State Medicaid officials are implementing regulations that will deny smoking cessation drugs to welfare recipients and the working poor - populations with the state's highest smoking rates.

This month, the Division of Medical Assistance introduced a policy that seems to undercut the $46 million-a-year antismoking program, which has reduced Massachusetts smoking rates to the second-lowest in the country over eight years, after Utah's. ''That's absolutely shocking,'' said Nancy Kaufman, a vice president of the Robert Wood Johnson Foundation, the health philanthropy, when told of the Division of Medical Assistance regulations. ''It is particularly amazing considering how progressive Massachusetts has been with its tobacco control programs.'' Kaufman said that the national trend has been for Medicaid to cover smoking cessation services. A spokesman for the division said the decision was based on the program's limited budget. ''We have never paid for smoking cessation drugs,'' said Richard McGreal, the Division of Medical Assistance spokesman. The division had an informal policy of not covering the cost of smoking cessation drugs for the working poor and those on welfare, arguing that there was no proof that the drugs were effective. The division adopted the more formal regulation after some physicians began prescribing Zyban for smoking cessation when the division itself had approved it only as an antidepressant, an administration source said. Four years ago, Governor Paul Cellucci blocked the division from adopting a similar regulation. At the time, the state had just settled with the tobacco industry, seeking to recover billions of dollars in Medicaid expenditures for smoking-related diseases. (Massachusetts is getting about $8 billion over 25 years from the national settlement of the lawsuits alleging that tobacco corporations had covered up smoking's risks.) This time, the division has the support of Acting Governor Jane Swift. She and House Speaker Thomas M. Finneran have been pushing for Medicaid coverage for uninsured women who have breast or cervical cancer. Division of Medical Assistance officials, trying to curb rising costs, said the cost for that program was one reason for breaking ranks with the national antismoking efforts and for formalizing its policy against covering nicotine drugs. Massachusetts Medicaid is a $4.4 billion program that serves 900,000 clients. It is reimbursed 50 percent by the federal government. Working poor and welfare recipients, who rely on Medicaid for their health care, have a smoking rate more than double that of the general population. The division has been under pressure from health advocacy groups and antismoking groups to include smoking cessation drugs in its MassHealth program, which administers Medicaid. The advocates argue that smoking-related diseases cost the state Medicaid program $250 million a year. They also argue that other states' Medicaid programs pay for Zyban pills, nicotine patches, gum, inhalers or smoking cessation counseling. And private insurers, they say, are increasingly covering antismoking therapies and drugs for their clients. ''Smoking is a phenomenon and an addiction that particularly afflicts the lower social classes and low-income populations,'' Kaufman said. ''How a program that is geared to provide medical services to that population cannot make such a service available is quite surprising.'' McGreal, of the Division of Medical Assistance, said the division has expanded other coverages under Medicaid, including drugs for HIV patients, along with treatment for uninsured women with breast and cervical cancer. He said the result was an 18 percent jump in the division's pharmaceutical budget last year. That increase precluded possible coverage for smoking cessation. The new regulation could become a political problem for Swift, who, because of her antitax position, has vowed to veto a proposed 50 cent increase in the tax on a pack of cigarettes to fund health care and community hospitals.

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