Blog Archives

NC Docs Face Retroactive Medicaid Rate Cut

This is a story from NC Health News by Rose Hoban…a follow up blog to come

In the 2014 state budget passed last August, state lawmakers inserted what could be considered a poison pill for Medicaid providers: a 3 percent pay cut that for specialists could be effective retroactively to January 2014.

Primary care providers such as pediatricians, internists and family doctors will see the same pay cut, effective back to Jan. 1, 2015.

But the cut is only now being implemented.

“All of us were optimistic that the cut wouldn’t happen,” said Karen Smith, a family doctor in Raeford who runs her own practice.

Smith said she and other physicians have been writing, calling and talking to legislators, working to convince them not to implement the cut.

But she and thousands of other primary care providers received notification late last week that on March 1 they would begin seeing the 3 percent cut.

And for specialists, the reduction will go back 14 months.

“It’s quite a hit,” said Elaine Ellis, spokeswoman for the North Carolina Medical Society.

Failed shared-savings plan behind the problem

The origin of the 3 percent cut goes back to the 2013 budget for Medicaid, the program that covers health care for low-income children, some of their parents, pregnant women and low-income seniors. In 2013, the federal government paid North Carolina 65.5 percent of every dollar billed for Medicaid-eligible care, while the state covered the other 34.5 percent (The rate, which changes annually, is 65.9 percent for 2015).
In 2013, the Medicaid budget had grown to close to $4 billion in state dollars, and lawmakers at the General Assembly were looking for ways to trim costs. So they devised a “shared-savings” program, in which Medicaid providers would take a 3 percent rate cut that would be collected by the state Department of Health and Human Services. If doctors and hospitals saved money by operating more efficiently, DHHS would share those savings back with the providers, effectively reducing the amount of the 3 percent cut.

But DHHS needed federal approval to initiate the program, which would have been complicated. The agency never submitted a plan to the federal government, so neither part of the program was initiated.

That created a problem for lawmakers, who had calculated the savings from the rate cut into their state budget. When lawmakers returned to Raleigh in 2014 to adjust the state’s biennial budget, they implemented the rate cut retroactively to Jan 1, 2014 for specialists. Primary care providers, such as Karen Smith, had their rate cut put off until the beginning of 2015.

Big bucks

Officials from the Medical Society have been gathering numbers from around the state and are finding that some specialty practices could owe tens of thousands of dollars that would need to be repaid to state coffers.

The need for retroactive payment is in part a logistical problem: The computerized Medicaid management information system, known as NCTracks, has not been able to process the cuts. NCTracks has had technical issues since it was rolled out in mid-2013; at that time, glitches in the system created months of delays and tens of thousands of dollars in unpaid services for providers.

“Requiring these [specialist] medical practices to pay back 3 percent of what the state has already paid them for the last 14 months would wreak havoc with the finances of these businesses – really, any business would struggle to recover from such a financial blow,” Robert Schaaf, a Raleigh radiologist and president of the Medical Society, wrote Monday in a press release.

And primary care doctors like Smith are also fretting over paying back 3 percent of what she earned from Medicaid for the past two months.

“Practices such as my own are functioning on an operating budget that’s month by month,” said Smith, who said that a great many of her patients are Medicaid recipients.

“We simply do not have that type of operating reserve to allow for that,” she said.

The cuts will be especially tough for rural providers, who have high numbers of Medicaid patients, said Greg Griggs from the N.C. Academy of Family Practitioners (The Academy of Family Practitioners is a North Carolina Health News sponsor).

“It’s one thing to make the cuts going forward, but to take money back, especially for that period of time, is pretty significant for people who’ve been willing to take care of our most needy citizens,” Griggs said.

“It’s pretty bad,” he said, “and its not like Medicaid pays extraordinarily well to begin with.”

Piling on

In addition to the state cut is a federal cut of 1 percent to Medicaid reimbursements for primary care providers that went into effect on Jan. 1.

As part of the Affordable Care Act, primary care providers like Smith got a bump in reimbursement last year, but that ran out with the new year. Smith said that legislators in other states found ways to keep paying that enhanced rate for primary care doctors.

“We were hoping our legislators would do the same,” she said.

Instead, Smith finds herself talking to her staff about possible reductions, and she’s hearing from providers in her area that they’re throwing in the towel.

“I already have colleagues who’ve left practice of medicine in this area,” she said. “My personal physician is no longer in this area. Another colleague who was a resident three years in front of me told me he cannot deal with the economics of practicing like this anymore.”

Smith acknowledged that North Carolina’s Medicaid program has a slightly higher reimbursement to physicians than surrounding states. But she said many of her patients are quite ill.

“We are in the stroke belt,” she said, referring to the high rate of strokes in eastern North Carolina. “When we look at how sick our patients are compared to other states, is it equivalent? Are we measuring apples to apples?

Williams Mullen Hosts Its First Annual Healthcare Panel Discussion: Summary Below

I am currently sitting in a hotel in New Mexico.  I testified this morning before the New Mexico Behavioral Health Care Subcommittee regarding due process for health care providers upon “credible allegations of fraud.”

This past Sunday I ran and finished my very first half marathon.  And, yes, I am sore.  I signed up for the Bull City 1/2 marathon in Durham because it was being held in October and I thought the temperature would be cool.  But I failed to contemplate Durham’s hills…ouch!

Despite my jet lag and sore muscles, I wanted to blog about the health care panel discussion this past Thursday night hosted by Williams Mullen. Representative Nelson Dollar, Barbara Morales Burke, Blue Cross Blue Shield of NC, Stephen Keene, General Counsel for the NC Medical Society, and I presented as the healthcare panel.  As you can see below, we sat in the above-referenced order.

Panel4

with moderator

Below, I have outlined the questions presented and my personal recollection of each answer.  These answers were not recorded, so, if, by chance, I misquote someone, it is my own personal recollection’s fault, and I apologize.

Our Williams Mullen associate Robert Shaw, acted as the moderator and asked the following questions:

To Rep. Dollar:

Most of us have heard about the discussion in the General Assembly about moving North Carolina’s Medicaid program towards a more fully implemented managed care model or to one using accountable care organizations. Where do the House and Senate currently stand with respect to these models, and what are the prospects for passing Medicaid reform in next year’s long session of the General Assembly?

Summary: The House and the Senate are not in agreement.  The House put forth a Bill 1181 last session that encompasses the House’s ideas for Medicaid reform.  It was a bipartisan bill.  It was passed unanimously.  Medicaid reform should not be a bipartisan matter.  Our Bill did not fare well in the Senate, but the House believes Bill 1181 is the best we have so far.

To which Keene interjected: It is important that Bill 1181 was unanimous. The Medical Society endorses the bill. 

To Barbara Morales Burke:

As we head into open enrollment season under the Affordable Care Act, what are the biggest challenges you see from the insurer’s perspective in complying with Affordable Care Act requirements and meeting the needs of the marketplace?

Summary: BCBS, as all other insurance companies, faced unique times last year during the open enrollment and this year will be even more important because we will find out who will re-new the policies.  While BCBS was not perfect during last year’s open enrollment, we have learned from the mistakes and are ready for the upcoming enrollment.

To Steve Keene:

What concerns are you seeing from members of the North Carolina Medical Society regarding patients’ access to providers of their choice and your members’ participation in the major health insurance networks?

Summary: This has always an issue since he came to NC. He actually wrote a memo regarding the access to provider issue back in the 1990s.  The insurance need to come up with a known a published standard. BCBS actually has better relationships with providers than, say, for example, a United Healthcare.  If the insurance company decides to only use X number of ob/gyns, then it should be clear why the insurance company is only contracting with x number ob/gyns.

To Knicole Emanuel:

Under the Affordable Care Act, the standard for withholding payments in the event of a credible allegation of fraud has changed. What is the standard for a credible allegation of fraud and how does such an allegation affect Medicaid reimbursements?

Summary: The ACA was intended to be self-funding.  In drafting the ACA, 42 CFR 455.23 was amended from allowing states to choose whether to suspend Medicaid reimbursements upon credible allegations of fraud to mandating the states to suspend payments.  The basis for a suspension is credible allegations of fraud and only requires an indicia of reliability.  This indicia of reliability is an extremely low standard and, thus, adversely impacts health care providers who are accused of fraud without a basis, such as a disgruntled employee or anonymous and unfounded complaint.  

For more information on suspension of Medicaid payments, please see my blogs: “How the ACA Has Redefined the Threshold for “Credible Allegations of Fraud” and Does It Violate Due Process?” or “NC Medicaid Providers: “Credible Allegations of Fraud?” YOU ARE GUILTY UNTIL PROVEN INNOCENT!

To Keene and Burke: (ACA topic)

One of the concerns, or perhaps benefits depending on one’s perspective, about the implementation of the Affordable Care Act is the possible transition from our country’s employer-based health insurance model. Are you seeing any trends away from the employer-based health insurance model, or do you expect such a trend in the future?

Summary: (From Keene) He sees the employer-based health insurance model as a tax issue.  Employer-based health insurance is not going anywhere unless the related tax break is eliminated.  Keene does not have an opinion as to whether the employer-based health insurance model is good or bad; he just believes that it is not going anywhere.  On a side note, Keene mentioned that, with employer-based health insurance, the employee has a much smaller voice when it comes to negotiating any terms of the health insurance.  The employee is basically at the whim of the employer and health insurance company.

Dollar and Emanuel: (Medicaid reform)

Who are the major contributors to the legislative discussion on Medicaid funding and reimbursement rates? What stakeholders do legislators want or need to hear from more to make sound policy decisions about funding decisions?

Summary: (From Dollar) It is without question that the legislators are surrounded by lobbyists regarding the discussion as to Medicaid funding and reimbursement rates.  I stated that the reimbursement rates are too low and are a direct correlation as to quality of care.  Rep. Dollar stated that he is open to hearing from all.  Furthermore, Rep. Dollar believes that the Senate Bill on Medicaid reform is a good start for Medicaid reform. The Bill implements the Accountable Care Organizations (ACOs), and is supported by the NC Medical Society.

Summary: (From me) I support Medicaid reform that eliminates the MCOs in behavioral health care.  These MCOs are prepaid and have all the financial incentive to deny services and terminate providers.

Burke: (ACO)

How is Blue Cross Blue Shield of North Carolina working with providers to take advantage of the new Medicare Shared Savings Program? (E.g., partnership signed with WakeMed Key Community Care (an accountable care organization) in July.)

Summary: BCBS works very hard to maintain solid relationships with providers.  To which Keene agreed and stated that other private insurance does not.

The health care panel was great.  We hope to host a State of the State on Health Care panel discussion annually.

Williams Mullen Hosts “The State of the State of Health Care” Panel Discussion

Williams Mullen is hosting a free panel discussion on “The State of the State of Health Care.”  Please see below!

The panelists will be Rep. Nelson Dollar, Steven Keene, General Counsel to the NC Medical Society, Barbara Burke, from BCBS, and me.  The panel discussion will begin at 4:00.  Then from 5:00-6:30 we will have free drinks and appetizers.

Please feel free to come and bring others.  But we do request that you register here by October 10th in order for us to have a correct head count.

panel