As Medicaid grows, will there be more cuts to provider payments?

Dr. Gary Dee figured the state’s fiscal troubles would lead radiologists like him to face a cut in their Medicaid payment rates. But he wasn’t anticipating the 42.5 percent cut Gov. Dannel P. Malloy’s administration imposed this spring.

Now, Dee’s private practice has stopped taking new Medicaid patients. He dropped talks with a community health center on plans to provide services for Medicaid patients. Efforts to recruit a new radiologist fell apart.

“The reimbursement is to the point where we can’t take care of these patients. They’re going to lose access,” said Dee, president of MidState Radiology Associates in Meriden.

While radiologists are appealing to legislators to roll back their rate cut, some patient advocates are raising a broader concern, warning that cuts to providers who treat Medicaid patients could become more common as state leaders look to squeeze costs from the growing program.

The result, they fear, is that it could become harder for the more than 725,000 state residents with Medicaid to find specialists to treat them, undermining the effectiveness of the expansion of Medicaid coverage that took place as part of the federal health law.

“Cutting rates inevitably means fewer providers participating, and fewer providers participating, if we continue with this trend, can make the Medicaid expansion a hollow expansion,” said Sheldon Toubman, an attorney with the New Haven Legal Assistance Association. “Because although on paper they have good coverage in terms of benefits, and no cost-sharing obligations, in reality, they can’t find specialists willing to see them.”

State Healthcare Advocate Victoria Veltri sees the radiology rate cut as part of a trend of cutting reimbursement rates to save money in Medicaid.

“There’s no question that the budget is incredibly tight and it’s not an easy thing to try to find places where there are cuts,” she said. “My concern is you could only go so far before you reach a tipping point where access becomes incredibly difficult.”

Department of Social Services spokesman David Dearborn said radiologists have been “relatively well paid” compared to other specialists in recent years.

More generally, he said, when lawmakers look at adjusting rates, it’s with an assumption that access will continue. He noted that as Medicaid has grown, so has the “revenue potential” for providers, since more patients have coverage, although providers say Medicaid doesn’t cover their costs.

“Over the years, Connecticut has sustained a leading Medicaid program and there is little reason to think there will be major changes affecting that achievement,” Dearborn said. “However, we need to acknowledge that the fiscal environment in Connecticut (as in any other state) can have effects, temporary or not, on the program…A big reason is that Medicaid is the biggest-ticket service category in the budget. On the whole, however, the program is intact and strong.”

Medicaid doubles in five years

There’s no question Medicaid is a big program: It covered 728,960 people last month, or one in five Connecticut residents. That’s double the number of people in Medicaid at the start of 2010.

Medicaid – also known as HUSKY in Connecticut – is also one of the biggest single items in the state budget, forecasted at $2.47 billion in the upcoming fiscal year. (That doesn’t include the federal government’s contributions to the program, which bring total spending above $6 billion.)

Per-person spending in Medicaid has been declining. But because enrollment has skyrocketed, the overall costs have grown, often beyond what officials anticipated.

That leaves those looking to cut spending with a challenge. Because Medicaid is an entitlement, anyone who qualifies must receive coverage. And many of the ways to save money in the program have drawn pushback from legislators and advocates.

Those include cutting eligibility so fewer people qualify. Malloy proposed doing so twice in the past three years. Legislators objected, but ultimately agreed to a cut expected to affect 20,000 to 25,000 parents. Once that takes effect, Connecticut will be close to the minimum eligibility limits allowed by Obamacare for states that expanded their Medicaid programs – meaning that big future savings from eligibility cuts could be difficult to achieve.

Cuts to benefits have also been politically unpopular in the past. Malloy’s predecessor, Gov. M. Jodi Rell, proposed cutting dental coverage for adults, which many other states don’t offer, but legislators rejected it. Under Malloy, legislators agreed to scale back the coverage, but not eliminate it.

Dearborn noted that in the 2002-2003 budget crisis, the state reduced some Medicaid benefits. State officials also instituted a $1 copayment for medications, but it was quickly scrapped, and the benefit cuts were also eventually reversed.

In the past, legislators have rejected other proposals to require Medicaid clients to pay copayments for care, and this year, the Department of Social Services raised objections to the concept. Responding to legislators’ questions about the idea, department officials suggested that they might not reduce costs, could lead clients to delay care or skip preventive services, lead some clients to end up in emergency rooms or hospitals if they lose access to outpatient care for not being able to afford copays, and could shift costs onto providers if they could not collect copayments from poor clients.

An easy way to save money?

Rate cuts, advocates say, could be viewed by officials as an easier place to squeeze money – but with potential consequences, since physicians are not required to treat Medicaid patients.

“I think it’s an easy way to save money,” Veltri said. “I’m not sure it’s always the right way to save money.”

Sharon Langer, advocacy director at Connecticut Voices for Children, also expressed concern that the Malloy administration and legislators could again turn to rate cuts if they want to save money in Medicaid. Those cuts, she added, “Are likely to reduce access to the very people that we’re trying to help by expanding the number of people that are covered by HUSKY.”

The Malloy administration has protected rates for primary care providers, which rose in 2013 as part of Obamacare. The increase was funded for two years with federal money, but Malloy made Connecticut one of just a handful of states to continue to pay higher rates – although slightly lower than the federal funds allowed – with state funding once the two years were up. The number of primary care providers participating in Medicaid has grown significantly.

Advocates have praised that policy, but say the reverse also applies: If raising rates for primary care helped attract more doctors, lowering rates for specialists could do the opposite.

Radiology cuts, and more

The radiology rate cuts were part of a series of midyear changes made by the Malloy administration as officials sought to address budget shortfalls. Altogether, they were the equivalent of $32.58 million per year in savings.

The changes include rate cuts for obstetrical care and some lab services, scaling back what cases would qualify for orthodontia coverage, and changes to the way Medicaid pays for mammograms, diagnostic chest x-rays, and durable medical equipment.

The budget that passed the House and Senate June 3 – but which Malloy has not yet signed – restored some of the funding for obstetrical services, reducing the cut from more than $5 million per year to $2.57 million in the upcoming fiscal year and $2.75 million the following one. It also restored $500,000 to radiology rates for high-risk pregnancies. The budget didn’t restore any other radiology rates, leaving providers to face a cut of $4.5 million per year.

Under the old rate, radiologists were paid what Medicare paid for radiology services in 2007. The new rate is 57.5 percent of that. The physician fee for a mammogram dropped from $35.56 to $20.45. For a shoulder x-ray, it fell from $7.67 to $4.41.

Dee, the Meriden radiologist, said he and his colleagues would have been willing to take a cut, recognizing the state’s tight finances. But he said the size of the cut was unreasonable, particularly since the rates had not increased since 2010 while fixed costs have risen and the number of Medicaid patients has grown. At the same time, he said, payments from private insurance companies have also fallen.

“In the old days, we would take care of Medicaid patients and sort of make it up a little bit on the other insurance companies,” said Dee, who is also director of radiology at Meriden’s MidState Medical Center. “We don’t have that ability anymore.”

The Connecticut State Conference of NAACP Branches has also criticized the cuts, raising concerns that they could make it harder for people with Medicaid to receive screening or care for breast cancer and other conditions.

James Rawlings, the organization’s state health chair, said the state can’t afford to have fewer providers of preventive and intervention services. “It simply would exacerbate the current situation around health care access, and that’s a real problem for us,” he said.

Dearborn said radiologists have not faced rate cuts since 2010, while other specialists have been paid at 57.5 percent of the Medicare rate since 2007.

“[Radiologists] were relatively well paid as compared to all other physician types,” aside from obstetricians, he said. “Unlike most provider types, they’ve been spared fee adjustments for five years.”

But radiologists say the methodology behind the cut to their rates differs from the way other specialists’ rates were set, leaving them with a disproportionate cut.

Dearborn said that even with the cuts, Connecticut’s rates are higher than those in New York and in line with other New England states.

While the obstetric cuts were partially restored, Dr. Joshua Copel, an ob-gyn and Yale School of Medicine professor who cares for high-risk obstetrical patients, is still waiting to learn how they will be implemented, and worries that even a smaller cut will be dramatic.

Copel said his practice, which is based at Yale-New Haven Hospital and does not turn patients away, is trying to figure out what to do about the cuts. He anticipates that doctors in private practice will stop seeing Medicaid patients, leaving more to go to hospitals, which are also facing payment cuts and higher taxes. And he worries that reduced access or delays in getting care could be especially harmful to pregnant women.

“We’re going to be expected to see even more patients and get paid less. We can’t make it up on volume when we’re losing money,” he said.

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