Medicaid Cuts for Poor and Elderly Threaten Practices
Medical Economics Feature – June 2012
Tex Med. 2012;108(6):37-41.
By Ken Ortolon
Senior Editor
La Joya family physician Javier Saenz, MD, is going broke. As of early April, Medicaid had not paid the four-physician practice he manages in the Rio Grande Valley for treating patients who are both poor and elderly.
"I've had to go through my personal money to be able to keep my office open," Dr. Saenz said. "If I had no savings whatsoever, this office would have closed two weeks ago."
Dr. Saenz is one of hundreds, if not thousands, of physicians across the state feeling the pinch of a decision Texas lawmakers made last year to drastically cut what the state will pay for "dual-eligible" patients – those who are old enough to qualify for Medicare and whose income qualifies them for Medicaid.
On top of those cuts, a glitch in the computer systems that are supposed to communicate claims data between Medicare and the state Medicaid program meant that thousands of claims for which Medicaid should have paid at least a portion of the bill were returned with zero payment.
While Texas Health and Human Services Commission (HHSC) officials say the computer glitch is resolved and physicians should have begun seeing payments hitting their mailboxes as of mid-April, Texas Medical Association officials and physicians in the Rio Grande Valley say the damage may already be done.
"Unfortunately, some of our colleagues have already left the area," Hidalgo-Starr County Medical Society President Victor Gonzalez, MD, said at a McAllen rally on March 27 to raise awareness of the problem. While physicians statewide face the impact of the cuts, the Valley was particularly hard hit because of its large number of dual-eligible patients.
TMA President C. Bruce Malone, MD, an orthopedic surgeon from Austin, says the impact on access to care for these dual-eligible patients likely will be traumatic if state officials do not solve the problem.
"The people who are affected are our most fragile, our elderly, the ones who are poor, the ones who are unable to fend for themselves," he said.
Dr. Gonzalez added, "The future health of our elderly, the future health of our uninsured, and our Medicaid population in this region is seriously at stake."
No More 80-20
The problems Dr. Saenz and countless other physicians across the state face stem from a rider the legislature placed into last year's state budget bill that eliminates a portion of the Medicaid payment for dual eligibles.
Under Medicare, patients have both a deductible and a copayment. This year the deductible is $140. The copayment is 20 percent of the Medicare allowable rate for a medical service. For example, if Medicare's allowable rate for a service is $100, Medicare will pay $80 of the bill and the patient is responsible for the remaining $20.
Until Jan. 1, the Texas Medicaid program paid both the deductible and copayment for dual-eligible patients. That's when the budget rider eliminating the payment of the Medicare copayment took effect.
Also part of that rider was a provision that Medicaid would no longer pay the full deductible but cover only the amount up to Medicaid's allowable rate for a particular service. So, as in the previous example, if a physician submitted a claim to Medicare for a service costing $100 and the patient had not yet met his or her $140 deductible, Medicare would pay nothing but would credit $100 against the patient's deductible.
In the past, Medicaid covered the full amount of the dual-eligible patient's deductible. But under the new policy, Medicaid pays only up to the Medicaid allowable charge. So, where the doctor would have received $100 in the example, he or she may now receive only $50, depending on what Medicaid pays for that particular service.
Affected Texas physicians watching their balance sheets say the combined 20-percent cut in copayments and the reductions to the deductible mean physician's reimbursement is slashed to 37 percent, depending on the diagnosis.
Texas is not alone in implementing this new payment policy. Some 20 other states have done the same.
While hits of that magnitude are bad enough for medical practices with high dual-eligible populations, the bad news got even worse. At the same time Medicaid implemented the new payment policies, HHSC also converted to the new Health Insurance Portability and Accountability Act (HIPAA) Version 5010 electronic transaction standards.
Helen Kent Davis, director of TMA's Office of Governmental Affairs, says it became clear as early as mid-January that the 5010 conversion impacted the crossover of claims from Medicare to Medicaid.
"What it meant was that doctors would submit the claim to Medicare, and Medicare would apply the amount to the deductible and then send the claim to Medicaid," Ms. Kent Davis said. "But Medicaid was paying zero because of the problem with the 5010 conversion."
Dr. Saenz says his practice lost about $50,000 in Medicaid deductible payments in just four weeks. He sought a line of credit to keep his doors open until the situation is resolved.
Houston cardiovascular surgeon Emilio Hisse, MD, also sees a large number of dual-eligible patients in his practice. He says he has experienced a "60-percent hit" in his revenues from the dual-eligible patient population since the first of the year.
And Edinburg gastroenterologist Carols Cardenas, MD, vice chair of the TMA Board of Trustees, says Dr. Saenz and other physicians lost thousands of dollars more in the intervening weeks. "You can't survive on nothing, and you can't keep your doors open on nothing," Dr. Cardenas said. "Yet, at the same time, you can't turn your back on the people you've made a community commitment to serve. It's an untenable situation. That's where a lot of the fellows on the front lines are right now."
Solution Sought
In addition to the rally, TMA hosted a physician town hall meeting on the issue in McAllen. At that meeting, Billy Milwee, the state Medicaid director, said HHSC is trying to resolve some of the problems.
The computer issues are fixed, and HHSC will pay previously denied deductible payments, he said. HHSC expected to catch up on those payments by mid-April, Mr. Millwee said.
Dr. Cardenas, however, said in early April that he had not heard of any physician in the Valley receiving payments.
Mr. Millwee also said HHSC Executive Commissioner Tom Suehs is looking at other ways to lessen the impact of the copayment cuts. "The commissioner has some authority to make some exceptions for access to care," he said.
In fact, HHSC did two things officials say should help. First, Commissioner Suehs decided to exempt services performed by psychiatrists and psychologists from the copayment cuts. He did so, in part, because the Medicare copayment for mental health services is 40 percent, not 20 percent as with other services. Also excluded were two codes for transporting portable x-ray machines. Those changes took effect May 1.
And, HHSC agreed to increase Medicaid payment rates for cancer chemotherapy medications to 100 percent of the current Medicare rate. That change came after oncologists convinced HHSC officials they could actually save Medicaid money if they receive a reasonable payment to administer those drugs in their offices rather than in a hospital, which is more expensive.
Commissioner Suehs told the House Committee on Human Services that he continues to work with physician groups on other alternatives to alleviate the problem.
In April, HHSC announced that a 5-percent cut in payments for renal dialysis services for dual eligibles would be applied only to payments to dialysis facilities and not to the physician component of dialysis services.
An HHSC spokesperson said it was "too soon to know if there will be additional changes."
At the March town hall meeting, Mr. Millwee said there may be little else the agency can do about the copayment cuts without action from the Texas Legislature or from the Legislative Budget Board (LBB), which has some authority to adjust spending levels between legislative sessions.
"We're playing the cards we were dealt," Mr. Millwee said.
Ms. Kent Davis says that because of the savings lawmakers expect to realize from the copayment and deductible cuts – some $475 million from physicians, hospitals, and other health care professionals – HHSC can't make significant changes without legislative approval.
In addition to the rally and town hall meeting, TMA has launched a petition to convince the LBB to take action. As of early April, TMA had collected nearly 2,000 signatures on that petition.
Also, you can view a series of TMA-produced videos on the dual-eligible issue by going to the Dual Eligibles page. Links to the individual videos can be found by clicking on the various articles on that page.
Kicked in the Teeth
While Dr. Cardenas and others recognize that HHSC is trying to do what it can to mitigate the impact of the budget cuts, physicians on the front lines are frustrated and say they don't know how much longer they can keep their doors open.
"I'm concerned for the 15 people who work in my office," said Edinburg ophthalmologist Imtiaz Mehkri, MD. "We're getting kicked in the teeth."
Mission neurologist Gabriel Diaz, MD, added, "I don't think we can survive to give care to patients with insurance or with no insurance."
The most important thing now, Dr. Cardenas says, is getting some kind of timetable on when the LBB might act, so physicians can make plans for keeping their practices afloat. But political observers say that was not likely to happen before the May 29 primary elections.
"We need some certainty," Dr. Cardenas said. "And we can't wait for the next legislative session. We need it now."
Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.
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