Higher Medicaid fees can't fix pay gaps, say doctors

The Atlanta Journal-Constitution

Dr. Thaddeus Chapman hasn’t drawn a paycheck in two years. He’s run through his retirement account. And his wife’s.

His credit score, he says, is “in the dumps,” and two business partners left the practice in search of a more profitable arrangement.

“That’s not the American dream,” says Chapman, an Atlanta obstetrician/gynecologist. “That’s the American nightmare.”

While Chapman loves delivering babies, the low fees Medicaid pays him, along with past payment snags, have pushed him to the financial brink, he says. Soon, it may force the 44-year-old to move from Georgia, his home state.

Gov. Sonny Perdue’s proposed budget for fiscal 2009 would increase the fees that the state pays doctors like

Chapman for treating poor and disabled patients in the Medicaid program.

Hospitals, home health agencies and nursing homes also would get a rate increase, which would extend to a second government program, PeachCare for Kids. The pay increase would cost $55 million in state money and, with federal matching funds, would total $154.8 million.

But physicians and hospitals say it won’t be nearly enough to erase their losses. And lingering pay gaps may make it harder to find doctors who will accept new patients covered by Medicaid and PeachCare, which together cover 1.4 million Georgians.

Chapman, who delivers at Emory Crawford Long Hospital and DeKalb Medical at Hillandale, says about 75 percent of his births are paid by the Medicaid program,significantly higher than the state average. He gets about $1,300 for each Medicaid obstetrics case, from prenatal care through post-birth evaluation, he says.

The pay has stayed the same for years. Meanwhile, Chapman’s office overhead has doubled since 2002, due to more expensive office leases, higher staff salaries and malpractice insurance.

“We can’t even break even,” he says. “About $2,200 is [breaking] even. We need to make a profit, too.”

The state Department of Community Health says Medicaid pays medical providers the 15th highest rates in the nation.

But according to budget documents, the last time Georgia doctors saw a general pay increase from Medicaid was in fiscal 2003. Georgia ranks 39th in Medicaid spending per beneficiary — about $800 less per recipient than the national average, and $400 behind the Southeastern state average, says the Access Healthcare Coalition, which includes physician, hospital and business groups.

The group says Georgia doctors are paid about 30 percent less for treating Medicaid patients than the fees paid by the Medicare program, which covers the elderly and disabled.

A proposed 2.5 percent increase for Medicaid deliveries, under the Perdue budget plan, would mean only about $32 more in fees.

Chapman has delivered more than 600 Medicaid babies in the past two years. If he’s forced out of business because of the low reimbursement rate, he says, the patients he sees will have a harder time finding an ob/gyn willing to treat them.

“Who’s going to absorb them?” he says. “Who’s going to deliver those babies?”

Matching cost of care

Financial losses have led some physicians to restrict their Medicaid and PeachCare load, which, in turn, ends up swamping the offices of other doctors.

Suzana Montana, a Norcross pediatrician, says Medicaid and PeachCare patients comprise 85 percent of her practice. Private insurance pays at least twice the $40 that Medicaid pays for a “sick” child visit, Montana says.

Her cash-paying parents, along with the privately insured, help keep the business going. “I make enough money to live,” Montana says, but not nearly as much as pediatricians with a high amount of privately insured patients.

Hospitals, too, are struggling. Medicaid pays Georgia hospitals about 84 cents for every dollar the facilities spend on providing care to patients covered by the plan, according to the coalition of groups advocating for higher fees.

The reimbursement increases are “a start toward getting some rates to where they should be,” says state Rep. Mickey Channell (R-Greensboro), head of a House Appropriations health subcommittee and a leading Medicaid expert in the state.

The goal is to make Medicaid payments match the costs of care by 2011, says the Georgia Hospital Association. The pay raises have won support from powerful business and county government groups, which see a link to overall health costs.

Doctors, hospitals and other medical providers raise prices for privately insured patients to offset losses from Medicaid and the uninsured. That, in turn, raises the cost of health insurance for businesses.

The Georgia Chamber of Commerce, recognizing that link, is backing higher Medicaid and PeachCare payments.

“Health care costs are the No. 1 concern of businesses across the state,” says Joe Fleming, senior vice president for government affairs at the Georgia Chamber of Commerce.

“It’s just wrong to pay 80 cents on a dollar,” says Fleming, in support of the Perdue plan. “If you have to take all comers, like hospitals do, and are paid 80 cents on a dollar, you’ve got to find another way to stay in business.”

Taxpayers also help fill the shortfalls. County governments often use property tax revenues to subsidize hospitals’ losses from Medicaid and uninsured patients, notes Ashley Meggitt, senior policy analyst for the Association of County Commissioners of Georgia, which also supports the budget increases.

Part of Grady Health System’s financial plight comes because of its huge Medicaid load — one-third of its revenues. Extra pay increases in the Perdue plan would go to hospitals such as Grady that have trauma centers.

Increase not enough

Memorial University Medical Center in Savannah, another large trauma hospital, says the increase is welcome but not enough to stem red ink. “We estimate the bump will be $1.5 million to $2.5 million,” says CEO Bob Colvin. “It’s better than nothing, but it’s not nearly as good as what some people think.”

Memorial projects a 2007 loss of $32 million. Of that, the Medicaid loss is $9 million, with much of the rest coming from treating uninsured patients, Colvin says. “We get 76 cents of every dollar of our costs reimbursed by Medicaid. Medicaid has not increased its core rates in six years.”

“What has been a very healthy hospital in the last 11 years has become very sick in the last 12 to 18 months,” he says.

The increased money can’t come soon enough for 25-bed Stewart Webster Hospital, which is surviving week to week, payroll to payroll. About 15 percent of the Richland hospital’s revenue comes from Medicaid and PeachCare.

“Any reimbursement increase would help — every penny helps,” says Betty Geeslin, the hospital administrator. “We’re barely making ends meet.”

If it closes, patients will lose access to a nearby hospital. The next closest hospital, she says, is in Columbus, 35 miles away.

Nursing homes will receive a total of $54 million (including federal funds), with much of it devoted for facility upgrades. “Most of our buildings were built in the ’70s and ’80s, and most of the facilities have three or four [patients] in a room,” said Fred Watson, head of the state’s nursing home association. “And no one wants to be in a three- or four-bed ward.”
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