Obama’s Latest Bait and Switch for Docs: Medicaid Payments to be Cut by 40%

As we enter year two of the Affordable Care Act, we have seen many issues arise during implementation.  Through both executive order and executive memorandum, President Obama has unilaterally changed the law more than 100 times in order to advance his own political agenda.  When it became important to publicize enrollment and increased coverage of the uninsured, the President and the ACA provided for an increased payment scale for patients with Medicaid.  With the rapid increase of Medicaid insured patients due to the implementation of the ACA, the administration utilized the increased payments as an incentive to attract more physicians to participate in Medicaid programs.  According to the New York Times, the ACA has resulted in the largest increase in Medicaid covered patients in history–now nearly 20% of all Americans are covered under this plan.  Attracting physicians to cover Medicare patients has been critical in order to meet the demand for access to care and  to adequately cover the newly insured.  Now, unless changes are made this week, Medicaid reimbursements will be cut once again leaving many physicians to wonder if they can continue to treat the increasing numbers of Americans covered thru these programs.

Traditionally, Medicaid has reimbursed physicians at rates significantly lower than Medicare–making practices with large numbers of Medicaid patients financially non viable.  As the ACA was rolled out, a provision provided for significantly better Medicaid payment rates to physicians in order to help provide larger networks of care for the newly insured.  Now, there looms an automatic payment rate cut of nearly 43% for Medicaid payments to primary care physicians–many of these are the same physicians who agreed to expand Medicaid within their practices in order to meet demand.  According to Forbes, traditional Medicaid reimbursement averages just 61% of Medicare reimbursement rates (which is often significantly lower than private insurance rates).  In addition, many Medicaid patients require a disproportionate amount of time and resources from the office–doctors are caught between a “rock and a hard place”–between a moral obligation to treat these patients and a desire to avoid financial ruin.  These patients tend to be sicker, have multiple medical problems and have suffered from a long time lack of preventive care.

Finances are not the only piece of the Medicaid puzzle. Government regulation and paperwork and processing often delays payments to physicians and impacts their ability to run a financially sound business.   Interestingly, a study from 2013 published in Health Affairs suggested that while physicians welcomed an increase in reimbursement rates as incentive to treat Medicaid patients that quicker payment times, reduced paperwork and simplified administrative processes would also need to be a part of any type of reform.  (of course, none of these items were included in the incentive package).

Many primary care physicians stepped up to answer the call for increasing coverage of Medicare patients when the ACA was initially rolled out.  Now, these same physicians are contemplating the need to drop these patients from their clinics with the pending change in reimbursement.  As mentioned above, in addition to lower reimbursement rates, the Medicaid program requires an enormous amount of administrative work in order to file claims and these claims are often paid very late–those running a small practice are forced with more work for less pay and often have to make difficult budgetary decisions in order to  payroll for their staff each week.   While the administration touts the swelling numbers of Medicaid covered patients–nearly 68 million currently–I suspect access to quality care will soon become an issue.  Just as with every other manipulation of the ACA over the last two years, legacy and political agendas have taken precedent over what really should matter–providing quality medical care AND prompt, easy access to care for the formerly uninsured.  In an effort to tout swelling numbers of “covered” Americans, the Obama administration has failed to anticipate the impact of short term financial incentives for primary care physicians to accept increasing numbers of Medicare patients.  Even in states such as California, officials are bracing for a large number of physicians who have announced that they will likely drop out of Medicaid plans if the planned cuts are implemented as scheduled.

It is time for the Obama administration to stop playing political games with our healthcare.  If the mission of the ACA is to provide affordable quality healthcare for all Americans, then we need to ensure that there are quality, dedicated physicians available to provide that care.  The Medicaid “bait and switch” is just one example of our President’s shortsightedness and lack of connection to those dedicated physicians who work tirelessly to ensure that ALL patients have access to care (regardless of insurance type).  It is my hope that the new Congress will engage with the physician community and find real solutions to the US healthcare crisis–and no longer allow the President to place his perceived legacy over the healthcare of those Americans who are in need.

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Image adapted from The Peanuts comic strip by Charles Shultz

One response to “Obama’s Latest Bait and Switch for Docs: Medicaid Payments to be Cut by 40%

  1. As a lawyer who handles, among other things, injury claims, I have had many opportunities to review medical bills- the charges by medical providers and what private insurance carriers and government programs (such as Medicare, Medicaid, CHAMPUS, etc) pay. The disparity between what is charged and what is paid by the various “reimbursers” is astounding. It is even more astounding if you consider the fact that, if a patient doesn’t have health insurance or isn’t a participant in some government program (something which shouldn’t happen under the ACA), then they will be forced to pay the full amount of the exorbitant charges. Anyone who has received medical care in a hospital setting has probably seen bills with the ridiculous charges of $25 for a Tylenol, $30 for a pair of latex surgical gloves, or an overnight inpatient admission that ran $25,000 to $30,000, and wondered why the cost of such treatment could possibly be so expensive. You may have also read that the cost of medical care in the United States greatly exceeds the cost of similar care in countries like Canada, England, and the Scandinavian countries, where there are one provider systems controlled by the government. Of course, there is anecdotal opinion that those systems provide inferior care and that there are long wait times to receive rationed care. Somewhere, there has got to be a middle path which is fair to the patient, the providers, the insurers, and the government programs. Perhaps that middle ground might be to select a panel of experts (physicians, insurance actuaries, hospital administrators, governmental health agency officials, pharmaceutical representatives, and medical device reps- all of the players in the health care industry), economists, and a few educated consumers, who will then review and revise the diagnostic codes program (ICD) and set the charges that everyone will pay for various medical procedures and tests. Why should there be different charges that different payers pay- uninsured patients, insured patients (with their deductibles and co-payments), insurance carriers, and government health providers? If the reasonable cost of providing a Tylenol tablet to an inpatient (i.e. the actual cost of pill, plus some amount for processing and overhead, etc.) is $3 per pill, then everyone should pay $3. If the cost of having a lumbar MRI, taking into consideration paying the technician who operates the machine, the actual cost of the scanner, and some reasonable overhead is $600, then charge that amount instead of some ridiculous charge of $4,850, of which the insurance company will “allow” only $678 and Medicare will “allow” only $452. I have yet to have anyone reasonably explain how medical providers actually come up with the amounts they charge, nor have I seen any real evidence to support how insurance companies and the government programs come up with the amounts they will “allow” for those medical procedures. If a Cost of Medical Procedures Appraisal Panel (CMPAP) could set the real cost for medical care that everyone (individuals, insurance companies and government agencies) pays, we might actually achieve affordable health care. Give that panel carte blanche authority to set those charges, much like the BRAC (Base Realignment Commission) has over consolidating and closing down military bases, in which Congress (which is so susceptible to the lobbyists) can tamper with or change the results, and require the CMPAP to review and adjust those charges every three years. This isn’t rocket science, but it sure would achieve a result that is fair, reasonable, and more affordable than the current problem-riddled system.

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