Physician organizations fight states' proposed cutbacks to Medicaid

Requests by California and other states to impose new enrollee cost-sharing would imperil vulnerable patients, advocates say.

By Doug Trapp — Posted Aug. 15, 2011

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Physician organizations, patient advocates and others are calling on the Obama administration to reject at least three recently submitted state Medicaid reform requests that they say could restrict access to care.

California, Florida and Utah recently submitted waiver requests to the Centers for Medicare & Medicaid Services to permit larger co-pays and other fees for Medicaid enrollees, among other significant changes. The states are pursuing different reform ideas, but all are seeking additional flexibility to rein in costs.

California also is requesting permission to implement a 10% Medicaid pay cut. Such a cut would require approval as well from the U.S. Supreme Court because of pending litigation. In addition, the state is asking federal permission to increase Medicaid enrollee co-pays and limit annual per-patient physician visits.

"Private-pay patients will be subsidizing care even further," said Kara Odom Walker, MD, MPH, MSHS, assistant clinical professor in the Dept. of Family and Community Medicine at University of California, San Francisco. California Medicaid physician pay is about 55% of Medicare rates.

States already have flexibility to adjust their Medicaid programs -- if they can obtain CMS approval. States can operate a wide variety of Medicaid demonstration programs. These programs, which typically last five years, can test new delivery systems and provide services not usually covered. But projects cannot cost the federal government more than the existing Medicaid coverage for the same population. States also can pursue Medicaid managed care options.

In February, Health and Human Services Secretary Kathleen Sebelius clarified several Medicaid program changes states could pursue without waivers. These include changing benefits, increasing certain cost-sharing, bolstering anti-fraud efforts, and managing care for high-cost Medicaid enrollees more effectively.

However, limits on states' ability to change their Medicaid programs are unclear. States cannot, for example, restrict access to care beyond limits established in federal law. But these standards are subject to interpretation by CMS and the courts.

The possible impact of the 10% Medicaid cut motivated Dr. Walker and 19 other advocates in California to lobby against the state's request. The group met with CMS officials and members of the California Democratic congressional delegation in Washington on Aug. 4. Dr. Walker -- one of seven physicians in the group -- represented the California Academy of Family Physicians. Also attending was California Medical Assn. President James G. Hinsdale, MD.

Dr. Walker said 85% of the state's Medicaid patients are cared for by only a quarter of California's physicians. "What does a 10% cut mean? Does that mean we're going to concentrate it even further?"

The California group also lobbied against the proposed annual per-patient limit of seven physician office visits. "That's going to impact mental health disorders -- people who are severely mentally ill and need coordination of services between primary care and specialty care," Dr. Walker said.

She said administration officials, including CMS Administrator Donald M. Berwick, MD, wanted as much data as possible on how a 10% pay cut would affect access to care in California, including the number of physicians accepting Medicaid and information on hospital revenues. "He was very interested in hearing about what our perspectives were," she said.

Federal lawmakers from California also were interested in the delegation's presentations, Dr. Walker said. But congressional staffers signaled that publicly opposing Medicaid cuts could be difficult politically because Congress is focused on cutting spending and reducing the national debt.

Doctors oppose Florida, Utah requests

Opposition also is mounting against a request by Florida to transition nearly all state Medicaid enrollees into capitated managed care.

The Florida Medical Assn. voted during its annual meeting in late July to send a letter to CMS indicating the association's opposition to the state's managed care waiver request.

Tad Fisher, executive vice president of the Florida Academy of Family Physicians, said family doctors oppose the state's waiver request in part because it insufficiently emphasizes primary care.

The proposal also would cap Medicaid spending and allow health plans to keep some of any savings below the ceiling.

Though physician impact is unknown, HCA -- the nation's largest for-profit hospital chain -- anticipates its Medicaid income to decrease by $50 million between now and June 2012 under the Medicaid reform, according to an Aug. 5 filing with the Securities and Exchange Commission.

Utah also is seeking to limit its Medicaid spending. It has asked CMS to allow a managed care expansion to most enrollees.

Seventeen children's health care advocacy organizations, including the American Academy of Pediatrics, signed an Aug. 3 letter to Sebelius asking for the Utah request to be rejected. That's in part because the state is seeking an exemption from federal requirements to provide Medicaid screenings to children if state Medicaid spending exceeds targets.

The organizations also object to Utah's request to give managed care plans discretion to impose additional Medicaid cost-sharing, including on children. "We do not believe it is appropriate for insurers to decide whether children have to pay more to access needed health services as a result of their (or more likely their parents') behavior," the letter states.

The Utah Medical Assn. did not sign the letter opposing the waiver because it wasn't asked to sign, said Michelle McOmber, the association's executive vice president and CEO. She said the association will become more engaged if CMS approves the waiver.

Oregon is the only state to receive CMS approval to prioritize Medicaid benefits, but that 1990s waiver was not as restrictive as Utah's request, said Joan Alker, co-executive director of the Center for Children and Families at Georgetown University's Health Policy Institute.

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Waiver requests under fire

Physician organizations, patient advocates and other groups oppose elements of the formal requests by three states to overhaul care delivery and increase cost-sharing in their Medicaid programs.


The request: The state would reduce Medicaid physician pay by 10% and institute enrollee co-pays ranging from $5 for a physician office visit to $200 for a hospitalization. Most Medicaid enrollees would be limited to seven physician office visits per year.
The concerns: Further cuts to Medicaid fees, which already are among the lowest in the U.S., would make providing care to certain Medicaid enrollees unsustainable. Instituting co-pays for emergency care would be a de facto rate cut for hospitals. Tracking enrollee office visits would pose another burden on health professionals.


The request: The state would pay risk-adjusted, capitated payment to health plans to provide medical homes to enrollees in Utah's four most-populated counties. Physician fees at least would match existing fee-for-service Medicaid rates. Pay for certain services would be cut if Medicaid spending exceeds targets. Health plans could impose annual cost-sharing of up to 5% of a family's gross income, including a $40 annual deductible and up to $220 for inpatient hospital services.
The concerns: Cost-sharing would discourage families from seeking necessary screenings and immunizations. Certain standard Medicaid benefits could be cut entirely.


The request: The state would provide risk-adjusted, capitated payment to health plans and eventually networks of physicians and hospitals to care for nearly all of the state's 3 million Medicaid enrollees. These new networks could keep up to 5% of savings they generate, but their initial contracts would pay 5% less than existing fee-for-service rates. Medicaid enrollees also would face co-pays, including $100 for nonemergency services provided at emergency departments.
The concerns: Health plans would have financial incentives to restrict access to care. Although the program would allow hospitals and doctors to compete with HMOs for Medicaid patients, that aspect may not be emphasized sufficiently.

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