Medicaid/CHIP Funding

Today Medicaid covers 3.3 million Texans. In less than four years, it will expand dramatically to cover more low income adults, increasing the program’s size to about 2 million enrollees. Texas Medicaid is only going to increase as more people move to Texas and our population ages. Most Medicaid enrollees — 69 percent — are babies, children of the working poor, pregnant women, and low-income parents. Another 23 percent are seniors or patients with disabilities. In fiscal year 2009, Texas Medicaid cost $20 billion. Texas’ share was $7 billion. While most enrollees are children, they only account for only about 30 percent of the program’s costs. Seniors and patients with disabilities account for 59 percent of the costs.

New and current Medicaid patients must have a physician available to care for them. Physicians want to participate in Medicaid, but they simply cannot sustain the loss as Medicaid payments lag far behind the cost of providing that care. Physicians’ practice expenses, like other small businesses’, increase about 3 percent each year. If lawmakers cut physicians’ rates further or fail to invest in a robust physician network, millions of Medicaid recipients will have a card but fewer physicians to care for them. Instead, these patients will seek care in more costly emergency rooms.

Today, only 42 percent of physicians accept all new Medicaid patients. However, it’s a marked improvement over 2006, when only 38 percent of physicians took new Medicaid patients. The increase is largely attributable to the 2007 legislature increasing physician Medicaid fees. However, the physician Medicaid network is tenuous. On Sept.1, 2010, physicians’ rates were cut by 1 percent. While a nominal Medicaid payment cut for physicians might appear manageable, it could have significant consequences. The program is typically one of the lowest payers and often does not even cover the basic cost of providing the service. On average, Medicaid pays 73 percent of Medicare and about 50 percent of commercial insurance payments.

TMA’s 2010 physician survey asked physicians how they would respond if the state cut Medicaid and Children’s Health Insurance Program (CHIP) payments by 1 to 2 percent. Nearly half — 45 percent — said the cut would cause them to consider imposing new limits on the number of Medicaid patients they accept. Another 25 percent reported they would stop taking Medicaid all together. TMA asks lawmakers when balancing the state budget to recognize that providing access to primary and preventive care services saves the state money.

Medicine’s 2011 Agenda

  • Ensure competitive Medicaid payments for physicians.
  • Support development of innovative payment and delivery system reforms, such as the patient-centered medical home and physician-led accountable care organizations, to help slow Medicaid spending.
  • Maintain physician loan repayment programs to help entice more physicians to participate in Medicaid.

Medicine’s Message

  • Physicians want to participate in Medicaid, but they simply cannot sustain the loss as Medicaid payments lag far behind other payers. The costs of physicians’ practices, like other small businesses, increase about 3 percent each year.
  • On average, the state pays about $36 for a physician office visit vs. $144 for an emergency room (ER) visit, excluding the costs of drugs, lab, and x-ray. Medicaid can save money by keeping patients out of the ER but only if patients are able to find a Medicaid participating physician in their community.
  • A 2007 Health and Human Services Commission analysis found the state could have saved $26 million by redirecting patients with minor illnesses from the ER to a physician’s office.
  • Investing in primary and preventive health care will reap much-needed savings down the road. By ensuring that all Medicaid and CHIP patients have a physician to coordinate and manage their care, the state can reduce patients’ reliance on more costly emergency rooms for routine care and potentially reduce hospitalizations and readmissions.

 

  


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