Virginia obstetricians welcome promised Medicaid pay hike

A state working group continues to look at issues threatening to put rural OBs out of business.

By Tanya Albert amednews correspondent — Posted Sept. 13, 2004

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Franklin, Va., obstetrician-gynecologist Sharon Sheffield, MD, has not seen an increase in Medicaid reimbursement during the seven years she's been practicing in the state. Meanwhile, her medical liability insurance rates have nearly tripled in the past three years.

So, for Dr. Sheffield and other Virginia obstetricians, the recently announced 34% increase in Medicaid pay for deliveries is key to keeping their practices running.

But doctors and elected officials say it's still just a first step in changing a climate that has made it increasingly difficult for doctors and hospitals to keep their doors open to pregnant patients, particularly those in rural areas.

"It's going to help," said Dr. Sheffield, who is part of a larger group practice. "But we're still not out of the crisis."

"While the payment went up 34%, they have to do something about tort reform or liability insurance," added Winchester, Va., obstetrician-gynecologist John B. Willey, MD.

Virginia is one of the states the American Medical Association says is showing early warning signs of a medical liability crisis that could prompt physicians to retire early, move to practice in other states or give up high-risk procedures. Most in the state agree that patient access to obstetricians, particularly in rural areas, is already jeopardized.

Gov. Mark R. Warner in March created a Working Group on Rural Obstetrical Care to discuss what can be done to keep hospitals from closing obstetrical units and to prevent even more physicians from giving up obstetrics.

The rate increase was one of the task force's initial recommendations.

"As one whose community has been devastated by the closing of an obstetrics unit, I know that proper reimbursement is an important step to healthy and viable rural OB units," Albert C. Pollard, a member of the Virginia House of Delegates and a member of the governor's working group, said in a statement.

The rate increase that kicked in Sept. 1 boosted Medicaid reimbursements for nonsurgical deliveries to $1,502, up from $1,270. The state will pay $1,702 for cesarean sections, up from $1,270. The increases are the first in 10 years.

Overall, the move is expected to boost pay to physicians by $14.4 million annually, with $7.2 million coming from state coffers and the rest from federal funds. Medicaid pays for nearly half of the babies delivered in Virginia, according to the Medical Society of Virginia.

While the increase is welcome relief, physicians worry it will help for only a limited time if the state doesn't do something to slow medical liability insurance rate increases.

"Fortunately we have not had the increases that some other states have had," said Mike Jurgensen, the Medical Society of Virginia's health policy and medical economics director. "Unfortunately, we are catching up."

He said other specialists in the state hope the pay increase for delivering babies is a sign that other long-overdue Medicaid reimbursement increases may be coming as well.

The state does seem to be paying more attention to physicians.

The Legislature in its last session failed to pass tort reform that included a $250,000 noneconomic damages cap that physicians see as a key way to stabilize insurance premiums. But doctors say the working group -- and the Medicaid reimbursement rate increase that resulted -- is one sign that elected officials have recognized physicians are having a tough time staying in business.

"We're all under huge pressure financially," said Richmond obstetrician-gynecologist John Partridge, MD, who is the American College of Obstetricians and Gynecologists' section chair for Virginia. "By itself, the increase is not sufficient to turn the problems around. But it will be a life line that will help some physicians survive for a while."

Working group keeps at it

Meanwhile, the governor's group of legislators, health care leaders and patient advocates that serves as the Working Group on Rural Obstetrical Care continues to study the issue.

The goal is to identify long-term solutions. A final report is due Oct. 1.

Warner said he, too, recognizes that the reimbursement increase is only part of the solution.

The "action represents an important first step in addressing the problems facing communities all over the state in maintaining access to quality obstetrical care," Warner said at a news conference in August. "I look forward to the working group's final recommendations this fall, and I expect additional steps in my executive budget and legislative package to address this important health care access issue facing Virginia and many other states."

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