Texas to reduce Medicaid support for Medicare enrollees

The new coverage limits for dual eligibles are expected to affect rural physicians and patients disproportionately.

By Doug Trapp — Posted Dec. 2, 2011

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Texas Medicaid administrators expect to save $475 million by implementing a reduction in Medicaid support for people eligible for both Medicare and Medicaid. The Texas Medical Assn. is concerned that the change could further erode physician Medicaid participation.

In Texas and many other states, Medicaid pays Medicare co-pays for people who qualify for both programs, also known as dual eligibles. For example, if Medicare prices a service at $100 and requires a 20% co-pay, Medicaid pays the remaining $20 for dual eligibles.

In June, the Texas Legislature adopted a two-year budget directing the Texas Health and Human Services Commission to limit these and other Medicaid payments. Beginning in January, the state's Medicaid program will pay full Medicare co-pays only if the Medicaid rate equals the Medicare rate for the same service.

For example, if both Medicare and Medicaid price a service at $100, Medicaid will cover the full $20 Medicare co-pay. If the Medicaid rate for that service is $85, the program will pay only $5, and if the Medicaid rate is $80 or less, it will pay nothing, said Stephanie Goodman. She's the spokeswoman for the Texas Health and Human Services Commission, the state's Medicaid agency. If Medicaid did not pay the full co-payment amount required by Medicare, the physician would be responsible for obtaining the balance from the patient.

The Legislature adopted these fee changes as a partial replacement for a proposed 10% Medicaid physician pay cut lawmakers were considering, said Helen Kent Davis, director of governmental affairs for the Texas Medical Assn. Lawmakers faced a $27 billion budget shortfall. Choosing between the two Medicaid reductions was not an appealing prospect. "Do you cut off your left hand or your right?" Davis asked.

She said reducing these Medicaid payments especially will affect rural patients and physicians. The state already is having difficulty maintaining Medicaid physician participation. In 1998, 78% of Texas physicians accepted all new Medicaid patients. That shrank to 42% in 2010, according to a TMA physician survey in March 2010. Texas has approximately 330,000 dual eligibles, she said.

The intent of Texas lawmakers is to limit Medicaid fees to Medicare rates and to rates paid by other states, Goodman said. "I understand that when they accept our Medicaid rate, that's a challenge."

Limiting these Medicaid co-pays will reduce Medicaid spending by $1.1 billion over two years in the state, including $475 million in state funding, Goodman said. Davis said roughly 20 other states have enacted similar reductions in Medicaid support for dual eligibles.

The state also is reducing Medicaid fees for home health and therapy services to align more closely with Medicare and other states' Medicaid programs, Goodman said. Texas Medicaid administrators are working with these health professionals to set reasonable rates after a Nov. 21 public hearing on the issue, she said. The agency's latest proposal would reduce Medicaid spending for these services by $150 million, including $64 million in state funds.

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