Medicaid Rate Hike an Enormous Opportunity

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Commentary - August 2007  


By William W. Hinchey, MD
Texas Medical Association  

At the close of the 2005 session of the Texas Legislature, when the Texas Medical Association once again was unable to gain a modest increase in physicians' Medicaid payments, Medicaid reimbursement immediately became one of our top priorities for 2007. Our Ad Hoc Committee on Medicaid and Access to Care recognized that Texas Medicaid patients' medical homes were disappearing rapidly.

Mounting evidence demonstrated the growing severity of the problem:

  • Finding a medical home had become increasingly difficult for Medicaid patients.
  • Over six short years, physician participation had declined dramatically from 67 percent of Texas physicians willing to accept new Medicaid patients in 2000 to only 38 percent in 2006.
  • This decline threatened our patients' ability to obtain medically necessary services and forced them to rely on more costly emergency rooms to meet their basic health care needs.

The reason for this decline in participation was obvious. Texas physicians had not had a meaningful Medicaid fee increase in 15 years. In fact, our fees were cut by 2.5 percent in 2003. The rising cost of medical practice meant these payments fell woefully short of covering the cost of providing care.

TMA declared that, quite simply, Texas lawmakers in 2007 must ensure that Medicaid patients have access to cost-effective physician services by enacting competitive reimbursement rates. Fortunately, all signs pointed to success.

We immediately obtained a powerful ally. Texas Health and Human Services Commissioner Albert Hawkins recognized the validity of our argument. He, too, began pushing for restoration of the 2003 cuts and an additional increase in physicians' Medicaid reimbursement. Commissioner Hawkins understood that cost-effective care hinges on Medicaid patients having access to a continuous, ongoing relationship with a physician medical home.

Our Ad Hoc Committee on Medicaid and Access to Care developed a five-year strategic plan to make Medicaid reimbursements on par with Medicare payment rates. We asked the 2007 Texas Legislature to, at a minimum, restore the 2003 cuts, provide a 20-percent across-the-board increase for the next two years, and enact other targeted increases that would lure more Texas physicians back into the Medicaid program.

Momentum for our plan built among leading legislators as it became apparent that the Texas treasury would enjoy a substantial surplus for 2008-09, and lawmakers would have a rare opportunity to engage in some discretionary spending. We immediately pointed out that this was more than a health care issue. For Texas to compete economically at home and abroad, we told them, our state must invest in a healthy population and workforce, which includes assuring that all Texans can obtain affordable, timely health care.

The final piece in the puzzle came together in early April, as legislative budget writers acknowledged that the powerful force of a federal judge also would be requiring better Medicaid rates. The state had run out of legal options to avoid its obligations under a 14-year-old lawsuit known as Frew vs. Hawkins . The suit alleged numerous, serious failings in the state's efforts to ensure all children enrolled in Medicaid were receiving appropriate preventive and specialty care services. And U.S. District Judge William Wayne Justice had his pen on a massive order designed to correct those failings.

Although TMA is not a party to that suit, legislative leaders consulted with us extensively as they attempted to craft a settlement in the case. What would it take, they asked, to bring Texas physicians back into the Medicaid system? In addition to significant payment increases, we told them to make sure Medicaid HMOs would pass along any increases to participating physicians, and we asked them to reconstitute the Physician Payment Advisory Committee (PPAC) to advise the state on how best to allot the monies for physician rate increases.

When the 2007 legislative dust cleared, lawmakers had appropriated enough funds to restore the 2003 cuts, increase physician payments for children's Medicaid services by 25 percent, boost payments for adult services by 10 percent, and set aside an additional $50 million for targeted rate increases for physician and dental subspecialists.

PPAC, which is chaired by a TMA-appointed physician and includes primary and specialty care physicians from across Texas, convened immediately. The panel recommended a fair method for distributing the increase, with an emphasis on primary care and prevention. The plan would allow the state to update all the Medicaid relative value units, which has not happened since 1992, and increase payments for all evaluation and management and preventive care codes, and for anesthesia services, which have a distinct payment methodology. At press time, TMA and Texas leaders were waiting on Judge Justice to approve the proposal. With his signature, the new rates will take effect Sept. 1.

Now we need to make the very most of it -- for our patients and our practices.  Texas physicians must once again open their doors to Medicaid patients. We must demonstrate that physician medical homes reduce costs through better care.

If you don't see Medicaid patients at all, please open your doors to them. If you still see Medicaid patients but don't accept new ones, please open your doors wider.

I guarantee you that state leaders and the judge will be watching physicians' Medicaid participation rates. And if we don't deliver, they will look for other options that will not serve our patients nearly as well.

I realize that, even with the rate increases, Medicaid reimbursements still don't cover our costs of providing care. But this historic rate hike gives us an enormous opportunity that we cannot squander.

TMA is holding to our strategy. Making Medicaid rates competitive with other payers will require several sessions of the Texas Legislature. But the increases we won this year have built tremendous momentum going forward and have brought our goal so much closer to our reach.

Please celebrate this victory with me … and open your doors. 

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