Michigan slashes Medicaid fees for doctors by another 8%

Michigan physicians won't be taxed more, but they are having their Medicaid fees slashed again.

Michigan Gov. Jennifer M. Granholm on Oct. 30 signed a $45 billion, one-year budget that reduces Medicaid fees for doctors by $355 million, bringing their pay to about 55% of private insurance rates and about 50% of Medicare rates. These 8% cuts follow a 4% reduction in physician fees ordered by Granholm on July 1.

The Michigan Senate did not approve a 3% tax on physicians' gross revenues that supporters wanted to use to increase Medicaid pay for doctors. The Senate rejected the bill by a vote of 32-4 on Oct. 28, with 12 Democrats joining Republicans in opposing the measure. The House had adopted the tax on Oct. 6.

The physician tax would have raised additional federal Medicaid matching funds, but the Michigan State Medical Society opposed the tax. It would have hurt oncologists and others who administer expensive drugs far more than physicians who don't, said David K. Fox, a spokesman for the society.

"I don't think I've seen physicians as perturbed about an idea as they were about this one," said Fox, who has been with the state society for 22 years. "Physicians didn't necessarily trust that this money would be used for what it said it would be used for." Several hundred doctors and other health professionals rallied against the tax at the state capitol before the Senate vote, Fox said.

Granholm offered only mixed support for the budget, which ended the threat of a government shutdown starting Nov 1. The budget funds state operations through Sept. 30, 2010. "Michigan has a budget in place, but not the budget we need," she said in a statement. "This budget cuts, rather than supports, Michigan's most pressing priorities."

Granholm spokeswoman Liz Boyd said the governor supported the physician tax and did not want to see physicians' Medicaid pay cut sharply, especially when more people in the state are relying on the program. Michigan hospitals and nursing homes already pay a similar tax, which draws additional federal Medicaid funding. But Fox said those facilities have been impacted more evenly than physician practices would have been.

The Michigan College of Emergency Physicians was the only state medical society to support the physician tax, Fox said. The society's executive director, Diane Kay Bollman, said the tax would have been better than an additional 8% Medicaid fee cut. "That's going to affect everybody in their ability to take Medicaid."

Bollman said fixing the legislation's adverse impact on oncologists and other specialists should not have been difficult, but she acknowledged that some physicians would have benefited more than others from the Medicaid pay increase.