In return for a significant amount of flexibility, Rhode Island has offered to let the federal government cap its Medicaid contribution to the state for the next several years. As part of the proposed deal, Rhode Island would not have to spend more than 23% of its state budget on Medicaid.
The Center for Budget and Policy Priorities calls this a "block grant" and hates the idea [here]. It looks like a "block grant" to us, too, and we love it. The New York Times [here] can't make up its mind. Bush Administration officials at HHS have not yet approved the waiver but they are working with Rhode Island officials to iron out any differences.