Med­i­caid un­cer­tainty loom­ing

Providers grap­ple with Med­i­caid pro­vi­sion

Modern Healthcare - - FRONT PAGE - Rich Daly and Jes­sica Zig­mond

The U.S. Supreme Court’s de­ci­sion to up­hold most of the health­care re­form law lifted the cloud of un­cer­tainty hang­ing over many providers, but those that treat large num­bers of Med­i­caid pa­tients strug­gled to un­der­stand the full ex­tent of its impact on them.

The court ruled that the fed­eral gov­ern­ment may not threaten to cut off all Med­i­caid fund­ing for states that do not ex­pand their pro­grams’ el­i­gi­bil­ity to all res­i­dents whose in­come is up to 133% of the fed­eral poverty level. That opens the pos­si­bil­ity that some states will not un­der­take an ex­pan­sion that was ex­pected to add at least 16 mil­lion new en­rollees to the shared fed­er­al­state in­surance pro­gram for the poor and se­ri­ously ill.

Rep. Phil Gin­grey (R-Ga.), cochair­man of the GOP Doc­tors Cau­cus, said he ex­pected his state to be among those that refuse to un­der­take the ex­pan­sion be­cause of cost con­cerns.

Pub­lic hos­pi­tal rep­re­sen­ta­tives voiced con­cern that the rul­ing could stymie the Med­i­caid ex­pan­sion that is es­sen­tial to safety net hos­pi­tals.

“We’re still study­ing it; we think it may be a big is­sue,” said Dr. Bruce Siegel, pres­i­dent and CEO of the Na­tional As­so­ci­a­tion of Pub­lic Hos­pi­tals and Health Sys­tems. “At first read, it seems to give the states the abil­ity not to do the ex­pan­sion.”

Siegel said states with con­ser­va­tive lead­er­ship and a gen­eral op­po­si­tion to the ACA and fed­eral fund­ing are more likely to not ex­pand their Med­i­caid pro­grams.

In­deed, im­me­di­ately af­ter the rul­ing, sev­eral GOP gov­er­nors, in­clud­ing those of Ari­zona, Florida and Texas, slammed the de­ci­sion and sug­gested that they would op­pose its im­ple­men­ta­tion.

Be­fore en­act­ment of the law, the cost of Med­i­caid was split be­tween states and the fed­eral gov­ern­ment. The fed­eral gov­ern­ment cov­ered an av­er­age of 57% of the cost, ac­cord­ing to the Cen­ter for Med­i­caid and CHIP Ser­vices. The Pa­tient Pro­tec­tion and Af­ford­able Care Act ex­panded the fed­eral share to the full cost from 2014 to 2016 of new ben­e­fi­cia­ries en­rolled un­der the new in­come-re­lated re­quire­ment. Af­ter that, the fed­eral share will de­cline grad­u­ally to 90% in 2020 and there­after.

Hos­pi­tal ad­vo­cates and some mem­bers of Congress high­lighted the dou­ble impact on hos­pi­tals of the Med­i­caid com­po­nent of the court’s de­ci­sion, which could result in both re­duc­ing the num­ber of Med­i­caid-cov­ered pa­tients hos­pi­tals treat and re­tain­ing dis­pro­por­tion­ate-share hos­pi­tal pro­gram pay­ment cuts that were in­sti­tuted to pay for that cov­er­age ex­pan­sion.

“Their poor pop­u­la­tion might be much worse off as a con­se­quence of the rul­ing that was handed down to­day,” Rep. Michael Burgess (R-Texas) said in an in­ter­view. Rep. Fred Up­ton (R-Mich.), chair­man of the House En­ergy and Com­merce Com­mit­tee, said he plans to hold hear­ings in the com­ing weeks to bet­ter un­der­stand the ef­fects of the Med­i­caid rul­ing.

But not all hos­pi­tals were con­cerned about the Med­i­caid pro­vi­sion of the rul­ing. For in­stance, Michael Con­nelly, pres­i­dent and CEO of Catholic Health Part­ners, a Cincin­nati-based health sys­tem, de­scribed the Med­i­caid pro­vi­sion as “cre­at­ing a nice bal­ance be­tween the rights of the states and the fed­eral gov­ern­ment.”

Many Democrats said they were con­fi­dent states would pursue vol­un­tar­ily the Med­i­caid ex­pan­sion, given the high fed­eral match.

The court “did con­clude that no state could lose all of its funds for its cur­rent Med­i­caid pro­gram if it chose not to se­lect this op­tion,” Rep. Henry Wax­man (D-Calif.), rank­ing Demo­crat on the En­ergy and Com­merce Com­mit­tee, said in a state­ment. “But the ma­jor point is that 100% fed­eral fund­ing re­mains avail­able to as­sist states in pro­vid­ing this cov­er­age, and states will seize the op­por­tu­nity to do so.”

Con­nelly doubted the con­tention of the law’s sup­port­ers that the Med­i­caid ex­pan­sion would lessen the ex­tent of emer­gency de­part­ment crowd­ing and in­di­gent care that hos­pi­tals have strug­gled with. Even if ev­ery state ex­panded their Med­i­caid pro­gram el­i­gi­bil­ity, he said, the low physi­cian re­im­burse­ment rates most use would keep many of the newly cov­ered from find­ing care alternatives to hos­pi­tal emer­gency de­part­ments.

Emer­gency de­part­ment visits in­creased 1.9% an­nu­ally from 2001 to 2008, ac­cord­ing to a June study in the An­nals of Emer­gency Medicine. Re­duc­ing the use of costly emer­gency de­part­ment care was a lead­ing ar­gu­ment for pas­sage of the law, but re­cent re­search has in­di­cated in­creased use of those fa­cil­i­ties af­ter the Mas­sachusetts’ health­care over­haul was im­ple­mented.

“I sus­pect if it is an is­sue it will be de­pen­dent upon lo­cal re­sources—that there will be some com­mu­ni­ties where it is not a rel­e­vant is­sue and there will be other com­mu­ni­ties where it is a sig­nif­i­cant fac­tor,” Dr. An­drew

Ziskind, manag­ing direc­tor for clin­i­cal so­lu­tions at Huron Con­sult­ing Group, said about con­tin­ued emer­gency de­part­ment crowd­ing.

In the states that opt to ex­pand their Med­i­caid pro­grams, providers an­tic­i­pate a num­ber of im­ple­men­ta­tion steps that will impact them to vary­ing de­grees in the com­ing months and years. Key rules will im­ple­ment the ex­pan­sion of Med­i­caid and the mod­ern­iza­tion of the Med­i­caid el­i­gi­bil­ity and en­roll­ment sys­tems.

For in­stance, providers will be watch­ing as closely as states for ex­pected fed­eral guid­ance on the bench­mark ben­e­fits that the law re­quires Med­i­caid pro­grams to of­fer to their new en­rollees. The ben­e­fits and ser­vices it cov­ers are likely to dif­fer from the stan­dard ben­e­fits many Med­i­caid plans have of­fered their en­rollees and those dif­fer­ences could af­fect the providers who care for them.

Mean­while, the le­gal cer­tainty that now ex­ists af­ter the high court’s rul­ing means that states no longer have a rea­son to hold back on cer­tain pro­vi­sions—namely the state in­surance mar­ket­places. But they now face a tighter dead­line to meet re­quire­ments.

In six months, states must show le­gal au­thor­ity to pro­ceed with an ex­change; hire the per­son­nel to staff the ex­change; and de­velop the in­for­ma­tion sys­tem re­quire­ments that will al­low ex­changes to take in in­for­ma­tion and dis­trib­ute it to the pub­lic in a way that will al­low them to make in­formed de­ci­sions, ac­cord­ing to Joel Michaels, a part­ner at McDer­mott Will & Emery.

The day af­ter the court de­ci­sion, HHS an­nounced it would make more fund­ing avail­able to build state-based health in­surance ex­changes. It said it would pro­vide states with 10 ad­di­tional op­por­tu­ni­ties to ap­ply for fund­ing to set up state-based ex­changes, state part­ner­ship ex­changes or to pre­pare state sys­tems for a fed­er­ally fa­cil­i­tated ex­change. Obama ad­min­is­tra­tion of­fi­cials said they would con­tinue to work with states wher­ever they are in the ex­change process and noted that some are ahead while oth­ers are be­hind. To date, the fed­eral gov­ern­ment has dis­trib­uted $850 mil­lion toward ex­change build­ing.

For the Medi­care pro­gram, the de­ci­sion means con­tin­u­ing im­ple­men­ta­tion of the many pro­vi­sions that the law es­tab­lished, such as phas­ing in cov­er­age in the Medi­care Part D drug ben­e­fit cov­er­age gap, or “dough­nut hole”; re­duc­ing fed­eral pay­ments to Medi­care Ad­van­tage plans over time and pro­vid­ing bonus pay­ments to plans that re­ceive high-qual­ity rat­ings; con­tin­u­ing to re­duce an­nual pay­ment up­dates to providers (other than physi­cians); and mak­ing ad­just­ments for pro­duc­tiv­ity im­prove­ments.

“Medi­care spend­ing will grow rel­a­tively slower in the next decade than it has in pre­vi­ous years be­cause the law in­cludes sig­nif­i­cant sav­ings to the pro­gram,” Tri­cia Neu­man, se­nior vice pres­i­dent and direc­tor of the Kaiser Fam­ily Foun­da­tion’s pro­gram on Medi­care pol­icy, told Mod­ern Health­care. “This had the ef­fect of sus­tain­ing the life of the trust fund.”

The $155 bil­lion in re­duced pay­ments over 10 years that hos­pi­tals ac­cepted un­der the law from Medi­care and Med­i­caid in­cludes $36 bil­lion from dis­pro­por­tion­ate­share hos­pi­tal pay­ments—spe­cial funds hos­pi­tals are given to treat a higher-thanaver­age num­ber of in­di­gent pa­tients—and $112 bil­lion from yearly re­duc­tions to the hos­pi­tal. Those re­duc­tions to Medi­care and Med­i­caid pay­ments are ex­pected to be off­set over the long term by sharp in­creases in the share of pa­tients hav­ing in­surance, as pro­vided by the new health re­forms.


Florida At­tor­ney Gen­eral Pam Bondi re­acts af­ter the Supreme Court’s de­ci­sion. The state’s GOP gover­nor, Rick Scott, said he would op­pose the law’s im­ple­men­ta­tion.

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