The Homa Files

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Excerpted from WSJ:  Health Reform Could Harm Medicaid Patients, Dec. 4, 2009 

Both the House and Senate health-care reform bills call for a large increase in Medicaid—about 18 million more people will begin enrolling in Medicaid under the House bill starting in 2013.

A flood of new patients will be seeking health services, many of whom have never seen a doctor on more than a sporadic basis. Some will also have multiple and costly chronic conditions. And almost all of them will come from poor or disadvantaged backgrounds.

Johns Hopkins’  Priority Partners handles Medicaid patients under a capitated system — that is, it receives a set payment per individual per month from the state.

Over time, we’ve developed the ability to manage the care of these individuals in a way that is both cost effective and that provides them with quality care. We’ve done it by tapping into our extensive delivery system, which includes four hospitals, a nursing home, the largest community-based primary care group in Maryland, and much more.

We’ve hit above-national benchmarks on all clinical quality measures, reduced monthly costs for patients with substance abuse and highly complex medical needs, and 70% of our patients tell us they’re satisfied with our care.

The key fact is that for years the state did not cover all the costs our Medicaid program incurred. As a result of new patients whose costs were not completely covered by the state, Priority Partners lost $57.2 million from 1997 to 2005.

We stanched the losses by ensuring that the payment from the state was appropriately risk adjusted to match the health conditions of our members, and by investing heavily in primary-care and care-management and disease-management programs.

Yet this past year the losses began again, because the state expanded the program’s eligibility to 116% of the federal poverty level up from 40%.

So we are struggling with a large group of new patients—about 30,000 people. Today, like in the late 1990s, a health-care surge is overwhelming our managed-care system. The capitated rate for the new beneficiaries is not yet risk-adjusted. Priority Partners has lost a devastating $15 million in just nine months.

Congress can help, or at least learn from our experience to use the reform legislation to bend the cost curve if it encourages other states to institute and appropriately fund capitated systems that allow capable providers to adjust payments based on risk. The key is that federal support to states for Medicaid must appropriately adjust rates to match the risk of providing health care to the group of people who are covered by Medicaid.

The Senate bill would increase eligibility for Medicaid to those who make 133% or less of the federal poverty level. The Kaiser Family Foundation reports there are 308,000 people who meet that threshold in Maryland.

Even if only half of those individuals seek Medicaid coverage, such a large expansion would likely have an excruciating impact on the state’s budget.

Without an understanding by policy makers of what a large Medicaid expansion actually means, and without delivery-system reform and adequate risk-adjusted reimbursement the current health-care legislation will have catastrophic effects on those of us who provide society’s health-care safety-net.

In time, those effects will be felt by all of us.

Full article:

http://online.wsj.com/article/SB10001424052748703939404574567981549184844.html?mod=djemEditorialPage