The Commonwealth of Massachusetts has sought and been granted a fourth extension on its request for a waiver from federal medicaid regulations. These negotiations between federal and state officials, critically important to the success of the Massachusetts health care initiative and to the FY2009 State budget, appear to be nearing completion. Yesterdays Boston Globe reported the extension request and highlighted the high stakes.

The federal payments, which are crucial for keeping the state’s landmark health insurance law afloat, were set to expire June 30, but the state has received three extensions, and a fourth would postpone the deadline for reaching an agreement until Aug. 25.

At stake in the negotiations between state and federal officials is more than $11 billion in federal funds over three years, money earmarked for dozens of healthcare programs in Massachusetts in addition to the state’s crown jewel: its two-year-old near-universal health coverage law that has provided insurance to more than 350,000 residents.

The critical nature of the waiver request was underscored by Senate Ways and Means Chairman Senator Steve Panagiotakos

“If we don’t get everything we are looking for in the waiver, we would either have to come up with the money through [state] reserves, or we would have to cut benefits,” said Senator Steven Panagiotakos, chairman of the Senate Ways and Means Committee.

Panagiotakos, who has been regularly briefed by the administration of Governor Deval Patrick, declined to discuss specifics but said state negotiators seemed cautiously optimistic about the progress of the discussions. But he said that the two sides are still in disagreement over funding for several key programs in the massive spending blueprint, and that if Massachusetts did not get what it requested for any one of those programs, it could have a large impact on the state budget.

And the negotiations continue, with a lot hanging in the balance. While the issue has had some coverage it seems to be relegated to the secondary news area. Nothing could be more important, and a failure here will likely bring an expedited effort to grant 9-c authority to Governor Patrick to deal with the negative impacts on the state budget. Stay tuned. Read the Globe story here.