Extends until April 1, 2009, the moratorium on any action by the Secretary of Health and Human Services to restrict Medicaid payments for graduate medical education (GME).

Amends the Medicare, Medicaid, and SCHIP Extension Act of 2007 to extend until April 1, 2009, the moratorium on certain restrictions relating to Medicaid coverage or payment for rehabilitation services or school-based administration and school-based transportation, including specified proposed regulations, if such restrictions are more restrictive in any aspect than those applied to such areas as of July 1, 2007.

Establishes additional moratoria until April 1, 2009, on specified regulatory actions concerning Medicaid: (1) treatment of optional case management services; (2) outpatient hospital services; and (3) allowable provider taxes.

Extends until April 1, 2009, the moratorium on any action by the Secretary of Health and Human Services to restrict Medicaid payments for graduate medical education (GME).

Amends the Medicare, Medicaid, and SCHIP Extension Act of 2007 to extend until April 1, 2009, the moratorium on certain restrictions relating to Medicaid coverage or payment for rehabilitation services or school-based administration and school-based transportation, including specified proposed regulations, if such restrictions are more restrictive in any aspect than those applied to such areas as of July 1, 2007.

Establishes additional moratoria until April 1, 2009, on specified regulatory actions concerning Medicaid: (1) treatment of optional case management services; (2) outpatient hospital services; and (3) allowable provider taxes.

(Sec. 3) Makes appropriations to the Secretary for the purpose of reducing fraud and abuse in the Medicaid program. Requires annual reports to specified congressional committees on activities funded by such appropriations.

(Sec. 4) Directs the Secretary to report to Congress on the Medicaid regulations referred to in this Act and how they were designed to address specific problems.

Directs the Secretary to contract with an independent organization to produce a comprehensive report for Congress on the prevalence of such problems: (1) identifying which claims for items and services under Medicaid are not processed through automated data systems; (2) examining the reasons why they are not so processed; and (3) recommending federal and state actions that can make claims for such items and services more accurate and completely consistent with Medicaid requirements.

(Sec. 5) Amends SSA title XIX to require each state to implement an asset verification program for purposes of determining or redetermining the eligibility of an individual for state Medicaid assistance.

Requires withholding of federal matching payments from states failing to implement such program.

Amends the TMA, Abstinence Education, and QI Programs Extension Act of 2007 to repeal the requirement to extend to the Medicaid program the web-based asset demonstration project under SS title XVI (Supplemental Security Income) (SSI).

(Sec. 6) Amends SSA title XVIII to make adjustments to funding available to the Physician Assistance and Quality Initiative (PAQI) Fund. Reduces amounts available to the Fund for expenditure during 2013, but adds funds for 2014 expenditures (under the same limitations provided for those made with money available during 2013).

Protecting the Medicaid Safety Net Act of 2008 - (Sec. 2) Amends the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Appropriations Act, 2007 to extend until April 1, 2009, the moratorium on implementation of a proposed rule ("Medicaid Program; Cost Limit for Providers Operated by Units of Government and Provisions To Ensure the Integrity of Federal-State Financial Partnership") relating to the federal-state financial partnerships under titles XIX (Medicaid) and XXI (State Children's Health Insurance Program) (SCHIP) of the Social Security Act (SSA).

Extends until April 1, 2009, the moratorium on any action by the Secretary of Health and Human Services to restrict Medicaid payments for graduate medical education (GME).

Amends the Medicare, Medicaid, and SCHIP Extension Act of 2007 to extend until April 1, 2009, the moratorium on certain restrictions relating to Medicaid coverage or payment for rehabilitation services or school-based administration and school-based transportation, including specified proposed regulations, if such restrictions are more restrictive in any aspect than those applied to such areas as of July 1, 2007.

Establishes additional moratoria until April 1, 2009, on specified regulatory actions concerning Medicaid: (1) treatment of optional case management services; (2) outpatient hospital services; and (3) allowable provider taxes.

(Sec. 3) Makes appropriations to the Secretary for the purpose of reducing fraud and abuse in the Medicaid program. Requires annual reports to specified congressional committees on activities funded by such appropriations.

(Sec. 4) Directs the Secretary to report to Congress on the Medicaid regulations referred to in this Act and how they were designed to address specific problems.

Directs the Secretary to contract with an independent organization to produce a comprehensive report for Congress on the prevalence of such problems: (1) identifying which claims for items and services under Medicaid are not processed through automated data systems; (2) examining the reasons why they are not so processed; and (3) recommending federal and state actions that can make claims for such items and services more accurate and completely consistent with Medicaid requirements.

(Sec. 5) Amends SSA title XIX to require each state to implement an asset verification program for purposes of determining or redetermining the eligibility of an individual for state Medicaid assistance.

Requires withholding of federal matching payments from states failing to implement such program.

Amends the TMA, Abstinence Education, and QI Programs Extension Act of 2007 to repeal the requirement to extend to the Medicaid program the web-based asset demonstration project under SS title XVI (Supplemental Security Income) (SSI).

(Sec. 6) Amends SSA title XVIII to make adjustments to funding available to the Physician Assistance and Quality Initiative (PAQI) Fund. Reduces amounts available to the Fund for expenditure during 2013, but adds funds for 2014 expenditures (under the same limitations provided for those made with money available during 2013).