Medicaid cuts may backfire, docs warn

November 7, 2009
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The state of Michigan’s 8 percent cut to Medicaid payments to health care providers is likely to send health care bills higher for everyone, a local pediatrician said.

As more doctors in primary care, family medicine, internal medicine and pediatrics limit the number of Medicaid patients they treat in the wake of the cut, patients will seek treatment in hospital emergency rooms, which can’t turn them down, said Dr. Nicholas Kokx, a pediatrician in Comstock Park.

“They are businesses, and they need to be able to make a bottom line,” Kokx said. Yet even without the cut, which was instituted as part of this month’s state budget deal, Medicaid payments are not enough to cover the costs of treating those patients, he said.

“The solution for a Medicaid population who cannot find a physician that will accept them in their practice is to use the emergency room. That costs the state of Michigan more money per unit.”

And worse, Kokx added, “It trains a group of people to use the emergency room for primary care. The industry knows them as ‘frequent flyers.’”

Dr. Paul Farr, a Grand Rapids gastroenterologist and former president of the Michigan State Medical Society, said pediatricians see a high number of Medicaid patients because a large proportion of children are in the program.

“When access becomes difficult, where do those children end up? In the emergency room, where it’s 20 times more expensive to take care of them,” said Farr, who chairs an umbrella group for Saint Mary’s Health Care doctors. “It’s one of those things that makes absolutely no sense.”

The Michigan Health & Hospital Association said the cut will reduce payments from Medicaid to the state’s 144 hospitals by $135 million a year, which includes $99 million in federal matching dollars that disappeared with the reduction. Also affected are prenatal services and part of the extra funding for hospitals that carry a high level of Medicaid patients.

Andy Johnston, director of legislative affairs for the Grand Rapids Area Chamber of Commerce, has long been advocating for the chamber’s position that raising Medicaid payments to doctors, hospitals and other health care providers would actually mitigate health care costs.

“Once again, the governor and the Legislature really took the easy way out when it came to trying to balance the budget rather than taking on significant structural reform,” Johnston said. “It only increases the cost shift on private insurance, which was over $2.1 billion in this state. It’s hurting small businesses as they try to provide health care for their employees.”

Johnston said that out of a list of 20 health care reforms backed by 2,000 petition signatures from Michigan businesses, he is putting combating Medicaid fraud at the top of the list. Better enforcement alone could save $200 million to $300 million, he said.

In the meantime, the federal Centers for Medicare & Medicare Services announced a 21.2 percent reduction in Medicare payments beginning Jan. 1. The total reduction would be somewhat mitigated by other changes in the payment formula pertaining to items such as electronic prescribing, and 5 percent to 8 percent increases for general practitioners, family physicians, internists and geriatric specialists.

CMS is accepting public comment on its ruling until Dec. 29. However, Farr noted, Congress has frequently stepped in at the last minute to stay the Medicare axe.

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