By PHILIP MARCELO
Journal State House Bureau

PROVIDENCE, R.I. -- Governor Chafee's administration is reviewing whether a recently proposed federal rule dealing with Medicaid may impact budget savings that the governor has assumed in the coming fiscal year.

The Centers for Medicare & Medicaid Services, the federal agency that administers Medicaid, proposes a rule change that several state officials and policy experts have said would make it more difficult for states to make changes to their Medicaid programs, which pays for healthcare for people who are poor, elderly, or who have disabilities.

Specifically, state officials argue that the proposal would limit their ability to change or reduce reimbursement payments to health care providers. The Obama administration says one goal of the rule is to assure that Medicaid recipients are protected as states seek cost savings to close budget shortfalls.

In Rhode Island, the proposed rule change potentially puts in question some $60 million in cuts to human services spending that Chafee has budgeted for the fiscal year that starts July 1. The cuts are part of the governor's plan to close a deficit approaching $331 million.

Chafee's Secretary of Health and Human Services Steven M. Costantino says the proposed rule change adds another layer of federal approval that may only serve to slow changes the state seeks. That, in turn, may lead to diminished savings in the coming fiscal year.

"We are reviewing those rules right now, but it seems like this new regulation goes against the grain," Costantino said this week. "States want more flexibility, not less. That is what everyone is talking about."

He was hopeful that the governor's proposed human services changes would meet the tougher federal requirements.

"The key is access. You can make changes as long as you do not reduce access. That is the key word," Costantino said of the proposed rule. "We pretty much believe that we are not going to reduce access."

Rhode Island might also be exempt from the rule because of the so-called "global Medicaid waiver" agreement former Republican Gov. Donald Carcieri reached with the federal government in 2009, Costantino said.

Costantino said Tuesday that his office, which oversees the state's five human services agencies, is working on an analysis of the actual savings achieved by that waiver agreement, which has been in the national spotlight this year.