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TMA Urged Senate to Ensure Medicaid and CHIP Patients Have a Medical Home

Testimony to Senate Finance Committee
Joannie Baumer, MD on behalf of the Texas Medical Association
Feb. 7, 2007

Senate Committee on Finance considered Article II – the health and human services budget for 2008-2009. Drs. Joanne Baumer and Roland Goertz, family medicine physicians from Fort Worth and Waco respectively, testified on behalf of TMA. They emphasized the cost benefit of ensuring Medicaid patients have access to a medical home versus seeking care in an expensive emergency room. Dr. Goertz also discussed the importance of providing continuous care for children, especially children with chronic illnesses. He talked about how few physicians can afford to see Medicaid patients due to the declining reimbursement rates.

• The top priority for the Texas Medical Association is improving the health of all Texans. TMA believes that the health of our citizens is fundamental to the future prosperity of our state. Ultimately, for  Texas to compete economically at home and abroad, it must invest in a healthy population and workforce, which includes ensuring that all Texans can obtain affordable, timely health care.
• A most critical component of a cost-effective health care delivery system is ensuring that patients have access to a continuous, ongoing relationship with a physician “medical home.” A medical home is a physician with whom a patient has an ongoing relationship and who provides not only preventive and primary care but coordination with specialists when such care is needed.
• We know that Medicaid reform will be hot topic this session. We look forward to working with you to find solutions right for Texas. As you debate possible ways to improve the cost efficiency and quality of the program, we believe that the most cost effective investment Texas can make is to ensure all Medicaid and CHIP patients have a medical home. No Medicaid reform effort -- regardless of how well it is designed or implemented -- can succeed over the long term without a robust network of participating physicians and providers.
• Unfortunately, finding a medical home has become increasingly difficult for patients enrolled in Medicaid as well as CHIP.
• Over the past six years, TMA survey data shows that physician participation has declined dramatically. Since 2000, the number of physicians accepting new Medicaid patients has dropped from 67 percent to 38 percent in 2006. This threatens patients’ ability to obtain medically necessary services and forces families to rely on expensive emergency rooms to meet basic health care needs.
• An inadequate network of physicians and providers has a significant impact on Medicaid costs and taxpayers by forcing patients to use the ER or to delay care and ultimately be hospitalized. In the LBB’s recommendations, they cite data from HHSC showing that between December 2002 and November 2003, there were approximately 600,000 visits to the ER because of non-emergent conditions among TANF and TANF-related Medicaid patients. These visits cost the state $115.9 million. Yet, if these services had been provided in alternative settings, the Medicaid program could have reduced its costs by approximately $82 million All Funds. The LBB noted that the Medicaid HMOs also are struggling to keep patients out of the ER because of lack of alternative options.

Data from local hospital districts also highlight these costs:

• • A preventive visit for diabetes costs $42 compared with an inpatient stay of $6,700 (source: Parkland)
  • The average cost to treat an established patient’s mild asthma attack in a doctor’s office is $94 - $103 using oxygen, or a nebulizer and medicine, while the cost of ER treatment is $9,209 for asthma patient with full symptoms who has to be hospitalized for three days, the average length of stay. (source: Harris County Hospital District)
• Rebuilding the physician network also is absolutely critical to the state’s efforts to increase preventive care among Medicaid and CHIP enrollees and to improving treatment of the chronically ill who account for about 80 percent of all health care costs.
• But besides the health care costs, inadequate Medicaid reimbursement also contributes to higher health care premiums paid by businesses, when costs are shifted to those with employer or private health insurance.
• Physicians tell us overwhelmingly that they support Medicaid and CHIP and recognize the importance these programs in providing care for low-income working families and patients with disabilities or chronic illnesses. Yet, as costs rise and Medicaid payment continues to erode to inflation, many physicians are being forced to make the tough decision to leave the program in order to survive economically.
• Texas physicians have not had a meaningful fee increase in nearly 15 years. The 2.5 percent reduction enacted in 2003 effectively cut Medicaid reimbursement to the same level as 1993. Our analysis shows that Medicaid pays roughly half the cost of delivering the service. For a physician in private practice – who is a small business owner – it is simply not feasible to provide services at half of the costs of delivering them.
• Meanwhile, over the past decade, physicians’ practice costs have increased more than 20 percent. Stagnant, inadequate reimbursement not only causes physicians to limit their participation in Medicaid and CHIP, but discourages physicians from modernizing their practices by adopting electronic health records and other technologies that could improve patient care while reducing costs.
• To stem further erosion of the physician network, we ask that you promote a physician “medical home” for Medicaid and CHIP patients by
  • adopting a five-year plan to ensure competitive reimbursement rates, which includes :
    • Restoring the 2.5-percent cut in physician fees enacted in 2003; and

      • Increasing fees by an additional 10 percent across-the-board in 2008 and 2009.
• We understand our request is significant. Yet, even at that level of investment, many Medicaid fees would still not even be half of the amount paid by Medicare.
• TMA also strongly supports restoring 12 months continuous coverage for children’s Medicaid and CHIP. Preventive health and the ability to have a continuous, ongoing relationship with a physician are critical elements of a successful medical home, particularly for children.
• Lastly, we ask that you support restoring state funding for Medicaid Graduate Medical Education. These funds are a critical component of Texas’ efforts to address the shortage of primary and specialty care physicians.

To revitalize the Medicaid physician network and improve patient’s access to cost-effective physician services, Texas Medical Association strongly supports the development of a five year strategic plan to enact competitive Medicaid physician reimbursements comparable to current Medicare payments.

The plan promotes a mix of across-the-board and targeted rate increases, including: 1) restoration of the 2.5 percent reduction enacted in 2003; and 2) an additional ten percent across-the-board rate increase in both years of the biennium.

We understand that our request is substantial, but even with such a generous investment, Texas Medicaid rates will still be far short of our goal of Medicare parity. Consider the following examples:

Last Published: 3/20/2007