Category Archives: Session Law 2013-360

NC Medicaid Reimbursement Rates for Primary Care Physicians Slashed; Is a Potential NC Lawsuit Looming?

Here is my follow-up from yesterday’s blog post, “NC Docs Face Retroactive Medicaid Rate Cut.

Nearly one-third of physicians say they will not accept new Medicaid patients, according to a new study.  Is this shocking in light of the end of the ACA enhanced payments for primary physicians, NC’s implementation of a 3% reimbursement rate cut for primary care physicians, and the additional 1% reimbursement rate cut?  No, this is not shocking. It merely makes economic sense.

Want more physicians to accept Medicaid? Increase reimbursement rates!

Here, in NC, the Medicaid reimbursement rates for primary care physicians and pediatricians have spiraled downward from a trifecta resulting in an epically, low parlay. They say things happen in threes…

(1) With the implementation of the Affordable Care Act (ACA), the Medicaid reimbursement rate for certain primary care services increased to reimburse 100% of Medicare Cost Share for services paid in 2013 and 2014.  This enhanced payment stopped on January 1, 2015.

(2) Concurrently on January 1, 2015, Medicaid reimbursement rates for evaluation and management and vaccination services were decreased by 3% due to enactments in the 2013 NC General Assembly session.

(3) Concurrently on January 1, 2015, Medicaid reimbursement rates for evaluation and management and vaccination services were decreased by 1% due to enactments in the 2014 NC General Assembly session.

The effect of the trifecta of Medicaid reimbursement rates for certain procedure codes for primary care physicians can be seen below.

CCNC

As a result, a physician currently receiving 100% of the Medicare rates will see a 16% to 24% reduction in certain E&M and vaccine procedure codes for Medicaid services rendered after January 1, 2015.

Are physicians (and all other types of health care providers) powerless against the slashing and gnashing of Medicaid reimbursement rates due to budgetary concerns?

No!  You are NOT powerless!  Be informed!!

Section 30(A) of the Medicaid Act states that:

“A state plan for medical assistance must –

Provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1396b(i)(4) of this title) as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

Notice those three key goals:

  • Quality of care
  • Sufficient to enlist enough providers
  • So that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area

Courts across the country have held that low Medicaid reimbursement rates which are set due to budgetary factors and fail to consider federally mandated factors, such as access to care or cost of care, are in violation of federal law.  Courts have further held that Medicaid reimbursement rates cannot be set based solely on budgetary reasons.

For example, U.S. District Court Judge Adalberto Jordan held in a 2014 Florida case that:

“I conclude that while reimbursement rates are not the only factor determining whether providers participate in Medicaid, they are by far the most important factor, and that a sufficient increase in reimbursement rates will lead to a substantial increase in provider participation and a corresponding increase to access to care.”

“Given the record, I conclude that plaintiffs have shown that achieving adequate provider enrollment in Medicaid – and for those providers to meaningfully open their practices to Medicaid children – requires compensation to be set at least at the Medicare level.

Judge Jordan is not alone.  Over the past two decades, similar cases have been filed in California, Illinois, Massachusetts, Oklahoma, Texas, and D.C. [Notice: Not in NC].  These lawsuits demanding higher reimbursement rates have largely succeeded.

There is also a pending Supreme Court case that I blogged about here.

Increasing the Medicaid reimbursement rates is vital for Medicaid recipients and access to care.  Low reimbursement rates cause physicians to cease accepting Medicaid patients.  Therefore, these lawsuits demanding increased reimbursement rates benefit both the Medicaid recipients and the physicians providing the services.

According to the above-mentioned study, in 2011, “96 percent of physicians accepted new patients in 2011, rates varied by payment source: 31 percent of physicians were unwilling to accept any new Medicaid patients; 17 percent would not accept new Medicare patients; and 18 percent of physicians would not accept new privately insured patients.”

It also found this obvious fact:  “Higher state Medicaid-to-Medicare fee ratios were correlated with greater acceptance of new Medicaid patients.”

Ever heard the phrase: “You get what you pay for.”?

A few months ago, my husband brought home a box of wine.  Yes, a box of wine.  Surely you have noticed those boxes of wine at Harris Teeter.  I tried a sip.  It was ok.  I’m no wine connoisseur.  But I woke the next morning with a terrible headache after only consuming a couple of glasses of wine.  I’m not sure whether the cheaper boxed wine has a higher level of tannins, or what, but I do not get headaches off of 2 glasses of wine when the wine bottle is, at least, $10.  You get what you pay for.

The same is true in service industries.  Want a cheap lawyer? You get what you pay for.  Want a cheap contractor? You get what you pay for.

So why do we expect physicians to provide the same quality of care in order to receive $10 versus $60?  Because physicians took the Hippocratic Oath?  Because physicians have an ethical duty to treat patients equally?

While it is correct that physicians take the Hippocratic Oath and have an ethical duty to their clients, it’s for these exact reasons that many doctors simply refuse to accept Medicaid.  It costs the doctor the same office rental, nurse salaries, and time devoted to patients to treat a person with Blue Cross Blue Shield as it does a person on Medicaid.  However, the compensation is vastly different.

Why?  Why the different rates if the cost of care is equal?

Budgetary reasons.

Unlike private insurance, Medicaid is paid with tax dollars.  Each year, the General Assembly determines our Medicaid budget.  Reducing Medicaid reimbursement rates, by even 1%, can affect the national Medicaid budget by billions of dollars.

But, remember, rates cannot be set for merely budgetary reasons…

Is a potential lawsuit looming in NC’s not so distant future???

Hello, 2014! And Hello 3% Decrease in Medicaid Reimbursements (But Call the Decrease “Shared Savings”)

Tomorrow is the first Medicaid checkwrite for 2014 (and its my birthday too).  Happy New Year! Happy birthday!! (I’m turning 29 for the 10th year).  For New Years, my husband and I had a very quiet evening eating crab legs at home. Yum! I am sure many of you made New Years resolutions…work harder…lose weight…get paid 3% less….WHAT?

With the first Medicaid checkwrite tomorrow, due to Session Law 2013-360, many health care providers will receive 3% less in Medicaid reimbursements.  You will receive a 3% cut if you are the following types of providers:

  • Inpatient hospital.
  • Physician, excluding primary care until January 1, 2015.
  • Dental.
  • Optical services and supplies.
  • Podiatry.
  • Chiropractors.
  • Hearing aids.
  • Personal care services.
  • Nursing homes.
  • Adult care homes.
  • Dispensing drugs.

(This is the exact list as found in Session Law 2013-360.  I am well aware that the list is grammatically-challenged, but I did not write it).  Both the federal government and NC are calling this 3% withholding “Shared Savings Plan with Provider.” 

How is this “shared savings with providers” when the government is withholding money from providers??? Sure, supposedly, there will  be a “pay for performance payment” to some providers, but most providers will just be reimbursed 3% less.

How is this fair?  How is this “shared savings?” 

Here’s an example:

Say I work at Harris Teeter and my manager comes up to me and says, “Hey, Knicole, Harris Teeter is really concerned with our overhead costs.  Salaries seem to be a big cost, and we want to “share the savings” with you.  So we are going to cut your pay by 3%.  If we, subjectively, determine, at the end of the year, that you are working hard and saving us money, then we will give you a performance reward.  It will not be all the money we retained, but it will be some amount.  This way Harris Teeter profits off the interest of the 3% we retain all year, plus the amount we never give you.”

Folks, the above example is called a decrease in pay and a swift kick in the bottom.  It is not “shared savings.”

In DHHS’ shared savings scheme, the money will go to:

“The Department of Health and Human Services shall use funds withheld from payments for drugs to develop with Community Care of North Carolina (CCNC) a program for Medicaid and Health Choice recipients based on the ChecKmeds NC program. The program shall include the following:

  1. At least 50 community pharmacies by June 30, 2015.
  2. At least 500 community pharmacies in at least 70 counties by June 30, 2016.
  3. A per member per month (PMPM) payment for care coordination and population health services provided in conjunction with CCNC.
  4. A pay for performance payment.”

Session Law 2013-360.

According to the Centers for Medicare and Medicaid Services (CMS), “[a] shared savings methodology typically comprises four important concepts: a total cost of care benchmark, provider payment incentives to improve care quality and lower total cost of care, a performance period that tests the changes, and an evaluation to determine the program cost savings during the performance period compared to the benchmark cost of care and to identify the improvements in care quality.”

Employers chop salaries all the time in order to maximize profit.  Back in 2011, Sony proposed 11% salary cuts for executives due to such a terrible fiscal year.  But guess what is different between Sony’s 11% cut and Medicaid’s 3%?  I know…I know…a lot….but what difference am I thinking about?

Sony sought shareholder approval.

I guess you can make the argument that the General Assembly sought voter approval because our citizens voted for all the legislators in the General Assembly.  But I think that argument is weak.  No legislator ran his or her campaign on: “Vote for Me! If you are a Medicaid provider, I plan to decrease your salary by 3%!”

Better yet, with the Sony salary cut, executives had the option to seek employment elsewhere.  What is a Medicaid provider’s option? Move?  Not take Medicaid? (Sadly, I see this as a more viable option).

On a legal note, I question the constitutionality of our new shared savings plan.  Wouldn’t the decrease of 3% in Medicaid reimbursements be considered an unlawful taking without due process.  In essence, could one argue that the decrease of 3% in Medicaid reimbursements is just a way for the State to decrease Medicaid reimbursements without going through the proper lawful process?

Then again, maybe we won’t need to worry about the 3% decrease at all…given NCTracks’ track record, it is plausible that NCTracks will not be able to adjust the Medicaid reimbursements by 3%.