Medicaid Payments and Access to Care

By Sara Rosenbaum, J.D.
The New England Journal of Medicine, December 18, 2014

With more than 66 million beneficiaries, Medicaid is the United States’ largest insurer, and its impact on health insurance coverage, access to care, and the health of the poor has been substantial. But historically, Medicaid has faced a major challenge — a relatively low rate of physician participation. In its March 2011 report to Congress, the Medicaid and CHIP (Children’s Health Insurance Program) Payment and Access Commission (MACPAC, Congress’s Medicaid advisory panel) pointed out that the Medicaid population disproportionately resides in medically underserved communities with serious shortages of primary care providers and that the problem of isolation is confounded by low physician-participation rates.

Extensive research suggests that many factors contribute to low physician participation: complex program requirements, payment delays, and concerns about managing the care of patients with high levels of health and social risk. But research also shows that low fees play a key role and that substantial payment increases may be needed to alter physicians’ behavior. In a study conducted for the Kaiser Family Foundation, the Urban Institute estimated that in 2012, Medicaid physician fees averaged about 66% of Medicare payments and that the Medicaid–Medicare pay disparity was widening.

For good reason, primary care tends to be the first area of focus in any discussion of access in Medicaid. With a pronounced and growing shortage of primary care professionals — a shortage that’s estimated to reach 30,000 by 2015 — depressed Medicaid participation among available physicians is a major cause for concern. In the case of primary care, mitigation strategies exist. Safety-net providers such as community health centers play a vital role in reducing the access gap in the communities they serve.

Specialty care arguably presents the more serious Medicaid access problem, especially since there is no obvious mitigation strategy for it comparable to that offered by community health centers. The Commonwealth Fund reports that low payment rates are the principal cause of reduced specialist participation.

Among the hot-button issues that define the tense federal–state Medicaid relationship, no issue has historically been hotter than access to care, because of fierce state resistance to federal oversight of provider payment. This tension has led Congress to gradually strip most provider-payment provisions out of the Medicaid statute. But one basic legal principle remains: the so-called equal-access provision, which specifies that as a condition of federal funding, states’ Medicaid provider payments must be “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

The Department of Health and Human Services (HHS), however, has never implemented this provision through regulations.

Under the Affordable Care Act, Congress funded a 2-year pay increase for Medicaid primary care services in order to boost primary care payment rates to Medicare levels. In its Kaiser study, the Urban Institute estimated that the pay bump would increase fees by 73%. But the increase, which took effect in 2013, expires at the end of 2014, with no renewal in sight. News reports suggest that nearly all states plan to roll back primary care payments to 2012 levels, despite anecdotal evidence reported by some states of increases in provider participation.

Faced with payment rates that in some cases may be dangerously low, beneficiaries and providers have turned to litigation. A fundamental question, however, is whether providers and beneficiaries can go to court when provider payments may be too low to ensure appropriate access to care. In 2012, in Douglas v. Independent Living Center of Southern California, which involved a challenge to deep rate cuts enacted by California’s legislature, the Supreme Court deflected this question. Now, however, the issue is back; this term, the Court will hear Armstrong v. Exceptional Child Center, Inc., which again raises the question of whether beneficiaries and providers can protest low Medicaid payments in court. Douglas involved a rate cut; Armstrong, in contrast, involves a state’s refusal to pay properly. The situation here is one of a state’s failure to pay a provider an HHS-approved rate, with no HHS effort to enforce its own requirements.

Observers do not expect another deflection; in his Douglas dissent, Chief Justice John Roberts made clear his objection to court involvement in Medicaid-access cases, arguing that HHS — not the courts — should be the sole enforcement authority.

The Armstrong situation may be more serious than that in Douglas. Douglas involved an ongoing and active federal review, however slow it may have been. In Armstrong, the federal government has chosen to play no affirmative role whatsoever. 

There is a deeper issue here, of course: getting the federal government to do what it is supposed to do. That means issuing the long-delayed access regulations, providing technical assistance to states, and maintaining active and ongoing oversight of state program management. Medicaid beneficiaries deserve no less.

http://www.nejm.org/doi/full/10.1056/NEJMp1412488

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Comment:

By Don McCanne, MD

Medicaid has traditionally underpaid physicians for their health care services. That has resulted in low participation rates, especially by specialists, which, in turn, threatens health care access for Medicaid patients. The Medicaid statute requires that states’ Medicaid provider payments must be “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” Failure of our government to enforce this equal-access provision will now be heard by the Supreme Court.

The Affordable Care Act (ACA) greatly expanded eligibility for Medicaid, though the increase was not quite as large as anticipated because of the Supreme Court’s previous ruling allowing states to opt out of the expansion. Nevertheless, in an effort to ensure that enough physicians would participate at a level to assure adequate access for the new Medicaid enrollees, Congress included a temporary provision in ACA that would increase primary care payments to Medicare levels. Next week, that increase ends, and most states will revert to pre-ACA payment levels.

Most states are shifting their Medicaid patients into managed care organizations for the purpose of reducing their spending for this program. With the low payment rates, it is difficult to see how these organizations can afford to finance their patients’ care except by significantly reducing the frequency and intensity of services delivered. This is not a population that has been receiving an excess of health care services. Quite the contrary, they were already doing without services that they should have. These further reductions likely will be able to be measured by an increase in suffering and death.

Although Chief Justice Roberts has already indicated that he does not believe this is a matter for the courts, even if there is a ruling that the equal-access provision must be enforced, it is likely that only nominal adjustments will be made and that Medicaid will continue to be critically underfunded.

Instead of tweaking Medicaid, we need to enact an improved Medicare for all that would include implicitly an equal-access provision that applies to everyone.

Protesters demand action on single payer, condemn Shumlin’s reversal

By Morgan True
VTDigger.org, December 18, 2014

Protesters from across the state descended on Montpelier Thursday to voice their anger with Gov. Peter Shumlin’s decision to drop his pursuit of single payer health care. More than 60 people stood in front of the Statehouse chanting slogans and singing protest songs.

Deb Richter, a longtime single payer advocate who regularly attends the Green Mountain Care Board’s meetings, tried to convince protesters that Shumlin is not their enemy.

“He’s the only governor in the country who raised this issue and put it in the forefront,” she said.

She urged them to have patience, and said she’s still optimistic Vermont will be the first state to have public universal health care, but that goal may need to achieved in increments, as the governor indicated when he made his announcement Wednesday.

“This is like turning the Titanic,” she said, “Frankly, beating up on the governor I do not believe is really going to be helpful.”

Richter called on the protesters to take their message to the Legislature, which she said is now the most fertile ground for making progress on health reform.

http://vtdigger.org/2014/12/18/protesters-demand-action-single-payer-condemn-shumlins-betrayal/

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Comment:

By Don McCanne, MD

Deb Richter is right. The criticisms of Vermont Gov. Peter Shumlin are not only misdirected, many of them are based on the notion that he had all of the tools at hand to establish a single payer system in Vermont, but that he then decided not to move forward in response to political pressure. We should look carefully at the facts and then decide what approach we should now take to advance the single payer cause.

Many of the protests state or imply that Vermont was on the cusp of implementing a single payer system, but the effort failed because Gov. Shumlin was not innovative enough in his financing proposal for the single payer system, and then elected to abandon it because of the tax burden on individuals and businesses.

What is wrong with this concept?  Well, many things, but the most important is that the model that the governor was trying to implement WAS NOT A SINGLE PAYER MODEL. Excuse the shouting, but everyone must understand that this was not a failure of the single payer model.

Very early it was clear that Vermont could not establish a single payer system without federal support. Even the Obama administration did not have the tools to grant the comprehensive “waivers” that would be required since the process for such waivers must be authorized by Congress. The available Sec 1115 Medicaid waivers, Sec 1332 ACA waivers, and the highly limited Medicare demonstration waivers are not nearly enough to assemble a single payer program. Also ERISA restrictions prevent the state from moving self-funded employer-sponsored health plans into a state system.

It became so obvious that the label, “single payer,” was removed from the legislation, H.202, and the bill was completely rewritten. The bill passed WAS NOT A SINGLE PAYER BILL. After negotiations with the Obama administration, it was clear that there was no way to transfer the control of Medicare to the state government. It was decided that Medicare had to be left out since there was no other option. Another dilemma was that Vermont could not force employers such as IBM into the program, yet the financing system for Green Mountain Care (the surviving entity that was not even close to being a single payer for Vermont) would require payroll taxes and income taxes. How could you require IBM and their employees to pay taxes into a state health care program when they are already paying into IBM’s health benefit program? There are a multitude of other problems that we won’t repeat here, but Vermont was never even close to establishing a single payer system.

When opponents of single payer use the failure in Vermont as proof that single payer cannot work, we must respond that VERMONT NEVER ENACTED A SINGLE PAYER BILL. The bill that was enacted was not much more than a variation on the Affordable Care Act. Although it did have the unique feature of attempting to consolidate private insurers into Green Mountain Care, it failed to provide processes to implement the great multitude of other beneficial features that would be required to make it a single payer system. Vermont’s effort WAS NOT A FAILURE OF THE SINGLE PAYER MODEL.

Gov. Shumlin was not to blame. The federal restrictions were simply overwhelming, making implementation of single payer impossible without major federal legislative action. Nevertheless, Gov. Shumlin continued with his efforts to move forward with implementing as many features of single payer as were possible in this political environment. Any objective analysis reveals that there were too few options at his disposal. Merely expanding our dysfunctional system results in increased health care spending. Innumerable studies have shown that expanding on our system increases spending while falling short of reform goals. Gov. Shumlin just proved that once again. This was not a failure of the single payer model; it was a failure of a model composed of flawed health policies found in our current financing system, as perpetuated by the Affordable Care Act. A true single payer system achieves all goals while slowing spending to sustainable levels.

So what do we do now? Once everyone finishes with their venting, it is imperative that we all pick up our pace in moving forward with single payer. There are many tasks at hand. The three most important you’ve heard repeatedly: education, education, education. The nation needs to have a better understanding of single payer (and I dare say that applies to some in our own camp as well). We need both federal and state legislation. States cannot do it without enabling federal legislation, but then states will need their own legislation to implement the single payer bill enacted by Congress. Until we have the requisite federal legislation, states should begin working on cleaning up our health care financing systems so that the eventual transition to single payer will flow more smoothly.

Many have said that we cannot do anything for the next two years because of the red tide in Congress. On the contrary, two years is almost too short of a time to intensify our education efforts, and begin building the political momentum for reform, ideally before the 2016 elections. We need to get working immediately.

The news from Vermont should not be a reason to walk. On the contrary, it provides us with a reality check on what we need to do.

By the way, did I say that this was not a failure of single payer, since it was never a single payer model in the first place?

(Note: There are many views being expressed now, and some of them are in conflict. The views here are mine and not the official views of PNHP. During this time, all opinions should be expressed, but awfulizing and obstruction of progress should be avoided at all costs. We need to sound off, regroup, and then move forward both individually and in unison in our quest for health care justice for all.)

How the High Cost of Medical Care Is Affecting Americans

By Elisabeth Rosenthal
The New York Times, December 18, 2014

The Times designed a questionnaire with CBS News and conducted a national poll this month.

Americans are eager for relief.

There seems to be widespread agreement that medical prices are burdensome for American patients, and new solutions are needed. But will the answer be a market-based approach involving greater price transparency? More regulation, focusing on price? A government-sponsored single-payer health system, like that in Canada? Or allowing younger people to join Medicare, the popular health insurance program for seniors? Many readers surprised me by saying they could not wait to turn 65. As one reader from Texas said: “I bought medicine in Mexico for 23 years before I became eligible for the promised land of Medicare.”

NYTimes/CBS Poll

Would you favor or oppose a government-administered health insurance plan — something like the Medicare coverage that people 65 and older get — that would compete with private health insurance plans? 

59%  Favor
34%  Oppose
 8%  No opinion

Would you favor or oppose a single-payer health care system, in which all Americans would get their health insurance from one government plan that is financed by taxes?

43%  Favor
50%  Oppose
 7%  No opinion

http://www.nytimes.com/interactive/2014/12/18/health/cost-of-health-care-poll.html

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Comment:

By Don McCanne, MD

During the health care reform debate there was considerable support for a “public option” – providing individuals an option of choosing a Medicare-like program, administered by the government, that would compete with the private health plans. During the legislative process it received much publicity, but it was eventually eliminated from consideration under pressure from the insurance industry that did not want any competition from the government. A vote on a single payer proposal also was promised by the Democratic leadership in the House, but eventually the opportunity for that vote was traded away in politics as usual.

We still hear calls for a public option that many contend would address the high costs of health care, though few seem to understand that it would hardly have any impact on costs since it would be only one more player in our dysfunctional multi-payer financing system. But we also hear calls for a single payer system – an improved Medicare for all – that actually would slow spending while meeting other important goals such as universality and equity.

How are these messages resonating with the public? The competitive public option concept is supported  by 59% of those polled, whereas the single payer concept is supported by only 43%, with 50% opposed.

Although some might dispute this polling based on the phrasing of the questions or whatever, to me these results seem to suggest a much more serious problem. Instead of the national debate that we should be having – single payer versus our fragmented multi-payer system – the debate is being shifted to our private insurance-dominated multi-payer system versus a multi-payer system with a public option – a Medicare-like program that you can purchase in place of private insurance.

What does that shift in the debate do? Well, first of all, it ensures that single payer will continue to be left off of the table as we move forward. Second, it allows the insurers to exercise damage control by ensuring, through their ownership of Congress, that the public option would be prohibited from gaining an “unfair” competitive advantage against the private insurers. During the reform debate the insurance lobby was successful in selling the concept that the public option had to be removed from the control of government and have restrictions placed on it that would make it worse than the private plans. Just opening that door was still too much for the insurers, and so the concept was tabled. But when it comes back up again, the insurers want to have that debate rather than the single payer debate, and they are ready for it.

Another concern about the public option debate is that the concept is being deliberately conflated with the premium support concept as a means of ensuring that there is strong public support for improving health care value through competition – competition of private health plans, that is. The government would provide support for the insurance premiums through virtual vouchers that would provide an option to purchase various plans through the public exchanges. Thus the insurance industry gets precisely what it wants with the debate being limited to how much damage can be done to the free-standing public option, public in name only, to be sure that it does not unfairly compete with the private insurers (inadequate funding of reserves, prohibition of “advertising,” increasing adverse selection through the requirement of being the safety-net insurer, requirement to maximize cost sharing, requirement of using ultra-narrow networks, etc.).

Maybe some of this is a stretch, but we really have to be concerned when the perception of the public at large is that we don’t want a single payer system but we do want a government plan that competes with private insurers. The issues are complex. We have a lot of work to do to educate the nation on the true facts behind reform options. As far as messaging is concerned, right now the single payer opponents can dismiss our model with just one word: competition. Now just try to find one word or phrase that explains why single payer is vastly superior to private plans competing in the marketplace.

Governor says: ‘Now is not the time for single payer financing plan’

Times Argus, December 17, 2014

Gov. Peter Shumlin is backing away from a commitment to pass a single payer health care financing plan in Vermont in 2015. He just made the announcement at a press conference in Montpelier.

http://www.timesargus.com/article/20141217/THISJUSTIN/141219995

Comment:

By Don McCanne, MD

Gov. Shumlin has provided a very valuable lesson for all of us. He did almost everything possible on a state level to try to establish a single payer system within Vermont. He has established the fact that, beyond all doubt, a bona fide single payer system is impossible to enact and implement on a state level without comprehensive enabling federal legislation.

We can be thankful to Gov. Shumlin for his valiant efforts. He has shown us that it is imperative that we continue with our efforts toward a goal of enactment of federal single payer legislation.

Those of us working on the state level still have very important work to do. We need to continue our education efforts on a local, statewide, and national basis. We will not have single payer until the people understand it and elect a Congress that will bring it to us.

There are other important health care measures that can provide some improvements in our dysfunctional health care system, and we should support those. But we cannot be fooled into thinking that these are incremental steps on the path to single payer. Our health financing infrastructure must be replaced with a single payer system. Mere patches, such as we see with the Affordable Care Act, fall far, far short of what we need, and will only perpetuate health care injustices.

We have plenty of dedicated people who will continue with efforts to provide the beneficial patches to our system, and we should support their work. But, above all, we need to regroup and intensify our efforts to educate the nation on the imperative of a federal solution. That must be our first and foremost priority. Nobody should become discouraged and start thinking of leaving our ranks. We need to get busy and recruit more soldiers for our cause, beginning today. We are fighting for the health of the nation.

Many Obamacare Plans Set Out-Of-Pocket Spending Limits Below The Cap

By Michelle Andrews
Kaiser Health News, December 12, 2014

Seventy-four percent of 2015 silver level plans’ out-of-pocket spending caps are below the $6,600 spending limit allowed for individual plans and $13,200 maximum for family plans, according to Avalere, a consulting firm. The average out-of-pocket maximum for 2015 individual silver plans will be $5,853, says Caroline Pearson, a vice president at Avalere. Silver was the most popular plan type this year, selected by about two-thirds of enrollees.

After a policyholder reaches the out-of-pocket spending limit during the year, the insurer pays all the bills, unless, for example, they involve doctors and hospitals not in the health plan’s network.

The vast majority of other plans also feature lower limits on out-of-pocket spending—which includes deductibles, copayments and co-insurance, but not premiums. Seventy-one percent of bronze plan spending limits were below the allowed maximum (with an average spending limit for single coverage of $6,381), as were 94 percent of gold plans (average limit, $4,458) and 98 percent of platinum plans (average limit, $2,145).

The tradeoff for lower out-of-pocket spending maximums may be a higher deductible, says Pearson. The average deductible for silver plans will increase 7 percent in 2015, to $2,658. Other metal-level average plan deductibles are increasing as well.

Higher deductibles are likely helping keep premiums low, and low premiums are what consumers are looking for, Pearson says.

Kaiser Health News: http://kaiserhealthnews.org/news/many-obamacare-plans-set-out-of-pocket-spending-limits-below-the-cap/

Avalere: http://avalere.com/expertise/managed-care/insights/avalere-analysis-consumers-should-look-at-maximum-out-of-pocket-limits-dedu

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Comment:

By Don McCanne, MD

This Avalere report reminds us that, at a given actuarial value of a health plan (average percent of the health care costs covered by the plan), there is a reciprocal relationship between the maximum out-of-pocket spending for which the insured is responsible and the deductible that must be met before the plan begins paying for health care.

Ignoring other variables, such as waiving the deductibles for certain preventive services, let’s look at the 2015 average deductibles and average maximum out-of-pocket spending (MOOP) for the four metal tiers representing different levels of actuarial values (AV) in the insurance exchanges. The numbers are for individual plans that must be capped at a MOOP of $6,600 or less.

• The bronze plans (AV 60%) have an average deductible of $5,249 with an average MOOP of $6,381.
• The silver plans (AV 70%) have an average deductible of $2,658 with an average MOOP of $5,853.
• The gold plans (AV 80%) have an average deductible of $1,080 with an average MOOP of $4,458.
• The platinum plans (AV 90%) have an average deductible of $189 with an average MOOP of $2,145.

It is obvious that, in these examples, as AVs increase, both the deductibles decrease and the MOOPs decrease. The higher the AV value, the more complete is the coverage. But then why are both adjusted? Why didn’t the actuaries set the MOOP for each plan at the statutory maximum ($6,600) and simply adjust the deductibles? That way the higher the premium paid, the lower the deductible would be.

If you look at the platinum plan (90% AV) the average deductible is only $189. With the essential health benefits and the networks remaining the same, in order to push the AV up to 90%, the actuaries had to reduce the maximum out-of-pocket to an average $2,145. For the gold plans, in order to have a product with a standard $1000 deductible ($1,080 with 2015 adjustment), the actuaries also had to lower the MOOP to meet the 80% AV.

The bronze plans, with the lowest AV (60%), had to push their MOOP up to close to the statutory maximum – $6,381, just below $6,600 – but then that required an average deductible of a whopping $5,249 – quite a blow for the low-income individuals and the young invincibles who would be attracted to the low premiums of these plans.

The silver plans, which about two-thirds of exchange purchasers select, have a more balanced deductible and MOOP. So why didn’t they push the MOOP up to the maximum ($6,600) so that they could offer a more reasonable deductible? For one reason, having greater cost sensitivity through higher deductibles advances the consumer-directed approaches of those ideologues who place more importance on the theory of moral hazard than they do on patients getting the care that they need.

Another reason is that, since about 80% of the population uses only about 20% of health care, most insurance plan enrollees would never meet their deductible. With the silver plan deductible of $2,658, insurers would be paying for almost no care for about four-fifths of their enrollees (except preventive services – a very small part of our health care services). The extra that would have to be paid by the insurers for having a modestly lower MOOP would apply to only about one-fifth of their enrollees, most of whom would far exceed their deductibles anyway.

Left out of this are considerations of the consequences of obtaining care out-of-network, even if inadvertent, and of being required to pay retail prices for services that are later determined to not be covered benefits.

Seems like a pretty good deal for the insurers. Isn’t it our turn to get a good deal? We would have to get rid of the insurers first.