How state budget crises are putting the squeeze on Medicaid (and you)
Budget shortfalls and restrictions on co-pays have prompted legislators in many states to trim payments to providers
Coming: Another 4.5 million women on Medicaid rolls
Under the Patient Protection and Affordable Care Act, Medicaid will expand to cover another 4.5 million women in 2014. Beginning January 1, 2014, state Medicaid programs are required to cover nonpregnant, non-elderly individuals who have incomes as high as 133% of the federal poverty level ($10,890 for an individual in 2011). The federal government will cover the full expense of insuring these newly eligible individuals for calendar years 2014, 2015, and 2016. Federal financing will phase down to 90% by 2020, and will likely decrease further after that.
States that participate in Medicaid must cover pregnant women who have an income at or below 133% of the federal poverty level. States are required to disregard 5% of an individual’s income when determining Medicaid eligibility, a rule that effectively brings the maximum eligibility level to 138% of the federal poverty level, opening the Medicaid doors to additional low-income individuals.
Today, coverage lasts throughout pregnancy and 2 months beyond. States may choose to extend eligibility to pregnant women who have incomes that exceed 133% of the poverty level; at present, 45 states do so, with the District of Columbia topping the list by covering pregnant women who have incomes at or below 300% of the poverty level.
Many measures show that Medicaid has improved access to health care for low- income women, saving lives and dollars. Your experience—wherever you practice— undoubtedly echoes that observation.
Prenatal care. You also know that prenatal care helps ensure healthy babies. Obstetric services often go beyond traditional medical needs to include a full spectrum of care that helps ensure a healthy pregnancy, delivery, and postpartum period.
Of course, inadequate use of prenatal care is associated with increased risks of low birth weight, preterm birth, neonatal mortality, infant mortality, and maternal mortality. Preterm births alone increase US health-care costs by $26 billion each year.5 Pregnancy-related maternal mortality is three to four times higher, and infant mortality is more than six times higher, among women who receive no prenatal care, compared with those who receive prenatal care.
Gynecologic services covered through Medicaid also help preserve health and reduce health-care costs. Eighty-four percent of women on Medicaid have had a Pap test in the past 2 years, compared with 80% of women who have private insurance and 59% of women who lack insurance.6 Routine gynecologic care is vital to prevent cervical cancer and other diseases. Women without a regular doctor don’t get regular Pap tests and mammography; nor do they get screened for other serious health risks, including high cholesterol and diabetes.
Despite the proven benefits of access to regular care, 23% of women on Medicaid report problems finding a new doctor who will accept their insurance, compared with 7% of Medicare beneficiaries and 13% of women who have private insurance.
Why the difficulty in finding a doctor? A leading reason is the inadequacy of Medicaid payment rates.
Cutting payments to physicians
Medicaid provider payments are often the first item cut in a state budget crisis. States are required to cover many health services and are restricted from charging patients significant co-pays, so they often trim budgets at the expense of physicians. Thirty-nine states reduced physician and provider payments in 2011, and 46 states plan to do so in fiscal 2012. In addition, in fiscal 2011, 47 states put in place at least one new policy to control Medicaid costs; most states implemented several of these policies. All 50 states plan to do so in fiscal 2012.
Under federal rules, states must ensure that payment rates are consistent with efficiency, economy, and quality of care. They also must ensure that payment is sufficient to enlist enough providers to render care and services to the same extent that care and services are available to the general population in the same geographic area. States must request and receive permission from the federal government before reducing provider payment rates. However, even with this safeguard in place, physician payments—and patient access to care—are in jeopardy.
For example, in 2008, the California legislature issued several rounds of cuts, including a 10% cut in physician and provider payments, to make up for budget shortfalls. Physicians, hospitals, pharmacists, and other health professionals sued in response, and the 9th US Circuit Court of Appeals blocked the payment cut.
In 2011, California Governor Jerry Brown again put the 10% cut in place, this time with approval from the federal Center for Medicare and Medicaid Services (CMS).
In response, California physicians, led by the state medical association, sued California again. They argued that payment cuts reduce access to care among Medicaid beneficiaries by prompting physicians to stop accepting these patients. The California Department of Health Care Services countered that the cuts are necessary to offset a critical budget shortfall and will not affect access to care. The situation in California highlights the conflicts between physicians and many states over Medicaid payment rates.
