reinforced a distortion embedded in the old system. Rick warns counties in New York about the similarities between the new cap on their shares of Medicaid costs and the Medicare " clawback ." There are a couple of differences, one mechanical and one conceptual. The mechanical difference is that the New York law requires an annual reconciliation. That involves a calculation of what the counties would have paid under the old system. If it's less than the cap, the State is supposed to write a check to the county for the difference. The conceptual difference is that the "clawback" is intended to offset a financial side effect of legislation whose primary purpose is not about the relationship between different levels of government, in this case providing pharmaceutical coverage for Medicare beneficiaries. In contrast, New York's new Medicaid cap is entirely about changing the financial relationship between different levels of government. Not that, in a financial pinch, New York wouldn't change the rules again but there is a difference. Rick is right though. Remain vigilant. There are many ways in which to play this system. Does anyone doubt that the Department of Health is currently cranking out rate appeals so that the payments can be made this year in order to inflate the base upon which the cap is calculated? May 17, 2005 Why did I raise the possibility that Medicaid expenditure growth in New York might slow a bit? Take a look at the trendline. Note that while expenditures actually