Medicaid physician pay swept up in battle over funding and access

Washington -- Even as House Republicans started moving a bill that would give cash-strapped states more flexibility to roll back Medicaid eligibility standards, Obama administration officials were proposing new standards for states to maintain access to care for enrollees. The rule could create an obstacle to states that want to reduce Medicaid physician pay.

The two proposals highlight the fight between congressional Republicans, who want to ease federal Medicaid requirements on states, and the administration, which is trying to preserve Medicaid coverage in advance of a major program expansion under the health system reform law.

On April 29, the Centers for Medicare & Medicaid Services unveiled the proposed rule, which would establish a three-part standard for states to measure access to health care in their individual Medicaid programs. The agency said the proposal is intended to guide states on how they can control Medicaid spending without squeezing beneficiary access.

The proposed rule was welcomed by some physician organizations but dismissed as too burdensome by state Medicaid directors.

Federal law already requires states to set Medicaid payment rates for physicians and other health professionals that are consistent with "efficiency and economy" and sufficient to ensure that people with Medicaid have the same access to health care services as people with other types of coverage.

To that end, the proposed rule would require states by 2013 to review access to Medicaid annually based on enrollee needs, the availability of health professionals and medical care, and the use of services. CMS is encouraging states to suggest data that could be used in these calculations. The rule would require the standards and results to be shared publicly.

"The proposed rule does not set a national standard or mandate any particular payment level," said Cindy Mann, director of the CMS Center for Medicaid, CHIP and Survey & Certification. "Rather, it proposes a standardized, transparent process for states to ensure that the millions of pregnant women, children, seniors and people with disabilities that they cover in Medicaid have access to the care they need."

State Medicaid directors had requested that CMS write a rule giving states maximum flexibility in determining their access measurements. The officials made the request in light of a March 2010 decision by the 9th U.S. Circuit Court of Appeals on a lawsuit against a series of Medicaid pay cuts enacted by California. In that case, the court blocked the reductions, saying that states were required to study the impact of changing Medicaid rates before implementing cuts. States find this standard too burdensome, said Matt Salo, executive director of the National Assn. of Medicaid Directors.

In January, the Supreme Court agreed to hear California's appeal of the lower court's decision blocking the Medicaid pay reductions. The high court will review the case on only one question -- whether private parties have the right to sue in federal court to enforce federal Medicaid law.

Program directors were hoping that CMS would take the opportunity to adopt simple standardized health care access measurements, said Doug Porter, Washington state's Medicaid director. For example, Washington measures access by tracking the number of physicians who submit at least one Medicaid claim, the number of doctors per 1,000 Medicaid enrollees and the number of unnecessary emergency department visits.

Instead, the proposed rule would require separate annual access measurements for different types of clinicians. "It's just an enormous amount of work," Porter said. Salo said the wide scope of the access measurements would invite new lawsuits over pay rates, not deter them.

However, the California Medical Assn. welcomed the proposal. "We would like it to apply sooner rather than later," said Elizabeth McNeil, vice president of federal government relations for the association.

The American Academy of Family Physicians also supports the proposals' intent to gather input from Medicaid enrollees and increase transparency of the access measurement process, said AAFP President Roland Goertz, MD.

The proposed rule would require states to prove that Medicaid pay cuts will not hurt access to care, McNeil said. California physicians and other health professionals have been fighting a series of Medicaid pay reductions that began with a 10% cut enacted in 2008 and continue with another 10% reduction the California Legislature adopted this year.

The CMA understands that California and other states are facing fiscal crises, McNeil said. But she said cutting Medicaid rates will reduce enrollees' access to care and lead them to seek treatment at EDs.

"At some point it's penny-wise and pound-foolish if we don't take care of these patients," McNeil said.

However, if states lose the flexibility to reduce Medicaid pay or eligibility, they may be forced to enact much broader benefit cuts to Medicaid, such as ending prescription drug coverage or long-term care, Salo said. "Be careful about winning this battle and losing the war."

CMS is accepting comments on the proposed rule until July 5.

The debate over eligibility

Meanwhile, the State Flexibility Act of 2011, which was approved on May 12 by the House Energy and Commerce health subcommittee, would repeal requirements in recent major federal health legislation that states maintain the Medicaid enrollment and eligibility standards they had on July 1, 2008. These requirements have constrained states' ability to adjust their Medicaid programs to close significant budget deficits, said Rep. Joe Pitts (R, Pa.) the panel's chair.

He said many governors have asked Congress for help in controlling Medicaid spending. "More than anything else, we heard how states want to have the flexibility to tailor their Medicaid programs to the needs of their individual states and citizens." Some governors warn that if states cannot reduce the number of people they must cover through the program, they will be forced to consider approving significant pay cuts to physicians and other health professionals.

States are facing difficult budget decisions in part because enhanced federal Medicaid funding under the 2009 economic stimulus package ends on July 1, the beginning of fiscal 2012 for most states. The eligibility mandates on states are tied in part to their acceptance of the stimulus funds.

The health subcommittee approved the bill 14-9 along party lines. The measure is sponsored by Rep. Phil Gingrey, MD (R, Ga.). Sen. Orrin Hatch (R, Utah) is sponsoring the Senate version.

Rep. Frank Pallone Jr. (D, N.J.), the highest-ranking Democrat on the health subcommittee, wrote in a May 6 letter to Pitts that the panel should hold a public hearing on the State Flexibility Act before moving the legislation.

"This bill could have devastating effects on low-income women, children and the disabled," Pallone said, but no beneficiaries were invited to testify about the measure.