Medicaid expansion: How to make it work for physicians

For primary care physician Doug Curran, MD, seeing Medicaid patients comes at a price-literally.

The Athens, Texas-based doctor’s only new Medicaid patients are children who leave the emergency room at the hospital he works at occasionally. Currently, his practice includes 15% Medicaid recipients.

“But if I took every Medicaid patient I couldn’t pay my bills,” explains Curran, who is also chair of the Texas Medical Association’s (TMA) board of trustees. “I get paid about $30 by Medicaid to see a child with an earache and that visit costs my practice $45, and those are just the office and administrative costs, it does not include any payment to me.”

He adds that the TMA supports Medicaid expansion but doesn’t want the present system expanded. “Expanding the current Medicaid system would be a nightmare,” says Curran. For example, a level 3 visit is paid at $36 by Medicaid compared with $69.76 from Medicare. (See sidebar “Same service, different pay” below).

Related:Treating Medicaid patients

In response to complaints about inadequate Medicaid reimbursements, legislators at the state and federal level are working on making the program more palatable for all involved.

Having survived yet another U.S. Supreme Court challenge to its legitimacy, the ACA seems here to stay. But that hasn’t stopped states from rejecting some of its provisions, most notably the opportunity to expand Medicaid.

Currently 22 states have not expanded Medicaid eligibility to include adults earning up to 138% of the federal poverty level, as the ACA allows. Whether due to concerns over future funding or fundamental opposition to the Obama administration’s key piece of legislation-or a combination of both-it is not just patients who are left in healthcare limbo.

The ACA requires the Centers for Medicare & Medicaid Services (CMS) to pay 100% of the additional cost of expanded Medicaid coverage through 2016, after which the federal share begins stepping down to 90% by 2020. The federal share in states not expanding Medicaid eligibility can be as low as 50%, and is set on a state-by-state basis by a statutory formula.

Primary care physicians view Medicaid expansion with mixed emotions. They want to see the uninsured covered, but low Medicaid payment rates and administrative hassles weigh on them, and are responsible for nose-diving numbers of primary care doctors who accept new Medicaid patients. In Texas, for example, 67% of all physicians reported accepting new Medicaid patients in 2000, according to the TMA. Today, only 37% do.

NEXT: Making Medicaid work

Making Medicaid work

But some states are having success inducing reluctant physicians to give Medicaid a second look. Indiana is a major example. It is the latest and 28th state (plus the District of Columbia) to expand Medicaid coverage. The state negotiated an agreement with CMS to give its Medicaid coverage more of a “private” look than conventional Medicaid.

CMS approved the waiver after considerable teeth-gnashing. Governor Mike Pence (R) championed the plan, known as Healthy Indiana Plan (HIP) 2.0. The Indiana State Medical Association also backed the expansion, which launched in February.

Along with expanding Medicaid eligibility, Indiana’s plan reimburses doctors treating Medicaid patients at the same rates as Medicare. Thus it is not surprising that 1,000 physicians, including 367 primary care providers, signed up for HIP 2.0 in the program’s first 100 days. (Medicaid previously paid about 67% of Medicare rates.) “That physician participation is a huge deal for Indiana,” says John Wernert, MD, secretary of the Indiana Family and Social Services Administration.

After 2017 Indiana will pay for its newly-covered Medicaid population using a combination of the federal Medicaid funds, a $1 per-pack cigarette tax, first instituted in 2007, and a new $50 million annual assessment on hospitals.

Related:Medicare at 50: Is it working?

Some laud the Obama administration’s flexibility in approving the waivers; others, including both Republicans and Democrats, take issue with aspects of those waivers.

Jocelyn Guyer, M.P.A., director of Manatt Health Solutions, the policy division of law firm of Manatt, Phelps & Phillips LLP, says the Obama administration has had an open-door policy for all states to come in and talk about the way states can get to expansion.

“The administration does not need to pressure states into expansion. Any pressure comes from it being a great deal for them and their citizens,” she explains. “The administration has been very open to working with states to get to ‘yes.’ ”

Toxic politics

While the Republican bona fides of the Indiana plan would seem to make it a model for other GOP states, that is not the case. Tennessee’s Republican governor Bill Haslam proposed a Healthy Tennessee Plan that was modeled on HIP 2.0 in many respects, only to see it rejected by the state’s GOP-controlled legislature.

Similarly, Republican governors in Wyoming, Idaho, Montana, and Utah, as well as Alaska’s Independent governor, proposed expansions after the 2014 elections, but only Montana is in negotiations with CMS on a Section 1115 waiver for its program.

Other Republican governors have no intention of expanding Medicaid eligibility, and some Republican legislatures have made it clear that any plan sent to them would be dead on arrival. That is the case in Texas, which is frustrating for physicians Curran who would like to see negotiations move forward.

“There is not a lot possible in the current political environment,” Curran complains. “It is almost toxic in the state capitol to talk about the [ACA]. I’m not saying that is right or wrong. But we have to deal with that reality. It is frustrating knowing we could do things better but no one is offering reasonable options.”

Other governors, state legislatures, and some physicians are also worried about the reduction in federal funding starting in 2017. That funding uncertainty is a major reason members of the Alaska legislature give for refusing to accept Governor Bill Walker’s Medicaid expansion proposal. “Who’s to say they won’t go down to the current federal share?” says Mike Haugen, JD, MBA, executive director of the Alaska State Medical Association. In Alaska, that is 50%.

“Our members are in favor of making sure all Alaskans have quality access to healthcare, and if that is Medicaid expansion, so be it,” Haugen says “But we have not endorsed the governor’s proposal. The physicians are not quite as excited about it as the hospitals and nursing homes.”

NEXT: Will states take responsibility?

Reform law survives (again)

With its recent decision in the case of King v. Burwell, the U.S. Supreme Court may have given added momentum to the drive to expand Medicaid eligibility in the states.

John Holahan, PhD, a fellow with the Urban Institute’s Health Policy Center, recently told Medical Economics that while Republican-run states could hold out hope for a repeal of the ACA under a Republican president elected next year, such a development is “unlikely.”

“I think more and more states are going to figure out the way to solve it politically, and the economic losses to states are just too great,” he says. “They are particularly great to the big hospitals that serve a lot of low-income people, and the business communities will be increasingly vocal, and more and more states, I think, will adapt the expansion.”

That sentiment was echoed by Shawn Martin, senior vice president, advocacy, practice advancement and policy for the American Academy of Family Physicians, who says that even in Republican-run states, the feeling is that “the [ACA] is here to stay.”

Related:King v. Burwell decision: What it means to physicians

“I think [some states] have a distrust in the political apparatus of Washington, D.C., and they see this is more of a problem on their plate that they need to address or deal with or identify solutions for, including in highly Republican states,” Martin says. “I think you will see a number of governors and states legislators become much more serious about their responsibilities and highly skeptical of Washington’s ability to really do what’s best for their particular state.”

States take responsibility?

So while there may not be an rush to expand Medicaid eligibility among these states, the large majority of holdouts appear to be headed in that direction, says Bob Doherty, senior vice president for governmental affairs and public policy for the American College of Physicians.

“Ultimately, I think we are going to see just about every state getting more of the Medicaid expansion, some will be next two years, some may take another five or six or seven years, but I think they are all going to get there,” Doherty says.

NEXT: Same service, different pay

Same service, different pay

Physicians often face a wide disparity in reimbursements from Medicaid and Medicare. For example, here are reimbursement rates for the area around Athens, Texas. This info was provided by Doug Curran, MD, a family physician and president of the Texas Medical Association (based on July 2015 data):

Source: Texas Medicaid & Healthcare Partnership: Texas Medicaid Fee Schedule, July 13, 2015; July 2015 Medicare Physician’s Fee Schedule - Texas Locality 11, provided by Doug Curran, MD

Section 115 Demonstration Projects

Section 1115 of the Social Security Act gives the Secretary of Health and Human Services authority to approve experimental, pilot, or demonstration projects that promote the objectives of the Medicaid and CHIP programs. The purpose of these demonstrations, which give states additional flexibility to design and improve their programs, is to demonstrate and evaluate policy approaches such as:

• Expanding eligibility to individuals who are not otherwise Medicaid or CHIP eligible;

• Providing services not typically covered by Medicaid; or

• Using innovative service delivery systems that improve care, increase efficiency, and reduce costs.

Source: Centers for Medicare & Medicaid Services