Sunday, December 28, 2014

YIKES! Medicaid Payments for Primary Care Services Could Drop by 50 Percent or More in California, Florida, New York and Pennsylvania

The government shouldn't be in the healthcare business at all, but what may occur at the start of 2015 is Crazy Eddie insane.

According to a new report by Stephen Zuckerman, Laura Skopec, and Kristen McCormack,:
In the 49 states studied and in the District of Columbia, expiration of the Medicaid primary care fee bump on January 1, 2015, would lead to an average 42.8 percent reduction in fees for primary care services for eligible providers. The fee reductions would vary substantially by state, with seven states experiencing a fee reduction of 50 percent or more and four states experiencing no fee reduction... 
 In seven of the states that do not plan to continue the fee increase with state funds,
Medicaid primary care fees for eligible codes will fall by 50 percent or more (Rhode Island, California, New York, New Jersey, Florida, Pennsylvania, and Illinois)... 
To put the magnitude of these fee reductions in some context, consider that the projected Medicare fee reduction under the sustainable growth rate formula was 24 percent in 2014. That cut and every potential fee cut under the formula since 2003 has been delayed by Congress. It has been uncertain whether congressional action related to continuing the Medicaid primary care fee bump would occur before the policy expires, and time appears to be running out...
The largest seven states by population size all face primary care fee reductions of more than 40 percent, and none of these states intends to continue the fee increase in 2015. Of those seven states, California, Illinois, New York, and Ohio could be faced with a significant expansion of enrollment in their Medicaid programs while implementing substantial Medicaid fee cuts for primary care. 
And here, just under the wire, is the 2014 understatement of the year, from the report:
 [S]ignificant drops in primary care reimbursement may lead physicians to see fewer Medicaid patients, potentially leading these patients to have difficulty finding a physician or getting an appointment. Although payment is not the only factor in physician acceptance of Medicaid (Long 2013), research has demonstrated a correlation between lower payment rates and fewer physicians accepting new Medicaid patients (Decker 2012). 
Bottom line: Those expecting to take advantage of government provided  healthcare via Medicare may start to  learn a lesson about long lines and the poor quality of government programs.


  1. I think that is fantastic, though those particular prices are not the most offensive as far as medical care goes. The system makes a lot of money from the poor in our trickle-up economy, including from medical reimbursements. Real reform means price reform. I personally know of OB/GYNs who made 7 figures over a career delivering babies for Medicaid patients, primarily. Don't think this is a threat when you say providers will deny care - let them deny care, and see how their income is affected. And poor quality has been a medical care reality for decades. Fat payments didn't change that fact.

  2. Just think if the government had left medical care alone that after a century (their meddling started in 1910) medical care would have been so remarkably cheap that practically anyone could afford it. Just like all those things that weren't important enough for government to meddle in.

  3. As the old quote goes "Socialism works until you run out of money". Maybe this is the event that will get people to actually embrace free market care and not government subsidized care

  4. As the reference to the Zuckerman/skopec/McCormack report indicates, this has been a yearly issue since 2003. The "sustainable growth rate," or SGR, was a scheme the government implemented to save money on government-funded healthcare (Medicaid) by forcing a gradual decline in reimbursement for basic medical services under the Primary Care umbrella every year. Every year, at the 11th hour, Congress passes a suspension of the fee reduction for another year, thereby kicking the can down the road another year. These large reductions are simply the cumulative amount of what the incremental reductions would have resulted in had the original SGR reductions occurred yearly without interruption.

    Every state's reimbursement rates for Medicaid are different, but generally speaking, the reimbursement from Medicaid is a pittance of what normal reimbursement rates would be from any other source, including Medicare rates (which themselves are lower than private insurance reimbursement). In essence, a primary care clinic loses money on every Medicaid patient they take, and by taking such patients, they are subjected to excessively burdensome, government mandated processes, procedures, and regulations (as one can imagine). The actual overhead to treat a Medicaid patient is higher than almost any other payment source while the reimbursement is much lower. The main reasons providers accept Medicaid is a) they are required to accept some if they wish to be able to accept Medicare patients as well, b) some providers are so bad that if they didn't accept Medicaid patients, they wouldn't have any patients at all since those who can afford to go elsewhere will do so, and c) many hospital-run clinics are required by local/state laws to provide care for uninsured patients as well as Medicaid and fully insured patients, so it's better to get $20 from Medicaid than $0 from an indigent patient.

    Essentially, the SGR is a price-fixing scheme that attempts to work in the absence of having a monopoly on the marketplace. They have a monopoly only on the poor folks who get stuck with Medicaid. Anyone with better insurance, and even those with no insurance can typically get superior care.

    The healthcare industry, even before Obamacare, was the most heavily regulated and government manipulated market in the US. Even the banking industry can't hold a candle to it in terms of regulation. Thus we have no idea what the actual "correct" price of healthcare is for any locale, and we have no basis on which to judge profitability. The price signals are manipulated and entrepreneurial hands are tied. Thus more and more physicians are choosing to no longer accept any insurance, or at least not accept government insurance, so as to lower their costs and increase the quality of care provided.

    What we see here is an early model of how the socialized medicine model, that is being further developed by Obamacare, will continue to fail. This is just another canary in the coal mine.

    My prediction is that, as it becomes more and more difficult for the providers on the front lines to break even with expenses, and they pull out of Medicare and Medicaid and Obamacare, state by state licenses to practice will gradually require providers to accept Medicaid and other government healthcare plans or they won't be able to get a license to practice. This is the nature of price fixing. A sudden and massive cut in reimbursement rates for Medicaid would only accelerate that. Lawmakers are likely to kick this can down the road as far as they can, but I suspect the Republican "solution" to "fix" Obamacare will only push us closer towards that end.

    1. Next stop, black market medical care. Probably an improvement over the current "sick care" scheme. Maybe the voters will then approve a "compassionate use" law for "medical" medical care as long as it's taxed and regulated. And the circle remains unbroken...

    2. It is my understanding that in Florida, it already is a requirement for state physician licenses that you must accept Medicaid patients.

    3. "Next stop, black market medical care."

      They've had to outlaw cash payments in Canada for most doctor services, though I'm not sure how much of a black market there is. When I was up there last year I witnessed the complicity of the population in regards to this...but not being a resident I'm not sure how many Canadian citizens have found a way to pay doctors cash/under the table despite the "law".

      In an ironic twist, if you are getting cosmetic surgery, ie. boob jobs, etc., then cash payment is 'ok'.

      So if you're a Canadian, hope that you don't have cancer but instead just want a boob job.

      I bring this up, because I see the US system eventually emulating the Canadian socialist system of healthcare as time goes on and the failures become more evident. As always, the gov't solution to their failed policies is more gov't 'solutions', never getting rid of itself.

  5. Meh, do you think doctors are stupid or something?

    When Medicaid pays you less, just bill your other patients more. Over time, this gets amortized.

    Eat that, Gruber!

  6. Could this be a ploy to jack up prices for non-Medicaid services provided by doctors? Who would benefit from such a development?

    1. Government benefits.

      Medical care in my opinion is now on the transit / passenger rail model. First the companies make crony deals with government. Government then keeps demanding more for less. Eventually the companies are bankrupt leaving the service a government monopoly.

      Dependence on government for medical care makes for a more compliant, more obedient population, especially if things are engineered to make them all 'sick'.