The governor on Monday announced details of a new round of spending cuts designed to keep the state budget balanced over the next several months.
Among them was an immediate 10 percent reduction in the Medicaid rates paid to doctors, hospitals and other health care providers.
Under one possible scenario, described last week by Kansas Health Policy Authority officials, the cuts would have been up to 5 percent on top of a planned rate leveling scheme that also would reduce payments to doctors for many treatments and procedures.
Under that scenario, the cuts would have kicked in for fiscal 2011, which begins July 1, 2010.
But Gov. Mark Parkinson said the state faced an “unprecedented” fiscal crisis, which made deeper, quicker cuts in the program necessary.
Medicaid, the government program that provides health services mostly to poor children and old people, has historically paid providers less than either Medicare or the private health insurance companies.
A new round of cuts, according to a leading spokesman for the state’s doctors, would surely make a bad situation worse.
“Most — not all, but most — docs in Kansas see Medicaid patients,” said Jerry Slaughter, executive director of the Kansas Medical Society. “I don’t think you’ll see them telling those patients they’re not going to see them anymore, but I do think you’ll see them deciding not to take on any more than what they’ve already got,” if the potential cuts are enacted.
“So, over time, it’s going to be harder and harder for someone on Medicaid to find a doc who’ll see them — harder than it is now,” Slaughter said.
Current Medicaid reimbursements, he said, fall way short of the meeting a physician’s costs.
“Every practice is different, but, generally speaking, Medicare barely covers most offices’ costs, and Medicare is 25 percent higher than Medicaid,” Slaughter said.
One increase in 20 years
Medicaid rates in Kansas generally have remained stagnant.
There was a rare increase in rates in 2006, after Kansas hospitals agreed to pay a “provider tax” that was then used to draw down additional federal Medicaid dollars which were then used to fund a modest increase in Medicaid reimbursements to hospitals and doctors.
“That got us to where we are now,” Slaughter said. “It was a good thing and we’re very appreciative, but I sort of have to remind people that that was the first increase in better than 20 years. We’re better off than we were, but Medicaid is still below Medicare and Medicare is still below commercial insurance.”
Some doctors report fewer colleagues accepting Medicare patients because of its relatively low payments. So cuts to Medicaid, they predict, are sure to shrink the pool of doctors willing to accept patients who are in the program.
Dr. Ron Brown, a family physician and president of the Medical Society of Sedgwick County, was one who said a cut in reimbursements would result in fewer physicians accepting Medicaid patients.
“Medicaid pays less than Medicare, so I think you’re going to see more of them say ‘We’ll keep seeing the ones we have, but we’re not going to take on any more.’”
He said new cuts would set the stage for fewer physicians seeing Medicaid patients at a time when, due to the economy, more people are eligible for and needing Medicaid services.
A recent medical society survey found that only 36 percent of the 1,033 physicians in Sedgwick County take Medicaid patients.
“You don’t hear a lot of docs complaining about breaking even,” Slaughter said. “They’re incredibly caring people. They know what’s going on. They want this to work. But there’s a difference between breaking even and losing money and you really can’t expect them to keep seeing a group of patients if it means they’re going to keep lose money doing it. It doesn’t take a lot of these patients to put an enormous strain on a practice.”
Different for hospitals
The situation would be different for hospitals. Because of federal law, they don’t have a choice. They must admit Medicaid patients.
“This will just make it harder for us cover our costs,” said Coffey Health System Chief Executive Dennis George, referring to the potential cuts in reimbursement.
“We have an orthopedist on staff,” George said. “When he does a knee replacement, our total Medicaid reimbursement doesn’t even cover the cost of the prosthetic device. So the unmet cost of that surgery comes out of our bottom line, which means I have to make it up from somewhere else. There’s only so much of that you can do.”
Coffey Health System is the36-bed hospital in Burlington.
Safety Net Clinics
Most of the state’s safety-net clinics use their Medicaid receipts to help cover the costs of caring for the growing number of patients who are uninsured, unemployed and unable to pay their bills.
Clinic directors say they’re fast running out of money.
“It doesn’t matter if we’re looking at a 1 percent cut or a 5 percent cut — whatever it is will be felt,” said Cathy Harding, executive director at the Kansas Association for the Medically Underserved. The association represents the state’s safety net clinics.
“I haven’t talked to a single clinic that isn’t feeling the impact of the economy and yet, at the same time, isn’t seeing more and more people who’ve lost their jobs and can’t pay their bills,” Harding said.
A recent KAMU survey found that in 2008, 23 percent of the patients seen at the state’s 40 safety-net clinics were on Medicaid. Most patients who use the clinics are working poor who have no health insurance.
Harding said it is often assumed that if a physician decides to no longer take Medicaid patients, the patients can always go to a safety-net clinic.
“That’s true,” she said, “but there’s only so much a clinic can do. It’s limited by its capacity, and right now almost all the clinics are operating at capacity. They’re being overrun.”
That’s certainly the case in Southeast Kansas, said Krista Postai, executive director at the Community Health Center of Southeast Kansas in Pittsburg.
“We’re full,” Postai said. “In the past couple months, we’ve taken on at least 100 patients who lost their doctor when they lost their jobs. They’re not on Medicaid, but that’s not the point — the point is they’re not working, so they don’t have any money, so they can’t pay their bill, so there’s less money coming in, which means you’re really going to need Medicaid (revenue) to help pick up the slack.”
A cut in Medicaid payments, she said, would constitute “a tax on a system that already overtaxed.”
Inevitably, patients who can’t get into the Pittsburg clinic or one of its satellites will turn to their local emergency room.
“When that happens,” Postai said, “you’re adding to the problem you’re trying to fix.”
Many, if not most, of the state’s hospitals are already reporting increases in the charity care they provide.
-Dave Ranney and Mike Shields are staff writers for KHI News Service, which specializes in coverage of health issues facing Kansans. They can be reached at 785-233-5443.