WASHINGTON -- With the Supreme Court days away from ruling on the constitutionality of President Barack Obama's 2010 health care overhaul legislation, members of Congress are preparing to respond. One of the first out of the gate is Rep. Bill Cassidy, R-Baton Rouge, a doctor. Cassidy has introduced a bill that would change funding for Medicaid, the joint federal/state health program for the poor and disabled, that would give states more flexibility in spending scarce health resources.

Under the legislation, a state's share of funding would be limited to what is currently the lowest matching amount for the 50 states: the 24 percent share paid by Mississippi. Louisiana's matching share under the bill would drop from 27.2 percent to 24 percent.

Savings to the states would be offset, though, because Cassidy's bill would bar the use of other federal funds, or interagency transfers -- what the congressman calls "funny money" -- to pay the state matching shares.

As part of the plan, which Cassidy describes as a work in progress, states would be free to design health programs for their Medicaid recipients, and would be able to use savings from better preventative care, and elimination of fraud and abuse, to finance other Medicaid related programs.

"By modernizing the way Medicaid is financed and incentivizing better care, we can improve Medicaid's bottom line and patient outcomes," Cassidy said. "If nothing is done, the status quo will eventually bankrupt Medicaid and America. I hope this legislation encourages more debate and discussion on this critical topic."

The federal funding would be based on the number of Medicaid recipients in each state in four broad categories: elderly; blind or disabled; children; and adults. In that way, it differs from a block grant program that designates federal funds on a per-capita basis. Cassidy said funding should be based on Medicaid populations and the degree of care different groups of patients require.

For instance, he said, Louisiana has high levels of intense poverty, which carry high levels of diabetes, hypertension and kidney dialysis.

Louisiana Health and Hospitals Secretary Bruce Greenstein praised the Cassidy proposal, saying it would enable the state to develop innovative programs that will both lower costs and improve health. Greenstein talked about implementing an "outcome-based" reimbursement formula for Medicaid health providers, rather than the traditional pay per procedure.

The state has faced major cuts in Medicaid reimbursement, but Sen. Mary Landrieu, D-La., has helped pass a legislative fix that averted a major financial crisis.

Cassidy, who is thought to be a likely 2014 opponent to Landrieu's expected re-election bid, said he hopes his proposal can be crafted with input from members of both parties in a way that can get it through the House and Senate next year.

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Health care proposal gives Louisiana more Medicaid spending flexibility