State officials seek to greatly expand Medicaid

Costs, impact on services could be issues

By Marissa Harshman, Columbian health reporter

Published:

 

The outlook for Washington's medically uninsured population may be a bit rosier by 2014, particularly for the more than 300,000 low-income people who may find themselves eligible for the state's Medicaid rolls.

But the desired expansion comes with a hefty price tag for the federal government, potential risk for the state and new concern for health care providers already stretched to care for current Medicaid patients.

The Medicaid program currently serves about 1.2 million people in Washington. In the last several years, as the state's purse strings tightened, the medical program for low-income residents has faced cuts to provider reimbursement rates and services.

Still, the state is moving forward with its implementation of federal health care reform and expansion of Medicaid enrollment, adding about 330,000 more Washingtonians to the program, with the expectation that the federal government will pay the lion's share of the cost to cover new enrollees.

The Washington State Health Care Authority, which oversees the state Medicaid program, had already begun work to implement the Affordable Care Act prior to the U.S. Supreme Court's June decision. The court upheld the Obama administration's health care reform law but essentially gave states the option of whether to expand their Medicaid programs.

In Washington, the direction was clear long before the court ruling.

"Our direction is move forward full speed ahead until somebody stops us," said Doug Porter, the outgoing director of the Health Care Authority.

Expanding Medicaid

The Medicaid program currently serves pregnant women, children, families and disabled people. Under the Affordable Care Act, Medicaid's eligibility requirements would expand, extending benefits to people ages 19 to 65 with an income of up to 133 percent of the federal poverty level (an annual income of about $14,856 for one person).

According to a May 2012 report by The Urban Institute's Health Policy Center, the new law would extend Medicaid coverage to about 328,000 Washingtonians. In Clark County, The Urban Institute estimates an additional 28,600 people will be enrolled in Medicaid under the expanded program. Currently, about 60,000 Clark County residents receive Medicaid benefits.

The majority of the state's new Medicaid enrollees -- about 245,000 of the 328,000 enrollees -- are adults who currently do not qualify for the Medicaid program. In contrast, nearly all children to be enrolled in 2014 are currently eligible for other state and federal programs, according to the report.

Overall, the new Medicaid enrollees are a lower risk and less costly group than those currently eligible, according to the report.

A majority of the new enrollees, about 73 percent, are considered in good, very good or excellent health. About 55 percent are ages 19 to 44, and only 25 percent of the enrollees use tobacco, according to the report.

Under the ACA, the federal government will pay 100 percent of the cost to cover the newly eligible Medicaid enrollees for the first three years. After that, the federal contribution will decline slightly until 2020, when the federal government share will be 90 percent and the state responsibility will be 10 percent. The cost sharing will remain at 90-10.

For those who are currently eligible for Medicaid but are not enrolled, the federal government will pay only 50 percent of the cost for providing care, which is the current Medicaid funding structure in Washington.

The Urban Institute estimates the federal government will spend about $2 billion in 2014 to provide services to new Medicaid clients in Washington. The total cost of providing services to existing and new Washington Medicaid patients in 2014 will be about $7.2 billion, with the state's share totaling $2.4 billion.

While the program comes at a considerable cost, The Urban Institute report found the program also comes with the potential for state savings.

By providing medical coverage to people who are currently uninsured, the state expects to save $524 million in uncompensated care costs, according to the report.

The state currently gives hospitals money for uncompensated care, which is care the hospital provides for people who don't have insurance, said Porter, with the Health Care Authority. Federal law requires hospitals to evaluate all patients who walk through the emergency department doors, regardless of their ability to pay.

The idea, Porter said, is to reduce the amount paid to hospitals for uncompensated care by 75 percent and use the money to get people insured.

Expansion concerns

Joe Kortum, president and chief executive officer for PeaceHealth Southwest Medical Center in Vancouver, considers the Medicaid expansion a mixed blessing.

The uninsured tend to turn to emergency departments, the most expensive place to get care, when they are in need of medical attention, Kortum said. The hope, he said, is when people are insured they'll think differently about how they receive care and will turn to primary care providers rather than the emergency departments.

"It's important to provide basic insurance to everybody," Kortum said. "It changes the key behavior in people, or at least that's the idea."

The problem, he said, is while Medicaid expansion will benefit hundreds of thousands of people in the state currently without insurance, it still leaves scores of people uninsured, including people in the country illegally. Those uninsured will still turn to emergency departments while hospitals take a significant cut in uncompensated care payments, Kortum said.

The expansion also raises concerns for officials at Columbia United Providers, a community-based health insurance plan owned by PeaceHealth Southwest Medical Center and other Clark County health care providers. CUP has administered Medicaid services in Clark County since 1994 and currently manages care for about 50,000 county clients.

"The state is struggling to provide the program as it is," said Cindy Orth, CUP vice president for external affairs. "The last two years have been reduction after reduction."

Since early 2011, the state has made program cuts to Medicaid's Medical Care Services (formerly Disability Lifeline), Children's Health Program and Basic Health. The state imposed limitations for adult physical, occupational and speech rehabilitation; reduced maternity support services; eliminated nonemergency dental care for adults; eliminated hearing and vision aid benefits for adults; and reduced or eliminated podiatry care for adults.

Recent policy changes have also affected the programs. The state has limited payment for visits to hospital emergency departments for issues that aren't medical emergencies; reduced reimbursement rates for Caesarean sections and hospital readmissions and made changes to pharmacy services and formulary lists.

Reimbursement strains

Declining provider reimbursement rates are also concerning for CUP officials and local health care providers. Not only are the state Medicaid reimbursement rates declining, they're far less than the rates paid by commercial insurers and the Medicare program, which serves seniors and people with disabilities.

Take a standard office visit, for example. For adults, Medicaid will reimburse the physician about $58. The Medicare reimbursement is about $77 and the commercial insurance reimbursement is about $126. For children, the Medicaid reimbursement is about $70, and the other reimbursements are the same as for adults, according to figures provided by CUP.

"Providers are already challenged right now with covering their costs," Orth said. "If it's not fixed, physicians will be hard-pressed to continue their practices as is now and add patients to meet the volume increase (in 2014)."

The Vancouver Clinic is CUP's largest provider, seeing about 50 percent of the group's Medicaid managed care enrollees, Orth said.

Dr. Sharon Crowell, chairwoman of The Vancouver Clinic board of directors, said the clinic struggles to find a balance between providing great care for patients while being paid significantly less.

"As it sits, Medicaid reimbursement is inadequate to meet my expenses to run my business," she said. "How can I keep my doors open with these kinds of rates?"

Moving forward

As the state presses forward, local providers grapple with how, if at all, they can provide care for more local Medicaid clients.

"We are not able to figure out at this clinic how the community will be able to absorb 30,000 more Medicaid clients," Crowell said.

"I don't know that anyone has figured out how to make the finances work to absorb these people in the existing practices," she added.

The Vancouver Clinic is focusing its efforts on re-engineering how it provides primary care and becoming more cost-effective.

PeaceHealth Southwest Medical Center has a similar objective. The hospital staff will continue to squeeze costs while working to make care better and more efficient, Kortum said. Kortum will also keep an eye on this fall's election.

"At no time in my 32-, 33-year professional life has there been such a sense of unknown about what's next," he said. "The options are so dramatically different depending on who this country puts in office."

State attorney general and Republican gubernatorial candidate Rob McKenna has raised concerns about the Medicaid expansion, particularly the potential strain on the state budget. He said the state shouldn't commit until the federal government offers the state more flexibility so it can run the program more effectively.

Jay Inslee, the Democratic gubernatorial candidate, has said expanding the program is worth the costs. Those with insurance are currently helping foot the bill for the uninsured; higher insurance premiums help pay for uncompensated care, he said.

Porter, with the Health Care Authority, doesn't see the future of the Medicaid program changing, regardless of who is elected this November.

"I'm trying to imagine what governor and what legislature would say to almost half a million uninsured -- our estimates say (up to) about 450,000 Washington residents -- who if we did not opt for the Medicaid expansion would be without insurance," Porter said.

People who have insurance would get tax breaks through the Affordable Care Act, while the lower-income residents who are currently covered by Medicaid would continue to receive benefits, he said.

"You'd be saying to 450,000 people, 'I'm sorry. We're not going to cover you because you're in the middle,'" Porter said. "I just don't see that being a persuasive argument."

Even if the program has financial implications for the state down the road.

"You can't let the risk of out-year liability mean you don't cover people," he added.

Marissa Harshman: 360-735-4546; http://twitter.com/col_health;http://facebook.com/reporterharshman;marissa.harshman@columbian.com.