law for those consumers earning more than to 400 percent of the poverty line. Those making less than that would have to pay back a greater portion than they are required to pay back under current law when health insurance exchanges open in 2014.

Medicaid continues to dominate the health policy agenda this week as the Obama administration weighs how much flexibility to give states, and federal officials prepare to testify about the fraud and abuse in federal health programs.

Governors warn Congress of healthcare reform law's costs: Republican governors ripped into Democrats' healthcare reform law on Tuesday, testifying before Congress that the law's massive Medicaid expansion and other federal mandates will hurt their states. The governors were in town for this weekend's winter meeting of the National Governors Association.

Mississippi Gov. Haley Barbour and Utah's Gary Herbert told the Energy and Commerce Committee that states were left out of the debate on Capitol Hill over the past couple of years. They also told the sympathetic Republican-led panel that they need much more flexibility to run their own healthcare programs. Read the Healthwatch report.

Dueling reports on health law's costs issued as governors testify on Capitol Hill: Dueling reports on the healthcare reform law's impact on states surfaced Tuesday as governors testified on Capitol Hill.

A new bicameral report from Republicans on the Senate Finance and House Energy and Commerce panels estimated that the law's Medicaid expansion would cost $118 billion over 10 years, almost twice the Congressional Budget Office's score. Simultaneously, the Robert Wood Johnson Foundation issued a report saying states would get $82.3 billion from the federal government in Medicaid and state exchange subsidies. Healthwatch's Julian Pecquet has the run-down.

The White House wants a say, too: WH spokesman Jay Carney also addressed Medicaid at Tuesday's briefing.

"We are committed to working with governors to help them manage their Medicaid costs, their Medicaid programs, and the Department of Health and Human Services has been an active and constructive partner with the states, with the governors, to answer their questions and ensure they are aware of the substantial flexibility that exists in the Affordable Care Act," Carney told reporters. "It’s important to remember that the Affordable Care Act will cover the overwhelming majority of the costs associated with the Medicaid expansion and will, in fact, reduce the amounts they spend to care for the uninsured. A lot of independent experts have actually estimated that the states will have a net savings in their Medicare program because of the Affordable Care Act."

Ryan knocks Obama for not shoring up Medicare funding: The Obama administration is violating federal law by declining to submit a proposal to shore up the Medicare program, House Budget Committee Chairman Paul Ryan (R-Wis.) charged Tuesday. Federal officials retort that the law doesn't legally bind them to do anything. Healthwatch's Julian Pecquet has the story.

The House Budget Committee's chairman said the administration is violating the law by not proposing ways to shore up Medicare.

Republican governors ripped into Democrats' healthcare reform law on Tuesday, testifying before Congress that the law's massive Medicaid expansion and other federal mandates will hurt their states.

Mississippi Gov. Haley Barbour and Utah's Gary Herbert told the Energy and Commerce Committee that states were left out of the debate on Capitol Hill over the past couple of years. They also told the sympathetic Republican-led panel that they need much more flexibility to run their own healthcare programs.

"We shouldn't have to come here and kowtow and kiss the ring" of federal officials to get the needed flexibility to run Medicaid, said Barbour, a potential 2012 presidential candidate.

"Believe it or not," Barbour told lawmakers, "we love our constituents as much as you all do. And we want to do right for them. But we want to do what we can afford and can sustain."

Governors made that case repeatedly over the weekend, during their winter meeting of the National Governors Association. President Obama told them Monday that he'd heard their message and wants to work with them to reform Medicaid and find alternative ways to achieve near-universal healthcare coverage.

A group of Democratic senators are asking the health department’s top investigator to examine Medicare contractors’ possible conflicts of interest.

Democratic Sens. Max Baucus (Mont.), Tom Carper (Del.) and Claire McCaskill (Mo.) on Tuesday called on the Health and Human Services Department’s inspector general to review Medicare contractors and their subsidiary relationships.

A survey conducted by staffers of several Senate committees raised concerns about the relationships between firms that approve and process Medicare reimbursement claims and those hired by the government to ensure the accuracy of the claims, the senators wrote. For example, in some cases, an oversight contractor was found to be the subsidiary of a company with a Medicare claims processing contract, the senators said.

“There would clearly be questions of impaired objectivity, or the appearance of impaired objectivity, when related companies are charged with both the administration of Medicare-related programs and oversight of that administration,” the letter read.
 
“We recognize that a conflict of interest does not necessarily mean fraudulent or improper activity is occurring,” the senators wrote. “However, this survey by our respective committee staffs strongly underscores the need for a more extensive review of relevant contracts to ensure compliance with federal regulations, and to promote a more efficient and transparent federal government.”

The Senate Finance Committee, chaired by Baucus, is one of three congressional panels to hold a hearing Wednesday on reducing fraud, waste and abuse in the Medicare program. HHS Inspector General Daniel Levinson will be at the Senate Finance hearing.

Dueling reports on the healthcare reform law's impact on states surfaced Tuesday as governors testified on Capitol Hill.

A new bicameral report from Republicans on the Senate Finance and House Energy and Commerce panels estimated that the law's Medicaid expansion would cost $118 billion over 10 years, almost twice the Congressional Budget Office's score. Simultaneously, the Robert Wood Johnson Foundation issued a report saying states would get $82.3 billion from the federal government in Medicaid and state exchange subsidies.

The new Medicaid enrollees, the foundation's report says, "have lower associated costs because, on average, they do not have the same health issues" as previous beneficiaries.

The bicameral report, meanwhile, warned about future costs to states because of the expansion of Medicaid to more than 15 million people, starting in 2014.

President Obama’s Medicaid chief shot down a proposal gaining traction among Republican governors to transform Medicaid into block-grant payments as the states face mounting costs running the healthcare program for poor individuals.

As states are facing massive budget deficits, more than half of the nation’s governors are looking for relief from a requirement in the new healthcare reform law to maintain Medicaid eligibility through 2014. Many Republican governors are pushing for Medicaid block grants, instead of a federal match, because they say it would provide them with the maximum flexibility to address budget shortfalls while ensuring the healthcare safety net remains in place for low-income individuals.

However, Centers for Medicare and Medicaid Services Administrator Don Berwick, stressing his support for states' flexibility, told reporters on Tuesday that block grants aren’t on the table.

“I think we need to make sure that Medicaid beneficiaries get access to the kind of care that could really help them them, and I think we’ll be open to ideas, but block grants are not something” the administration would support, Berwick told reporters at the Federation of American Hospitals (FAH) conference.

When pressed for an explanation of why the administration opposes block grants, Berwick declined.

“That’s all I have to say about that right now,” he said.

Republican Govs. Haley Barbour (Miss.) and Gary Herbert (Utah) urged Congress Tuesday to press for the Supreme Court to quickly resolve the legal challenges against the healthcare reform law.

"We already have conflicting opinions at the district court level," Barbour said. "Conflicting decisions from different circuits would just compound the problem. So, for those of you who have any influence on that, we would like to have that question answered sooner rather than later."

"Speaking for Utah, it's kind of like we're sitting on shifting sands," Herbert said, adding that as more time passes it's going to be increasingly difficult to determine which elements of implementation would need to be unwound if the whole law is struck down. "The uncertainty is really a problem for us, to know which way to go and what to do."

The governors made the remarks while testifying in Congress about the healthcare reform law's costs to the states.

Three federal district judges have ruled that the law's individual mandate is constitutional, while two have struck it down. One of those judges, Florida's Roger Vinson, ruled Jan. 31 that the whole law is unlawful because the mandate is central to its functioning.

The White House has appealed the adverse rulings to two appeals courts rather than asking the Supreme Court to review the contradictory rulings in an expedited manner. At that rate, Rep. Michael Burgess (R-Texas) said, it could be June 2012 before the Supreme Court rules.

The Obama administration has also asked Vinson to clarify whether he meant to freeze implementation of the law with his ruling.

Vinson could rule as early as today. If he declares that implementation should stop until higher courts rule, the administration is almost certain to seek a stay.

This post was updated at 12:20 p.m.

The top Republicans dealing with healthcare policy in the House and Senate released a report Tuesday that estimates the cost of the healthcare reform law's Medicaid expansion at $118 billion - almost twice the Congressional Budget Office's estimate.

The bicameral report comes as three governors prepare to testify Tuesday morning before the Energy and Commerce Committee about the program's impact on their state budget. The report, titled 'Medicaid Expansion in the New Health Law: Costs to the States', contains a state-by-state analysis of the law's financial impact.

"Governors of both political parties were clear when Congress was debating the $2.6 trillion health law that they could not afford a massive expansion in Medicaid," said Senate Finance Committee ranking member Orrin Hatch (R-Utah). "Washington didn't listen and plowed forward instead by putting 16 million Americans onto the Medicaid rolls to keep the federal price tag down.