States Can Cut Back on Medicaid Payments, Administration Says

By Robert Pear
The New York Times, February 25, 2013

The Obama administration said Monday that states could cut Medicaid payments to many doctors and other health care providers to hold down costs in the program, which insures 60 million low-income people and will soon cover many more under the new health care law.

The administration’s position, set forth in a federal appeals court in California, has broad national implications as it comes as the White House is trying to persuade states to expand Medicaid as part of the new law.

In a brief filed with the United States Court of Appeals for the Ninth Circuit, in San Francisco, federal officials defended a decision by California to cut Medicaid payments to many providers by 10 percent.

Kathleen Sebelius, the secretary of health and human services, approved the cuts in October 2011 after finding that beneficiaries would still have “adequate access” to the wide range of services covered by Medicaid.

The Obama administration urged judges to uphold those cuts, which are being challenged by patients, doctors, dentists, hospitals, pharmacists and other health care providers in California.

Health care providers said California’s payment rates were inadequate even before the cuts. They pointed to a federal study that said, “California stands out because of its very low Medicaid payment levels.”

In an interview, Gov. Jerry Brown of California, a Democrat, said the Medicaid cuts were essential to his efforts to dig the state out of a budget hole.

Federal law says Medicaid rates must be “sufficient to enlist enough providers” so that Medicaid beneficiaries have access to care at least to the same extent as the general population in the same geographic area.

Moreover, the administration said, Congress gave states “wide discretion” to set Medicaid rates, and courts should not second-guess decisions by Secretary Sebelius on the adequacy of rates.

“There is no general mandate under Medicaid to reimburse providers for all or substantially all of their costs,” the administration said.

http://www.nytimes.com/2013/02/26/us/politics/states-can-cut-back-on-med…

And…

Healthcare overhaul may threaten California’s safety net

By Anna Gorman
Los Angeles Times, February 25, 2013

An estimated 3 million to 4 million Californians — about 10% of the state’s population — could remain uninsured even after the healthcare overhaul law takes full effect. The burden of their care will fall to public hospitals, county health centers and community clinics. And those institutions may be in jeopardy.

County health leaders and others say the national health law has had the unintended consequence of threatening the financial stability of the state’s safety net.

And under the federal law, some of the funding that goes to safety-net hospitals is also set to decrease.

Now, as the state scrambles to create the new healthcare infrastructure, Gov. Jerry Brown is proposing to take back another crucial pot of money that counties have depended on for more than two decades to care for the uninsured.

http://www.latimes.com/health/la-me-left-uninsured-20130226,0,3348028.story

California has been a leader in setting national trends in health care financing. Two developments should have low-income patients very concerned. California’s Medicaid program is critically underfunded, and the state is reducing payment rates by another ten percent. Also, the state is reducing funding for local safety-net institutions which provide critical access for low-income populations.

Perhaps the most alarming of all is the official response of the Obama administration (in an appeals court filing): “There is no general mandate under Medicaid to reimburse providers for all or substantially all of their costs.”

We have said over and over again that Medicaid, as a welfare program, will never have the political support to fund it adequately. The burden of the additional load of Medicaid patients will surely find the health care resources strained beyond the capacity of willing providers, especially when you consider that California already is not meeting the costs of providing care to this vulnerable population. And the 3 to 4 million Californians who will remain uninsured will need to rely on the safety-net institutions, though those institutions also are in jeopardy – again because of the lack of political support for welfare programs.

If California is successful with its cruel budget trimming, it can be anticipated that many more states will follow.

Here’s an amazing fact: Low income patients do not have the money to pay for health care. (What an intuitive stroke of genius!) What they need is an affordable system that removes financial barriers to care while ensuring adequate financing of our entire health care delivery system, thereby removing health system disincentives to providing essential care for this vulnerable population. Make that for all of us.