Medicaid changes provide incentives for providers to become more efficient and lower costs
by Becky Gillette
Published: November 2,2012
Unlike some neighboring states facing Medicaid budget shortfalls of hundreds of millions, currently Mississippi does not have a looming budget deficit. But Dr. David Dzielak, executive director of Division of Medicaid in Mississippi, said all that could change dramatically in the months ahead.
“The Medicaid budget is a very complicated dynamic that is often difficult to project into the future,” Dzielak said. “There are many factors that are beyond the control of the Division of Medicaid such as the number of qualified beneficiaries that enroll in the Medicaid program, how many times in one year our beneficiaries seek access to medical services and the federal match rate for the medical services, to name a few that make an accurate projection of a budget into the future a challenge.”
This past legislative session the Division of Medicaid was given some flexibility in the way it reimburses hospitals for both inpatient and outpatient services. These reimbursement methodologies are currently being implemented.
“We believe these changes will create incentives for these providers to become more efficient and, as such, lower overall costs to Medicaid,” Dzielak said. “We have to walk a fine line when making these types of changes because we cannot create service limitations that will affect access to health care for our beneficiaries. Last year we proposed several other efficiency improving changes that did not make it into the legislation. I think we can create a more efficient system that helps contain the ever-escalating costs of health care.”
Dr. James Keeton, University of Mississippi Medical Center associate vice chancellor for health affairs, said the status quo is an enormous burden to individuals who struggle to gain access to care, and threatens the financial solvency of safety-net providers.
“With that said, health care providers must continue working to increase the overall quality and reduce the cost of care as part of the broader improvement of the health system,” Keeton said. “We’re hopeful that our state and federal leaders, working with the health care industry and academic medical centers like ours, can find enough common ground to eventually get more people insured.”
Everyone is keeping a close eye on the presidential election as that could have a major impact on implementation of Obamacare. It could be kept as it is, small parts of it revoked, or there could be a major overhaul. The uncertainties make it difficult for those in the health care business.
“There are probably more unknowns out there in the hospital reimbursement world than there have ever been before,” said Gwen Combs, vice president for policy, Mississippi Hospital Association. “It is hard to know what to expect.”
Combs said there are huge uncompensated care questions. If there is not an expansion of Medicaid in Mississippi, how will health care providers be reimbursed for indigent patients?
Changes already instituted under Obamacare are causing concern. Combs said Oct. 1 value-based purchasing was instituted under the Medicare provisions of the Affordable Care Act. That payment methodology requires a 1 percent reduction in reimbursement to create a pool for hospitals that meet goals. Medicare will take a little from everyone and distribute to those doing better with value-based purchasing. Hospitals that do better will get enhanced payments, but how this works won’t be known right away.
Some state hospitals are already losing money on Medicare. If those hospitals are reduced by one percent, they will be going even deeper in the hole.
Combs said on a positive note, many hospitals have taken advantage of federal grants to institute Electronic Health Records (EHR). “A lot of hospitals have worked hard and gotten incentive payments to help with EHR that helps with financial and quality of patient information,” she said.
From the patient standpoint, there have been some beneficial changes in that children up to age 26 can be kept on their parent’s health insurance policy even if the child is not in college, people can’t be turned down for insurance because of prior conditions and some changes in reimbursement have encouraged prevention of hospital acquired infections (HACs). Since both Medicaid and Medicare will not pay for conditions that could be prevented by providers, more is being done to improve quality of care to prevent HACs.
Dr. Steve Demetropoulos, an emergency room physician at Singing River Hospital System and president of the Mississippi Medical Association, said everyone is waiting to see how the election plays out since a lot of the Affordable Care Act provisions have been implemented, and a lot haven’t.
He said the biggest thing that has happened in the past two years is there has been a big push towards “pay for performance” where the government sets quality and performance goals.
“That is good if you are getting a bonus for reaching goals,” Demetropoulos said. “But what they are doing is taking away money if you are not hitting goals. A lot of doctors and hospitals have taken a year or so to ramp up for this, but are not sure of process issues — how to reach goals. Oftentimes, the goals don’t make sense. If you don’t reach those goals, they can take away two percent of your income. A lot of margins are very close for hospitals, so it is quite a challenge.”
Health care officials are concerned that if disproportionate share hospital (DSH) payments from Medicare end, but large numbers of residents remain uninsured, this could dramatically change the financial picture for hospitals that serve large populations of chronically ill, uninsured and underinsured people.
“Hospitals will have to expand Medicaid rolls or lose the extra money many hospitals have been depending on to make their budgets,” Demetropoulos said. “The way it affects doctors is if our hospitals receive $22 million in DHS payments, and our margin is $4 million, without that money, the hospital would have to lay people off, not buy new equipment and make other cuts.”
Demetropoulos said the biggest thing physicians dislike in Obamacare is the number of regulations and intrusion into patient-physician relationship, which is regulated at many different levels from payment to how physicians document patient encounters.
“It is one big regulation, and that is what people most object to,” he said.
On the other hand, he thinks the health insurance exchanges are probably something both political parties view as a positive outcome of Obamacare. People will be able to go online and compare apples to apples. For example, if you want a high deductible policy, you can see which insurance companies offer what.
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