Repeal Physicians’ Dual-Eligible Payment Cut

TMA Testimony by Doug Curran, MD

Senate Finance Committee
Article II, Health and Human Services Commission

Thursday, Feb. 19, 2015

Good afternoon, Madame Chair and committee members. Thank you for the opportunity to testify and for your service to our state. I am Dr. Doug Curran, a family physician from Athens and vice chair of the Texas Medical Association Board of Trustees. I am speaking on behalf of TMA and the Texas Academy of Family Physicians. 

I am testifying today to respectfully urge your support for ending a cut enacted in 2011 known as “Medicare equalization.” The unintended consequence of this cut has been financial hardship for many physician practices across the state. 

In 2011, as part of the Medicaid cost-containment package, the legislature directed the Texas Health and Human Services Commission to stop paying the Medicare Part B cost-sharing on physician services for certain people — for poor seniors and people with disabilities who qualify for both Medicare and Medicaid if what Medicare pays for a service exceeds what Texas Medicaid pays, which is almost always the case. Patients affected by the change are commonly known as “dual eligibles” and are among the state’s sickest and frailest patients. According to the Kaiser Family Foundation, roughly half of dual-eligible patients suffer from multiple chronic conditions, including mental illness.

All Medicare patients are required to share in the cost of their health care by paying both an annual deductible and 20-percent coinsurance on most medical services. Dually eligible patients are too poor to pay these costs on their own. Thus, Medicaid paid the cost-sharing on their behalf so that costs do not become a barrier to needed medical care. 

The 2011 cut had two parts:  

  1. Texas Medicaid stopped paying the entire portion of the patient’s Medicare deductible, and
  2. Texas Medicaid stopped paying the patient’s coinsurance if Medicare’s payment to the physician exceeded what Medicaid pays for the same service. Medicare’s payment is almost always more (see example). 

In January 2013, the state did restore payment of the Medicare deductible, a tremendous relief to those of us struggling to continue caring for dual eligibles. Many of you on the committee fought to restore the deductible, and I sincerely thank you for your help. 

However, the continued coinsurance reduction means physicians take a 20-percent payment cut every time they see a dual-eligible patient. This is a devastating financial blow to any physician who cares for this population, but absolutely catastrophic to those practices in border, rural, or inner-city communities where higher numbers of dual-eligible patients reside. While certainly unintended, Texas’ decision to enact this policy has penalized the physicians who care for the sickest and frailest Medicare patients and discourages physicians from practicing in the underserved communities that need them most. 

Since the new policy took effect, thousands of physicians from across the state have contacted TMA to report on the extreme financial distress the cut has caused them. Most physicians say they want to continue to care for their dual-eligible patients despite the losses they are incurring, but to make ends meet they have been forced to lay off staff, take out personal loans, and discontinue certain services — or some combination thereof. Others have had no choice but to limit the number of dual-eligible patients they accept or to discontinue care for this population altogether. 

In Athens, it is not an option to limit or stop seeing these patients, many of whom have been with the same physician practice for decades and would have no other place to go for medical care if physicians stopped seeing them.

In the coming months, we look forward to working with you to craft a budget that will meet Texans’ diverse and growing health care needs, while also judiciously managing taxpayer dollars. We appreciate what a juggling act is facing you and want to work with you to achieve our mutual goals to improve the health of all Texans. 

Thank you for your timely consideration.

Here’s an example of how the current policy works:

An established dual-eligible patient visits a physician office for a routine visit. The 2015 Medicare deductible has been met. The physician bills Medicare for the service. The Medicare allowable payment is $72.44. Medicare will pay the physician $57.95, 80 percent of the allowable. The patient is responsible for the remaining $14.49 (20 percent). For a dual-eligible patient, the physician bills Medicaid for the remaining balance. 

The Medicaid allowable for the same service is $33.27. Because the Medicare payment exceeded the Medicaid allowable, Texas will not pay any additional amount. The physician must write off the $14.49.


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