If the state slashes Medicaid payments to doctors, they may stop serving the neediest patients. Where will they go?
In an era of overcrowded emergency departments, Tomball Regional Medical Center’s emergency room has become an efficiency leader, a model of how to quickly stabilize patients, move them to hospital beds and keep the waiting room manageable.
Hospital officials are worried that the good times are about to end.
The officials fear the ER will be the recipient of a crush of Medicaid patients suddenly seeking primary care or preventable emergency care, the result of the 2011 Texas Legislature slashing reimbursement rates.
Reducing rates is expected to cause many more health care providers to stop accepting Medicaid patients.
“If the Legislature slashes Medicaid rates, those patients are going to be left without a health-care home and they’re going to come to the ER,” said Dr. Glen Blaschke, the Tomball hospital’s medical director of emergency services. “It’ll totally overwhelm us. It’ll cause problems for everyone. It’ll be depressing.”
Texas hospitals are bracing for the likelihood.
With a state budget shortfall estimated as high as $27 billion for the upcoming two-year cycle, legislators are targeting Medicaid, which accounts for a quarter of the total state budget.
The Legislature is proposing a reimbursement rate cut and other Medicaid cost-savings initiatives that could reduce hospitals’ payments by as much as 33 percent.
That would do serious damage to a formula funding system that now reimburses hospitals 89 cents on the dollar for Medicaid care. And those numbers don’t reflect a 2 percent reimbursement cut the state instituted in the past six months.
A growing population
The anticipated cut also would come amid a swelling Texas Medicaid population. The ranks have grown 12 percent a year in recent years, mostly the result of people losing their jobs, and insurance, due to the recession.
Plus, in 2014, the federal health-care reform law will make an additional 2 million Texans eligible for the program.
A 33 percent cut would be particularly hard on some rural hospitals that treat a large percentage of Medicaid patients. Texas Hospital Association officials tell of one hospital in the Panhandle that anticipates it will stop delivering babies and one in East Texas looking at closing its maternity services and outpatient clinic for poor people.
They also predict a few hospitals wouldn’t survive such reimbursement cuts.
If the outlook isn’t as bleak in greater Houston — its Texas Medical Center and suburban hospitals have a better mix of payment sources, larger financial cushions and more doctors to pick up the slack when doctors drop out — its hospitals nevertheless are projecting tough times ahead.
Tomball Regional is representative of the concern.
A standard community hospital — founded in 1976, it staffs 220 beds and performs most procedures except transplants — it’s exploring how to absorb the coming ER influx and where to make cuts that should be significant even though Medicaid enrollees constitute a relatively small minority of its patients.
Lynn LeBouef, the hospital’s president and chief executive officer, estimates the proposed legislative cuts would cost the hospital about $6 million in state and federal money and strain an already tight budget. The hospital’s operating margins run about 1.5 to 2 percent.
He says the most likely casualty will be personnel.
“Our highest costs and our most controllable costs are salary,” said LeBouef, a 33-year veteran at the hospital, a nonprofit not affiliated with a system or supported by taxes. “It’s not like we can negotiate new electricity rates.”
LeBouef acknowledged the possibility that reduced Medicaid reimbursement rates will result in higher health insurance premiums.
Analysts expect hospitals to pressure private insurers for better rates to recoup money lost on Medicaid patients treated at the emergency room and written off as bad debt. Insurers eventually pass on their cost increases through higher premiums and co-payments.
The proposed Medicaid legislative cuts only amount to 10 percent for doctors, but their exodus seems inevitable, given that primary-care physicians are currently reimbursed just 50 cents on the dollar. The percentage of Texas doctors accepting new Medicaid patients is 42, down from 67 percent a decade ago, and Texas Medical Association leaders say the number likely will drop to single figures if rates drop significantly again.
Blaschke says the effect at emergency departments will be huge: Doctors not trained in the treatment of chronic illness suddenly will have to manage people with conditions such as hypertension or diabetes; quality of life and life expectancy will be reduced; and ERs will be overrun with patients, delaying care to those who need it most quickly.
Blaschke also emphasizes that such treatment will incur huge bills, for patients who could be treated more inexpensively by a primary care doctor and for those who wait until their condition requires emergency treatment, such as amputation or dialysis. The latter group often will go from the ER to rehab or nursing homes, at even greater Medicaid expense. Many people suffer from addiction. Click here to check your Humana rehab insurance benefits covers rehab treatment.
“It really makes no sense,” says Blaschke. “There might be savings in the short run, but in the long run, it’s only going to cost the state more.”