Will budget cuts affect access for Medicaid recipients in your state?
A growing number of state Medicaid programs are in a precarious position right now: They're torn between cutting provider ratesfor many, a necessary step to balance their budgetsand trying to retain providers to maintain recipients' reasonable access to care.
As of September 2008, Medicaid directors in 39 states reported "some" or "significant" problems with access to care in three areas: Primary care, specialty care, and dental, according to a report from the Kaiser Family Foundation (KFF)'s Kaiser Commission on Medicaid and the Uninsured, Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an Economic Downturn.
"At its most basic level, access is a function of supply and demand," says Robert W. Seifert, a senior associate at the Center for Health Law and Economics at University of Massachusetts Medical School in Charlestown.
Increased enrollment means more demand, which puts pressure on existing providers to maintain access. "Supply has a number of dimensions, but it is definitely affected by the rates providers are paid," says Mr. Seifert. "So, increasing enrollment, especially if coupled with rate cuts, will threaten access. If you try to find your savings by cutting provider rates, then you will lose providers. That is a definite danger. It is definitely a fine line that everybody is walking."
Several states, including California, New York, Nevada, Rhode Island, and South Carolina, adopted Medicaid provider payment cuts for FY 2009, even before the economy worsened significantly, according to a January 2009 KFF report, Medicaid in a Crunch: A Mid-FY 2009 Update on State Medicaid Issues in a Recession. According to the report, several state Medicaid directors said they were now looking beyond provider rate cuts, and a few said they expected to run out of cash to pay Medicaid providers during the fiscal year.
In the KFF's September 2008 survey, more than half of states indicated that they expected their enrollment and spending to be higher than what they had projected at the start of the fiscal year, mostly attributed to the downturn.
Rising enrollment adds to woes
According to a January 2009 brief, Rising Unemployment, Medicaid and the Uninsured, also from the Kaiser Commission on Medicaid and the Uninsured, an unemployment rate of 7% means that Medicaid and SCHIP enrollment would increase by 2.4 million, and an additional 2.6 million people would become uninsured.
"There are so many more people who are seeking coverage because they are losing their employer- sponsored coverage," says Robin Rudowitz, a principal policy analyst for the Kaiser Commission on Medicaid and the Uninsured, and former Medicaid director in the Office of Legislation at the Centers for Medicare & Medicaid Services (CMS). "The COBRA you may or may not qualify for is often unaffordable to someone who is not working. People are left with few options," she adds.
During the last downturn, federal fiscal relief helped states to avoid deeper cuts to programs and provider rates. "If some states are on the verge of making program cuts, federal fiscal relief could help them avoid making those and manage increased enrollment at the same time," says Ms. Rudowitz.
If access is compromised to a serious extent as a result of budget cuts, a state's provider cuts could even be challenged in the courts, says Ann Kohler, director of health policy for the National Association of State Medicaid Directors. "I would not say that we are experiencing access problems due to provider rate cuts," she says. "However, both states and CMS will need to monitor the issue closely."
Ms. Kohler notes that in some cases, advocacy organizations have sued states, claiming that lack of access has resulted in the state not being able to provide services as required under Early Periodic Screening, Diagnosis, and Treatment, a requirement that states screen and treat problems identified in children.
"There are laws that say Medicaid programs have to provide certain things and make care reasonably available. And that can be interpreted as saying that you have to pay reasonably for it as well," says Mr. Seifert.
Not all news is bad
On a positive note, one-third of the state Medicaid directors surveyed in the September 2008 report indicated that the access problem is, in fact, improving, largely as a result of state initiatives to improve provider rates and address dental access.
"There is a large body of research that shows that individuals with Medicaid have significantly better access to care than those that are uninsured," says Ms. Rudowitz.
"Kids [on Medicaid] in particular compare quite similarly to individuals with private insurance. They are much more likely to have a usual source of care, to have had a dental visit, and to have had a physician encounter over the last year," she says.
That said, however, there have been longstanding issues related to provider participation in the Medicaid program for several reasons. "Physicians in particular cite Medicaid payment rates, which are generally lower than commercial rates, as one of the key factors," says Ms. Rudowitz.
However, Ms. Rudowitz notes that access problems are not specific to Medicaid; work force issues make access to primary care, specialists, and dental care providers difficult for individuals with private insurance as well. "So, Medicaid is fighting similar problems as private insurers in finding enough physicians and dentists to treat Medicaid and privately insured patients," she says.
The September 2008 report also says Medicaid directors generally perceive that Medicaid enrollees have much better access to primary care than to specialty care or dentists. Nearly half of all states reported that they have good or excellent access to primary care. "So, the issues were more focused on specialists and dentists, where there are issues for those with private insurance, as well," says Ms. Rudowitz.
During the last economic downturn, virtually every state implemented a whole host of cost-containment measures, including freezing or cutting provider rates.
Subsequent budget surveys done by the KFF in 2007, 2008, and 2009 indicated that many more states were increasing rather than decreasing provider rates. When the economy started to recover in 2005, many states were looking to increase provider rates to make up for freezes or cuts made during the downturn.
Ms. Rudowitz notes that Medicaid rates, which already are lower than commercial rates, were frozen during the previous downturn. "During 2007 and 2008, states were moving forward with some big coverage expansions with efforts to address their rising uninsured population," says Ms. Rudowitz. "And many states realized they needed to shore up provider participation to have meaningful expansions. But now, here we are back in another economic downturn."
"Now, as the economy has gotten worse even in the first few months of the fiscal year, states are again looking to cut back," says Ms. Rudowitz. "And provider rate cuts are often one of the first things that states go to, because there is an immediate impact."
What are states doing?
Until recently, Colorado's Medicaid program was seeing shorter wait times for new appointments and increasing rates of provider participation. "So, we were looking to build on high rates of primary care participation by working to expand Medicaid slots. We were looking at recruiting particular specialists that hadn't enrolled in Medicaid," says Sandeep Wadhwa, MD, Medicaid director and chief medical officer with the Colorado Department of Health Care Policy and Financing.
However, the situation has changed with the economic downturn, which resulted in a 12% increase in the state's Medicaid caseload. "Our safety net providers are reporting that they are seeing more clients that are both uninsured and on our public health insurance programs, such as Medicaid and SCHIP," he reports. "We are also hearing from many of our large providers that new appointment times are stretching out from within a week to over a month."
Although the state's Medicaid program has not seen reductions in providers re-contracting, this may be because the rate cuts taken for this year were very small.
"We have increased primary care physician rates over the past three years and had been strengthening our relationship and trust with that community," says Dr. Wadhwa. "This downturn will likely test that trust."
Colorado has a state-supervised, county-administered eligibility determination model. The modernization of this eligibility determination model is in the process of being examined, and recommendations for improvement have been collected from private vendors.
The goal is to make it easier for people to apply for public health insurance programs and decrease the number of the uninsured, says Dr. Wadhwa.
By leveraging technology and streamlining the application process, Colorado intends for clients' eligibility determination to be faster and to have access to services more quickly. Examples of proposed improvements include the creation of a paperless system, more avenues for application submission, and a centralized customer service center.
An accountable care collaborative would fund care coordination and shared outcomes incentives for primary care.
Colorado expects to see improved health status of its clients for metrics such as obesity, functional status, and missed days of school; improved health care metrics such as lower readmission rates and emergency department visits; and improved cost efficiency. "We anticipate that these programs will increase Medicaid panels with primary care," says Dr. Wadhwa. "We are also proposing a hospital provider fee, which would cover 100,000 to 200,000 uninsured Coloradans, dramatically improving access to care for currently uninsured populations."
According to Emma Forkner, South Carolina's state Medicaid director, access is ensured for its managed care beneficiaries by certifying network adequacy. Managed care entities must document adequate access to primary, specialty, and hospital care on a county-by-county basis. "Each submission is approved and verified by our agency's staff," she says. "We continue to see network expansions."
A variety of measures are used to track access for fee-for-service beneficiaries. In addition to multiple internal reports, Medicaid has partnered with the University of South Carolina's Institute for Families in Society to assess access to OB/GYN providers.
"These providers were particularly concerned about the rate adjustment the agency was forced to make," says Ms. Forkner. "We always have to be sensitive to access issues. As yet, we have not seen any indications the rate reductions implemented this fall have had any effect on access."
The state's Medicaid budget has been reduced by $137 million, or about 15%, since August 2008. "With cuts of this magnitude, there are only three things you can do: reduce rates, eliminate services or cut beneficiaries from the rolls," she says. "We are now prohibited by a temporary state law from adjusting rates, so the burden of future reductions will be shouldered exclusively by Medicaid beneficiaries."
Contact Ms. Forkner at (803) 898-2504 or [email protected], Ms. Rudowitz at (202) 347-5270 or [email protected], Mr. Seifert at (617) 886-8065 or [email protected], and Dr. Wadhwa at [email protected].
A growing number of state Medicaid programs are in a precarious position right now: They're torn between cutting provider ratesfor many, a necessary step to balance their budgetsand trying to retain providers to maintain recipients' reasonable access to care.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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