WASHINGTON – U.S. Sen. Olympia Snowe, R-Maine, exchanged sharp words with Health and Human Services Secretary Mike Leavitt Wednesday over proposed changes to Medicaid rules that would cut $1.28 billion from the program over five years, severely affecting services in Maine.

“With Maine and other states facing significant budget deficits, this is the wrong time to impose a regulation that will shift additional financial burdens on states that can’t afford it,” Snowe said at a hearing by the Senate Finance Committee, of which she is a senior member.

Gov. John Baldacci says the federal cuts could cost the state $45 million through the next 16 months.

“They have a tremendous trickle-down effect in our ability to help our most vulnerable citizens,” said David Farmer, spokesman for the governor.

The services specifically affected by the proposed changes are case management, which includes funding for special education; rehabilitation services; hospital outpatient services; and transportation for disabled school children. States are required by federal law to provide many of the services that would be affected, including services for young students with disabilities.

Leavitt’s proposed changes would take effect on March 3 unless Congress extends the deadline by a year under legislation Snowe has co-sponsored.

Snowe and her colleagues are acting after the National Governors Association sent a letter to the Health and Human Services Department appealing for it to postpone the changes to give states time to respond.

The proposal “restricts state flexibility to design and manage their programs and threatens the success of recent reform initiatives,” said Raymond Scheppach, executive director of the association, in the Feb. 4 letter.

But a federal official says the states were warned.

States have been using the Medicaid program to fund services that aren’t supposed to be funded by Medicaid, according to Dennis Smith, director of the Center for Medicaid and State Operations in the Department of Health and Human Services.

?The moment is now here and states are scrambling, but it?s not really news to the states,? said Smith.

Maine officials are talking with medical providers and school systems, searching for ideas on how to restructure the programs to compensate for the shortfall in federal funds.

?Nearly half of all children in the foster care system have a disability or suffer from a chronic medical problem,? Snowe said at Wednesday?s hearing. ?More than 75 percent have serious emotional problems. And right now, Maine is scrambling to figure out how to maintain case management services for them.?