Bracing for Medicaid expansion

States with low physician supply could struggle to meet the demand posed by the health reform law's Medicaid expansion starting in 2014.

By Doug Trapp — Posted Oct. 3, 2011

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More than two years remain before millions of low-income Americans gain Medicaid eligibility through an expansion authorized by the health system reform law, but it's already clear the overhaul will affect some states much more than others.

Certain states in the Northeast and Midwest already cover most or all of their poorest residents. So the health reform law's Medicaid expansion to 133% of the federal poverty level should pose relatively little strain to their safety nets.

But other states -- particularly in the South and Mountain West -- are bracing for a bigger impact. They will take on significant shares of the 16 million people expected to gain Medicaid coverage beginning in 2014, according to the Kaiser Family Foundation. About another 16 million people are expected to obtain private health coverage through insurance exchanges launching in 2014.

For these states, "primary care could be more of a problem in the future just because of the sheer increase in the demand," said Peter Cunningham, PhD, a senior fellow and director of quantitative research for the Center for Studying Health System Change, who wrote a research brief on the issue in March.

Challenged states -- such as Texas, Oklahoma, Mississippi and Idaho -- have limited numbers of physicians, but they already pay relatively high Medicaid fees to doctors in an effort to retain them. So a health reform provision that will raise Medicaid primary care pay to Medicare levels in 2013 and 2014 is not expected to lure many additional physicians in those states to accept new Medicaid patients, Cunningham said.

Texas, in particular, faces challenges because of its large uninsured population and low physician supply -- especially in rural areas, Cunningham said. "It will be an interesting state to watch."

Texas: The uninsured leader

Texas has the highest percentage of uninsured residents of any state: 24.6%, according to U.S. Census Bureau figures released Sept. 13.

Texas' uninsured population is expected to shrink significantly beginning in 2014 due to the Medicaid expansion. Roughly 1.8 million Texans could sign up for Medicaid between 2014 and 2019, according to the Kaiser Family Foundation. That would increase the state's Medicaid population to about 5 million people.

Less clear is whether these new enrollees will be able to get appointments with physicians. The state is having enough difficulty maintaining an adequate network of doctors for its 3.3 million Medicaid enrollees, said Stephanie Goodman, a spokeswoman for the Texas Health and Human Service Commission, the state's Medicaid agency.

"Finding specialists in rural areas certainly is always hard for us," she said.

Texas Medical Assn. President C. Bruce Malone, MD, an orthopedic surgeon in Austin, said one needs only look at the example of Massachusetts, which in 2006 moved to near universal coverage in much the same way as the national reform law. "People got an insurance card, and they had difficulty finding a doctor. That's what we're concerned about."

In addition, despite the access concerns, the state has been cutting -- not expanding -- funding to support public health and train physicians.

"It would be safe to say that nothing that required any resources is being done to prepare" for the Medicaid expansion, said Anne Dunkelberg, MPA, associate director at the Center for Public Policy Priorities, an Austin-based organization that tracks conditions for low- and moderate-income Texans.

Facing a $27 billion budget shortfall, Texas lawmakers adopted a two-year budget that cut Medicaid by $2 billion and created an additional $5 billion hole in the program budget by funding it only through March 2013 instead of the end of the fiscal year in August 2013, Dunkelberg said.

Texas lawmakers maintained Medicaid primary care physician rates this year, which are about 80% of Medicare fees. But they cut Medicaid fees by 8% for hospitals, mental health professionals, therapists and case managers. The state also cut tens of millions of dollars from both graduate and undergraduate medical education and physician education loan repayment programs.

The state is having difficulty maintaining Medicaid physician participation. In 1998, 78% of Texas physicians accepted all new Medicaid patients, Dunkelberg said. That shrank to 42% in 2010, according to a TMA physician survey in March 2010.

Competition from private insurance plans also could hurt Texas Medicaid's physician participation. Many uninsured Texans will qualify for subsidized private health insurance through the upcoming health insurance exchange, Dunkelberg said. Such plans probably will offer better payment for physicians than will Medicaid.

"Nobody is saying we're going to pay doctors more to treat Medicaid patients," Dr. Malone said.

Dunkelberg said the Legislature and Gov. Rick Perry made revenue control a higher priority than everything else. "We certainly haven't made things any easier for ourselves," she said.

Oklahoma: A rural access challenge

Oklahoma is a state that already pays physicians Medicaid rates that are roughly equivalent to Medicare -- and that is expected to serve about 50% more Medicaid patients by 2019. That means an additional 357,000 Oklahomans are expected to sign up for the program, according to the Kaiser Family Foundation.

"We're challenged. There's no question about that," said Mike Fogarty, CEO of the Oklahoma Health Care Authority, the state Medicaid agency.

He said Medicaid physician surveys indicate that doctors are at only about 40% of their maximum patient load. But that assumes each doctor's patient panel could expand to up to 2,500 patients. The largest panel now has only 1,640 patients, Fogarty said.

Doctors might say they can handle more Medicaid patients, but their patients could have difficulty getting appointments, said Steven Crawford, MD, chair of the Medicaid agency's Medical Advisory Committee. The state could be overestimating its Medicaid capacity by as much as 25%, he added.

"I'm very nervous about rural Oklahoma," Fogarty said. The agency is considering partnering with medical schools to increase Medicaid graduate medical education funding, among other tactics to expand capacity.

The state has a relatively low percentage of uninsured -- 17% -- compared with some of its neighbors. That's in part because Oklahoma increased its Medicaid outreach, growing enrollment to nearly 730,000 beneficiaries. The state's population of uninsured children has been reduced by more than half, Fogarty said.

Fogarty said his agency understands that it must offer competitive Medicaid fees to retain physicians. However, physicians have told the agency that reducing Medicaid administrative hassles was at least as important as maintaining reasonable fees. Now 97% of Medicaid claims are handled electronically and paid in about a week, he said. Automatic Medicaid enrollment for newborns means that there is no gap in coverage once low-income families leave the hospital.

"In so many ways we're moving in the right direction," Fogarty said.

Mississippi: Dangerously low supply

No state has a lower per-capita primary care physician supply than Mississippi -- about 8.3 doctors per 10,000 residents in 2008, according to the Center for Studying Health System Change. The national average is 12.8.

Physicians in the Delta region are especially overburdened, said Tom E. Joiner, MD, president of the Mississippi State Medical Assn. Some of these doctors see dozens of patients a day on a first-come, first-served basis, he said.

But because so many residents are poor, Medicaid acceptance is relatively high, especially for primary care physicians in rural areas, said Anna Morris, an association spokeswoman. About 71% of Mississippi physicians in the state participated in Medicaid in 2010, which pays 90% of Medicare rates.

The combination of a low physician supply and a high participation baseline means the Medicaid expansion will have a tremendous impact on physicians in Mississippi, especially in the Delta, Dr. Joiner said.

The state has a low physician population despite enacting medical liability reforms in 2003 and 2004, including noneconomic damage caps of $500,000. The state also has tried to expand rural physician education.

Public health programs also have been criticized. Mississippi Gov. Haley Barbour has been a vocal critic of the reform law and its Medicaid expansion. He advocates for changing Medicaid from a program of defined benefits to one of defined contributions.

Idaho: Seeking the status quo

The exact number of Idaho physicians accepting new Medicaid patients is not known. However, the Idaho Dept. of Health and Welfare, the state's Medicaid agency, is not aware of any shortage, said spokeswoman Emily Simnitt.

"We don't really see that there are any additional access issues that Medicaid participants face in Idaho" compared with the privately insured, Simnitt said. Idaho Medicaid pays primary care physicians Medicare rates and other doctors 90% of Medicare. More than 1,200 physicians participate in a Medicaid primary care case management program.

But the system will be tested when 85,000 more people gain Medicaid coverage between 2014 and 2019. "We are not actively planning like we should be to make sure there is access," said A. Patrice Burgess, MD, a family physician in Boise and past president of the Idaho Medical Assn. "Our legislature is not really looking at Medicaid expansion favorably."

Idaho was one of the first states to sue the Obama administration to block implementation of the health reform law, said Susie Pouliot, CEO of the Idaho Medical Assn. Idaho Gov. C.L. "Butch" Otter issued an executive order this year banning any state agency from accepting federal health reform dollars without his approval. Otter has denied 3 out of 13 such agency requests.

The state cut $40 million from Medicaid this year, in part by ending automatic, regional price-based fee increases. "Medicaid pay has been relatively stable in the past, and now that's gone out the window," Pouliot said.

But despite the state's conservative politics, physicians aren't pushing for an end to Medicaid in Idaho, Dr. Burgess said. "I don't think we have doctors who are philosophically opposed to Medicaid. I think it's just a matter of balancing the books."

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Waiting for the blow

The coming demand for care after health care reform kicks in will hit some states hard. Here is information about four states:


Medicaid fees as a percentage of Medicare: 80% (for adult patients), 84% (for children)
Projected Medicaid enrollment increase between 2009 and 2019: 1.8 million (45.5%)
Primary care physician supply per 10,000 residents: 9.2 (ranked 46th in U.S.)
Uninsured population: 6.1 million (24.6% of state)
State fact: Reduced funding for medical education this year by tens of millions of dollars


Medicaid fees as a percentage of Medicare: 96.8%
Projected Medicaid enrollment increase between 2009 and 2019: 357,150 (51.2%)
Primary care physician supply per 10,000 residents: 10.0 (44th in U.S.)
Uninsured population: 624,000 (17% of state)
State fact: Processes 97% of Medicaid claims electronically


Medicaid fees as a percentage of Medicare: 90%
Projected Medicaid enrollment increase between 2009 and 2019: 320,748 (41.2%)
Primary care physician supply per 10,000 residents: 8.3 (50th in U.S.)
Uninsured population: 618,000 (21% of state)
State fact: Caps noneconomic damage awards from medical lawsuits at $500,000


Medicaid fees as a percentage of Medicare: 90% (100% for primary care)
Projected Medicaid enrollment increase between 2009 and 2019: 85,883 (39.4%)
Primary care physician supply per 10,000 residents: 8.8 (48th in U.S.)
Uninsured population: 294,000 (19% of state)
State fact: Repealed a formula to increase Medicaid pay annually based on costs

Sources: Kaiser Family Foundation, Center for Studying Health System Change, U.S. Census Bureau, state Medicaid agencies and medical societies

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External links

"Safety-Net Providers After Health Care Reform,"Archives of Internal Medicine, August (link)

"State Variation in Primary Care Physician Supply: Implications for Health Reform Medicaid Expansions," Center for Studying Health System Change, March (link)

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