Tag: Medicaid

Medicaid block grants would be ok for Massachusetts

January 24th, 2017 by
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Look mom, no waivers!

The old Republican idea of replacing Medicaid with block grants to the states is back on the front burner. In general I oppose it because it is likely to be used as a backdoor way to screw people with low incomes by reducing available funding. And I also fear it will increase healthcare disparities in many states where the commitment to universal coverage is low. Read (Everything you need to know about block grants – The Heart of GOP’s Medicaid Plans) from Kaiser Health News for the ins and outs.

But a shift to block grants would be fine for Massachusetts. It might be preferable to the status quo, even with the threat of a slowdown in funding.

In particular, Massachusetts is operating under a waiver from the Centers for Medicare and Medicaid Services (CMS) that will enable the commonwealth to shift Medicaid recipients into accountable care organizations (ACOs). We need permission from the feds to tackle Medicaid reform, and have had to argue with CMS to get funding for priorities that the state government thinks are important, such as directing funding to providers for the uninsured.

Under a block grant program, Massachusetts (and other states) could do as they please. In Massachusetts, I’m confident that we’d do the right thing. Frankly, under the current system I worry that the Trump Administration could decide to punish Massachusetts and our level-headed, bi-partisan oriented Governor by yanking the waiver.

I’ll go a step further and say it would also be fine for Massachusetts if the whole Affordable Care Act were repealed and not replaced. Even though Obamacare was based on Romneycare, there are enough differences that it has caused painful adjustments in the Massachusetts market that we could do without.

As long as we are exploring radical ideas, we could go a step further and establish that each state receive back from the federal government the same share as it pays in from taxes. Instead of redistributing revenues from Democratic states like Massachusetts and California to Republican ones like Mississippi and Alabama as we do now (ironic isn’t it), we could even things out. That’s kind of agains the ethos of our republic, but hey, times are changing.

In any case, while block grants and repeal of the ACA are bad ideas that will hurt the country as a whole if enacted, in Massachusetts we should be just fine.

Image courtesy of sattva at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.

Medicaid for all?

November 14th, 2014 by

As More Join Medicaid, Health Systems Feel Strain.” That’s the striking and counterintuitive headline on the front page of the Wall Street Journal. The Affordable Care Act is injecting billions upon billions of dollars to provide Medicaid to previously uninsured people. More money should help healthcare providers’ finances, not hurt them. So what’s going on?

To summarize, Medicaid reimburses for services at only about half the rate of what commercial health plans pay. A doctor in the article receives just $80 to see a Medicaid patient compared to $160 for a commercial patient. That’s typical.

If all providers had the same mix of patients, this wouldn’t be such a problem. Well reimbursed commercial patients would make up for poorly paid Medicaid patients. But in today’s world, that’s not how it works. Some health systems concentrate their resources in wealthy communities with lots of commercial patients. Other providers end up with a much higher share of Medicaid patients and enter a vicious cycle that depresses their earnings, makes it hard for them to compete, and leads eventually to financial distress. To make matters worse, some of these “Medicaid” hospitals receive lower rates from commercial plans than fellow hospitals who avoid Medicaid. This is the scenario we face in Massachusetts (see Healthcare Inequality in Massachusetts: Breaking the Vicious Cycle) and elsewhere.

Still, I don’t accept the Journal’s implicit conclusion that the Medicaid expansion is bad for hospitals and physicians overall. For any given patient, a provider would much rather get reimbursed by Medicaid than try to collect from an uninsured patient. And since the US spends double per person what other rich countries spend on healthcare, even stingy Medicaid budgets should suffice.

It’s notable that the Journal article says next to nothing about solutions to the problem. All of the examples they cite assume a fee-for-service system. The very first example –Medicaid paying for robotic surgery for a patient– reminds me of the US system’s penchant for high-tech interventions that are expensive but not necessarily better.

Solutions are at hand, if we would be bold enough to embrace them:

  • Reduce disparities in reimbursement rates. Is there a defensible rationale for paying different rates for Medicare and Medicaid beneficiaries? For that matter, why should commercial plans pay a different rate?
  • Consider payer mix when setting reimbursement rates. If we’re stuck with differential rates between Medicaid and commercial –which we probably are– we should at least not penalize providers who take care of a lot of Medicaid patients. Their commercial and/or Medicaid rates should be adjusted so they don’t have to turn away Medicaid patients to survive.
  • Shift to risk-based payment models. Fee-for-service is wasteful and provides incentives for volume and high acuity care rather than value. Why not encourage the use of Medicaid Accountable Care Organizations and other risk-bearing approaches that give providers responsibility for costs and quality?

The sooner we have a serious discussion about Medicaid policy in this country the better.

By healthcare business consultant David E. Williams, president of Health Business Group.

Medicaid: Program for the poor should not impoverish doctors and hospitals

July 22nd, 2014 by

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Medicaid beneficiaries deserve the same access to healthcare services and products as people with commercial insurance or Medicare. But since Medicaid pays doctors and hospitals 27 to 65 percent less than commercial health plans (according to a new GAO report), it makes it awfully difficult for providers to be payer agnostic. Sure enough, we see even supposedly mission-driven non-profit healthcare systems looking to maximize their share of the commercial population by catering to that group.

That’s a real public policy problem as the proportion of patients with Medicaid increases, and it presents providers with an unreasonable dilemma.  In many states, doctors or hospitals that take care of a high proportion of Medicaid patients will find themselves in financial distress. That’s not fair to them or the Medicaid recipients. Frankly it’s also unfair to the commercial customers who may be overpaying to compensate for Medicaid underpayments.

Compare Medicaid with the Supplemental Nutrition Assistance Program (SNAP), aka Food Stamps. SNAP recipients don’t bankrupt supermarkets. That’s because the government pays the same price for groceries as any other customer. The SNAP program doesn’t demand that the grocery store sell products below cost, nor should it. SNAP recipients have to be savvy about how they use their benefit, seeking out high value products and retailers to stretch their dollar.

Realistically we won’t see the disparity between Medicaid and commercial payment rates erased any time soon. It would be just too expensive. But there are steps that can and should be taken:

  • Narrow the gap over time from the current 27 to 65 percent to something more like 10 to 15 percent
  • Introduce more progressive payment mechanisms –like Medicaid Accountable Care Organizations– that provide health systems with incentives to contain costs and improve quality. Healthcare systems that figure out how to help Medicaid members become healthier for a lower cost will prosper –analogous to what Walmart does with SNAP payments
  • Provide incentives for Medicaid beneficiaries to seek lower cost, higher quality care. Let’s not be paternalistic and assume that people on Medicaid aren’t capable of identifying high quality, low cost services.. I’ll venture to say that many lower income Americans are savvier shoppers than average consumers, if only due to necessity

The GAO report should be a wakeup call. It’s time to do something about these disparities beyond simply shrugging our shoulders.

photo credit: nffcnnr via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group

Target drops health benefits; I discuss on Al Jazeera

January 23rd, 2014 by

As mentioned yesterday, I went on Real Money with Ali Velshi to discuss Target’s decision to stop offering health benefits to part time employees. My overall message: part-timers will be better off on Medicaid or with subsidized exchange plans.

Here’s a snippet from my appearance.

[youtube https://www.youtube.com/watch?v=9gxc3n9lXyU?rel=0] —

By David E. Williams of the Health Business Group.

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