Category Archives: Government Shutdown

More Financial Pressure on Hospitals By 2013’s Legislative Medicaid Budget

Representative David Price spoke as the Keynote Speaker at the North Carolina Society of Health Care Attorneys annual meeting yesterday morning.  Since Representative Price was actually up in Washington D.C. during the shutdown, it was very interesting to hear him speak.  His opinion, as one would expect from his ideology, was that the shutdown was idiotic and unnecessary.

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What I found interesting was how he described the relationships between congressmen and women today versus in the 90s.  Remember, he has represented NC in Washington for more than one decade.  He described the relationships, even across party lines, as more cordial in the 90s than today’s relationships.  I wonder why our legislative body has become more segregated.

In the afternoon session, Linwood Jones from the North Carolina Hospital Association spoke about recent legislative action.  This legislature was not good to hospitals.  As Linwood described the legislative session this year…”It was all about Medicaid.” (I know you were wondering how the NC Society of Health Care Attorneys annual meeting was going to be germane to Medicaid).  According to Mr. Jones, the Medicaid budget was the primary factor in almost all budget cuts.  And what entities get most of Medicaid funding?

Duh…Hospitals.  Hospitals are the biggest providers in the state, and, in some areas, the biggest employers.

Our Medicaid budget is approximately $13 billion.

Remember…36 million a day is what we spend on Medicaid in NC.

How much of that $13 billion Medicaid budget goes to hospitals?   According to Kaiser Family Foundation, 25.7% for inpatient care.  Or $3.341 billion annually.  Or $9.252 million a day!!

Including outpatient care?  38.7%  Or $5.031 billion annually.  Or $13.932 million a day!!

According to the handy-dandy Wikipedia website, North Carolina has 126 hospitals in 83 counties.  For those of you who never went to 6th grade in North Carolina, we have 100 counties in NC.  (In the 6th grade, if you grew up here, you learn all about North Carolina geography, which apparently didn’t stick, because I still get lost).

That is $13.932 million dollars a day going to 126 hospitals in NC.  That is a lot of money!!!

Does Medicaid matter to hospitals?

Heck, yes!! Remember, a hospital cannot turn anyone away, including Medicaid recipients and uninsured.  Add the fact that the mentally ill in NC are not getting medically necessary services because our managed care organizations (MCOs) have monetary incentives to NOT provide the expensive mental health services; PLUS the fact that Medicaid reimbursements are painfully low, which leads to many physicians not accepting Medicaid, and you get the sad sum of Medicaid recipients ending up in emergency rooms of hospitals.

Don Dalton, a spokesman for the Hospital Association, said that statewide about 46 percent of hospitals’ revenue comes from Medicaid. (See Rose Hoban’s article).

But, hospitals don’t make a huge profit.  Especially on Medicaid recipients.

On average, Medicaid reimburses hospitals 80% of the actual cost for hospital services.

But this year, the General Assembly created a budget in which the 80% will be reduced to 70%.

Medicaid reimbursements were already bad.  But now, the Medicaid reimbursements will be 10% worse.  Subtract 10% from the $13.932 million dollars a day…

This is not a good thing for hospitals nor Medicaid recipients.

When Representative Price was speaking, a woman raised her hand with a question/vignette.  She said that she and her friends had gotten on the health care exchange (Obamacare) (Healthcare.gov) website and “shopped” for health insurance.  She said that all the people who signed up for health care exchange (because it is mandated and there is a penalty for not having insurance) had their premiums increase anywhere from 300%-800%.  Although Rep. Price made a good point, that they all should have contacted Blue Cross Blue Shield (BCBS) and asked why BCBS dropped that particular insurance plan.  Nonetheless, the woman harped on the fact that Obama had promised, “You like your insurance? You can keep it! You like your doctor? You can keep him/her!” (I added the “her.”)

So, here we are…with low Medicaid reimbursements to begin with, high medical costs, and the General Assembly reducing the Medicaid rates for hospitals by 10%.

Incentive to accept Medicaid recipients?  I think not…but hospitals have no choice.

Physicians and other Medicaid providers have the choice as to whether to accept Medicaid patients, but hospitals?  No choice there.  Hospitals must accept Medicaid recipients.  Mandatory!!!

In my opinion, the very first step toward fixing the Medicaid system is RAISING Medicaid reimbursement rates.

Sound counterintuitive? Yes, I agree it sounds counterintuitive.  But think about Medicaid like this:

If you agree with me that Medicaid is an entitlement and that the Medicaid budget is way too high, but that all Medicaid recipients deserve quality health care…if you agree with all that…

And you also agree with me that it is drastically more expensive for Medicaid recipients to go to the emergency room (ER) for health issues that could be solved in a family physicians’ office…if you agree with all that…

Then we would save Medicaid dollars by increasing (drastically) the Medicaid reimbursements.  If doctors had a monetary incentive to accept Medicaid, then more doctors would accept Medicaid (Logic 101).  If more doctors accept Medicaid, then more Medicaid recipients have the ability to go see a doctor.  If more recipients have more office visits then ER visits drop.  If more unnecessary ER visits drop, then the State pays less money to the hospitals, which is an extremely higher rate (even with the 10% reduction) than a higher Medicaid reimbursement to physicians.  Cut the $13.932 million a day to hospitals, not by decreasing the reimbursement rate, but by fewer Medicaid recipient going to the ER…instead have the recipients receive quality care outside the hospital, thus saving money…

Get it?

By reducing the Medicaid reimbursements to hospitals, the legislature did decrease the Medicaid budget, but not in a way that intelligently attempts to fix the system.  The same amount of Medicaid recipients will be going to hospitals.  Since the hospitals cannot turn anyone away, reducing reimbursements to hospitals merely hurts the hospitals.

Want to decrease the Medicaid budget? Increase Medicaid reimbursements (drastically) to Medicaid providers.  More providers accepting Medicaid means more recipients receiving quality care and NOT checking into the ER….

Money saved intelligently.  Too bad the legislature didn’t ask my opinion prior to slashing Medicaid reimbursement rates.

Government Shutdown: No Medicaid Funds Available in D.C., So Why Am I Still Getting My Mail!

Hey, have you heard??? Our federal government has shut down. So why am I still getting mail???

Unless you have lived under a rock for the past couple weeks, you are aware that our esteemed federal government has shut down.  At least…partially.  I keep getting mail.  Social security is still getting paid.  But don’t you dare try to visit a national monument…those are off-limits!! Really? Who decided what gets shut down and what stays open?  How is it that I still get my cable bill, but cannot visit Yellowstone National Park??

How is all this tomfoolery affecting Medicaid?  Minimally, in most areas, but Medicaid fundings HAS STOPPED in Washington D.C.

Why stop Medicaid funding in D.C. when the federal air traffic controllers are still working.  The State Department continues processing foreign applications for visas and U.S. applications for passports.  The federal courts are open.  The National Weather Service is still working.  Student loans are still getting paid. The Veterans’ hospitals are all up and running.  The military is still working.  I guess, Obama and White House staff are still working. (Although Obama could be on the golf course).  The Post Office is delivering mail.

Yet, here are some random federal actions and agencies that are actually stopped/closed:  Food safety inspections are suspended; U.S. food inspections abroad have also been stopped.  Auto recalls and investigations of safety defects are stopped.  Taxpayers, who filed for an extension in the spring, still have to pay their taxes by today, yet the IRS is not processing tax returns (How does this make sense??). The Consumer Product Safety Commission (CSPC) is not working.  (Great, after the CPSC starts working again, there are sure to be numerous lawsuits based on new product defects that have been placed in the market over the last 2 weeks).  The Environmental Protection Agency (EPA) has ceased to run, which means we have two weeks of allowable pollution.  Many at the Federal Bureau of Investigations (FBI) and the federal housing agency are furloughed.

How does this shutdown make any sense?? Who determined that the IRS should not process tax returns, but should accept taxes?  Who decided that safety inspections should be stopped, but passports should still be processed?

That safety inspections of food and products should halt, but students should still get federal loans.

Where is the logic?

It is as if someone said, “Shutdown the federal government!! Except not the mail, passports, and the weather service…keep those running!”

And then Medicaid in D.C…. Why did Medicaid funding stop only in D.C.??  While I still think if the mail is being delivered that D.C. providers could get Medicaid fundings, I will attempt to explain the illogical reason below:

Because D.C. is not a state.  D.C. is a local government without a state, so its budget must be authorized by U.S. Congress.  And Congress has not passed a budget.

D.C. has $2.7 billion budgeted for Medicaid, but providers are getting nothing (and, quite possibly, some recipients).  I can only imagine how this is negatively impacting health care providers in D.C. I am sure many of the providers are still rendering services unpaid.  But some, I would imagine, are closing up shop.  I know I could not last financially without a paycheck for 3 months.  I am sure many of the D.C. providers are no different.

But it still makes no sense.  Just like NC, D.C. pays for about 30% of Medicaid with the federal government reimbursing about 70%.  If NC’s federal reimbursements are still being paid, why not in D.C.?

And why am I still getting mail????

Well, my heart goes out to all the Medicaid providers and Medicaid recipients in D.C.  I hope you receive Medicaid fundings very soon.

Although, at least D.C. providers know that, at some point, the Medicaid funds will be funded; whereas in NC we still have NCTracks.