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The rule many hospitals fear most would change the definition of a "public" hospital and all but eliminate reimbursements to the state for many uninsured patients.

North Carolina has drawn money from the federal government by using matching funds from about 40 of its public hospitals, including many county hospitals, that treat uninsured patients.

The Bush administration has occasionally proposed Medicaid changes as part of the president's annual budget request, but Congress declined to enact his ideas.

Clash with Congress

Now, with less than a year left in his presidency, Bush doesn't have the Democratic-controlled Congress on his side. But he has the power to change regulations. Many of the new rules came in the past year.

"This is the administration disregarding the will of Congress," said Lynne Fagnani, senior vice president for the National Association of Public Hospitals and Health Systems.

Fagnani said hospitals have warned her of closed clinics, longer emergency room waits, fewer hospital beds - results that touch all patients, not just those on Medicaid.

"These could affect things that everyone cares about," Fagnani said.

But, to Smith, it's a matter of keeping Medicaid focused on its mission.

"To slip these [programs] under the door of Medicaid, I think, undermines its accountability," Smith said.

Some observers say the rules come as part of necessary changes to a bloated entitlement program that finds itself paying for services unrelated to Medicaid's purpose.

"It's important to start to bring about more accountability. These are just small steps," said Nina Owcharenko, a senior policy analyst at the Heritage Foundation and a former Jesse Helms staffer.

"Congress should really let these regulations go through," Owcharenko said. "By doing another moratorium, Congress is saying we're going to keep the mess because we don't have the fortitude to address the underlying problems."

Last year Congress imposed a moratorium on two of the rules - including the one that many hospitals in North Carolina worry about most.

But the congressional stopgap expires May 25.

Sen. Dole steps in

Dole signed on as the lead Republican co-sponsor of legislation from Sen. Jeff Bingaman, a New Mexico Democrat. The bill would extend the moratorium one more year - beyond Bush's tenure as president. It has the support of the majority of the Senate and more than 200 members of the House.

Still, supporters of the legislation say Bush would veto any free-standing bill.

So Bingaman must instead tack his moratorium onto "must-sign" legislation such as the supplemental war-spending bill. Because Congress passes few major bills in the spring, only a handful are bound for the president's desk in the coming months.

"The sense of urgency is that both the Senate and Congress need to act now," said John Bluford, chief executive officer of Truman Medical Centers in Kansas City, Mo., and chairman-elect of the National Association of Public Hospitals.

If the rules go through, he said, his hospital could lose $37 million. He fears he might have to restrict health care for indigent patients to only the poorest.

"They're very hurtful to us," Bluford said of the rule changes.

Politics aside, hospital administrators and county health officials nationwide are worried.

Lauren Reichelt, health and human services director for Rio Arriba County in northern New Mexico, said she has spent 15 years working with villages in the rugged agricultural region, where women sometimes delivered babies with only their husbands as attendants.

"I feel like we've reversed that and gotten ambulance coverage to most parts in our county," she said. "I'm terrified, actually, that these rules changes would reverse that progress."

State looking at losses

Duke University Medical Systems would lose a quarter of its net operating income, said Ken Morris, senior vice president and chief financial officer. The hospital system may have to increase costs to insured patients or look to cuts in areas such as pediatric care that don't pay for themselves.

WakeMed lobbyist Judy O'Neal said the rule changes, which could cut $17 million from the hospital, have become her top priority.

"I just see our emergency department ... and you say, 'My gosh, we've got enormous demands,' " O'Neal said.

In Charlotte, Carolinas Health Care System - the state's largest Medicaid provider -- warns that it would lose $62 million.

"It's the state's most vulnerable citizens," said Russ Guerin, the system's executive vice president for business and planning. "I really believe that it is our legislators' responsibility to continue to protect these folks."

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