Practices under pressure: Push toward Medicaid managed care

As a pediatrician in San Antonio, Dianna Burns-Banks, MD, is well versed in the bureaucratic hassles of Medicaid HMOs. She encounters them almost daily at the South Texas Center for Pediatric Care, which she and a partner founded 17 years ago.

Sometimes her patients find, to their surprise, that they've been transferred by their HMO to another doctor at a different office. Or Dr. Banks-Burns discovers that she's been assigned new patients who would have preferred to stay with the doctor they'd been seeing.

"There's no logic to it," she said. "It means I have to stop seeing patients and take time to deal with it."

But that is the system into which all of her Medicaid patients will be transferred next year, when Texas plans to implement a Medicaid managed care expansion that includes making HMOs mandatory for all pregnant women and children covered by Medicaid who live in urban areas. In rural areas, these patients will move from fee for service to a managed fee-for-service model.

Texas physicians aren't the only ones witnessing a renewed shift toward Medicaid managed care. Many states, faced with ballooning Medicaid budgets, are looking at a variety of cost-control strategies, including capitated managed care plans.

On the national level, this could mean that Medicaid HMO enrollment is set to increase again, after having leveled off in recent years. "There was a little bit of a step back," said Joan Alker, a senior researcher at Georgetown University's Health Policy Institute. "But now it does seem there is a second wave of states ... who are considering it."

Managed care "is definitely picking up steam," said Kathy Driggers, chief of managed care and quality at the Georgia Dept. of Community Health. "I think a lot of states are watching us."

But one unintended result of the shift could be a drop in physician participation in Medicaid, according to a recent study.

In Texas and Georgia, two states planning sweeping moves toward managed care, doctors are worried not only about physician participation but payment, increased administrative burdens and HMO contract provisions.

Texas Medicaid officials have not yet released their forecast of how this year's policy changes will affect next year's Medicaid HMO enrollment, but the Texas Medical Assn. estimates that more than 1 million Medicaid recipients will be shifted into an HMO-only model. Currently, there are about 2.8 million Medicaid enrollees in Texas, and about 1.2 million of them are enrolled in managed care -- either an HMO or managed fee for service.

TMA favored preserving a choice of health care delivery models for these patients, said Helen Kent Davis, TMA's director of governmental affairs. Forcing some patients into an HMO-only model "really disregards physicians' concerns," she said.

Similarly, Georgia intends to shift about 1 million of its Medicaid recipients and about 200,000 children in PeachCare, the State Children's Health Insurance Program, into capitated managed care plans called care management organizations.

The Medical Assn. of Georgia isn't pleased. "We expressed our concern from the start, and our concern has only been exacerbated," said Deborah Winegard, MAG's general counsel and director of its Division of Third Party Payor Advocacy.

Despite objections from physician groups, both states are moving forward with their plans.

Some state officials feel that they can't afford not to make big changes. For example, Medicaid consumes 43% of all new Georgia revenue. State officials estimate that if left unchecked, the program will eat up more than 60% by fiscal 2011.

One reason states have turned to managed care is that it has proven effective in controlling Medicaid cost growth, said Mohit Ghose, spokesman for America's Health Insurance Plans. "We are consistently showing that we can provide state governments with accountability and peace of mind when it comes to a fixed budget for their Medicaid population."

Big changes ahead

In Texas, the state plans to shift pregnant women and children in urban areas into an HMO-only model by eliminating their alternative -- a managed fee-for-service model known as Primary Care Case Management that combines some elements of managed care with noncapitated reimbursement.

The move is unfortunate, said TMA's Davis. The case management system has been popular with patients and physicians because it provides a medical home for patients, along with wider access to specialists and fewer administrative hassles than HMOs. In San Antonio, for example, more than half of eligible Medicaid enrollees have chosen this model over HMOs.

In addition, the state plans to move about 200,000 Medicaid patients who are aged or blind or have disabilities and who live in urban areas into HMOs. TMA also opposed that decision.

In Georgia, the changes will be similarly profound. Two-thirds of the state's 1.5 million Medicaid recipients will be enrolled in HMOs by the end of 2006. The program will first be implemented in Atlanta and the state's central region and then phased in throughout the rest of the state.

"The big experiment in Georgia is how providers in relatively low-income, rural areas are going to be treated and how their needs are going to be met," said William Custer, PhD, a health policy expert at Georgia State University.

"There is a lot of uncertainty and angst about how this is going to work out," Dr. Custer said. "The real problem will be getting a significant number of physicians into the network."

So far, the contracts being offered to physicians provide little in the way of incentives, according to Winegard, MAG's general counsel.

Already, the three managed care companies -- Amerigroup, WellCare and Centene -- have retreated from earlier promises to raise Medicaid reimbursement above the current fee schedule, she said. They also plan to either reduce or eliminate the monthly case management fee paid under the current managed fee-for-service model.

"In other words, physicians are going to receive a pay cut under this new program," Winegard said.

In addition, the state is requiring that physicians who contract with any of the case management organizations be willing to accept all new Medicaid patients. Currently, many practices that accept new Medicaid patients also limit the number. Under the new program, physicians who restrict their Medicaid patients would have to limit their commercial patients as well.

As a result, doctors have been very reluctant to sign these contracts, Winegard said. "[The state] is saying, in essence, that they're going to force physicians to take every Medicaid patient who comes to their practice even though they're going to be paid less than their costs for that patient."

But according to Driggers at the Georgia Dept. of Community Health, the requirement is the state's effort to "mainstream " those patients and see that they are not treated differently from other patients. Currently, some physicians, particularly specialists, "close their door at will" to Medicaid patients, she said. "We're trying to make sure we have adequate access."

Physicians wary

But some physicians in Georgia and Texas fear that the HMO push will not only fail to attract more physicians into the program but also might alienate those who are already participating.

"I'm very concerned about physicians leaving Medicaid because of the hassle factor," said Sandra Reed Lichtenfeld, MD, an ob-gyn and senior partner at the Shaw Center for Women's Health in Thomasville, Ga.

Her four-physician practice draws patients from several rural counties in southwestern Georgia, and more than half are covered by Medicaid. The coming shift to managed care played a role in Dr. Reed Lichtenfeld's recent decision to stop delivering babies.

"When I finished residency, I figured I'd deliver babies until I'm 70," she said. "But to be honest with you, the health care system has just beaten me down."

Dr. Reed Lichtenfeld hopes the transition to HMOs won't cause ob-gyns to drop out of the program but says she's not optimistic. "In many circumstances it doesn't take much for practices to shut down their Medicaid, and that's going to overburden other practices that do take Medicaid," she said.

In Texas, physician participation in Medicaid has been declining for several years, and an HMO expansion is likely to exacerbate the trend, Davis said.

According to TMA data, the percentage of physicians who accept all new Medicaid patients fell from 66.8% in 2000 to 44.6% in 2004. "The decline is most acute in the areas where you have HMOs," she said.

Nationally, increased Medicaid managed care penetration does not attract more primary care physicians to Medicaid, according to the results of a study published in the September issue of the American Public Health Assn.'s journal Medical Care. The study found that between 1996 and 2001, increases in Medicaid managed care not only failed to boost physician participation in Medicaid but actually were associated with a slight decrease in participation.

"Our analyses indicate that a 10-percentage-point increase in managed care penetration would reduce the likelihood that physicians participate in Medicaid on average by 2.9 percentage points," study authors wrote.

"I hope that by providing some empirical evidence at the national level, policy-makers will be a little more realistic about their expectations of Medicaid managed care," said Jessica Greene, PhD, a health policy expert at the University of Oregon and the study's lead author.

But in Texas, Medicaid HMOs have not seen a drop in physician participation for next year, said Leah Rummel, executive director of the Texas Assn. of Health Plans. "If anything, we're seeing an increase."

Concerns deflected

In Georgia, physician groups have expressed their concerns about the Medicaid HMO rollout to policy-makers, but to no avail, said Dr. Reed Lichtenfeld, who also serves on MAG's executive committee and is president-elect of the Georgia Obstetrical and Gynecological Society.

"The state medical society tried to approach [Gov. Sonny Perdue] and ask that he change his direction, and it fell on deaf ears," she said. "It was not an 'if it happens,' it was a 'when it happens.' "

Similarly, Texas physician groups' objections to the HMO expansion plan didn't get anywhere with policy-makers, said Jane Catherine Rider, MD, interim chair of TMA's Ad Hoc Committee on Medicaid and president of the Texas Pediatric Society.

"The people who made the decision seem philosophically committed to shifting government functions to private entities," Dr. Rider explained. "I don't think they were influenced very much by those of us who actually care for the patients."

In San Antonio, Dr. Burns-Banks said her practice would continue to serve Medicaid patients, despite low reimbursement and the administrative hassles associated with HMOs. "I'd like to see the system work better," she said. "But I guess we just have to keep trying to work with this thing."