States and providers threaten to drop Medicaid; shortage of providers threatens Medicaid managed-care networks

After Republicans in the Texas legislature "floated a radical cost-saving proposal" to opt out of Medicaid last week, experts are trying to determine how serious they are, and whether other states are likely to follow suit, Kaiser Health News reports. The answer "is complicated," but "lawmakers in nearly a dozen other states, frantic over budget shortfalls and anticipating new costs from the federal health care overhaul," are considering the move (Ramshaw and Serafini, 11/12). 

Kaiser Health News, in a separate story: A shortage of specialists in Medicaid managed-care networks is making it hard for people like Tonya Bauserman, who is enrolled in HealthCare USA -- "one of dozens of private managed health care plans providing care" to almost half of "the nearly 50 million Americans on Medicaid" — to find providers in their area who will see them. By 2014, 16 million more people will become eligible for Medicaid under the new health care law as eligibility rules are widened. Insurance carriers like UnitedHealthcare and Aetna that run Medicaid managed-care plans stand to benefit, but "the coming boom is sparking debate about whether Medicaid managed care is best for patients."

While enrollees in traditional fee-for-service Medicaid "can go to any doctor willing to participate in the program," scarce as those doctors may be; managed care enrollees can only see providers in their plans' networks. The managed care plans often refuse to approve expensive services "such as CT scans and some surgeries." But "cash-strapped states, hoping to control costs, are increasingly turning to managed care — and requiring Medicaid recipients to leave the traditional program and enroll in the plans" (Galewitz, 11/12).

ABC News: While "thousands of Americans renewing their health insurance plans will see new benefits kick in" under the new health law passed earlier this year, "the future of the controversial law remains in limbo" as Republicans in the incoming Congress, emboldened by court battles around the country, threaten to repeal the law. States like Texas and Arizona are also protesting the new law's expansion of Medicaid and threatening to cut their Medicaid programs altogether. Twenty states also have filed a lawsuit against the Department of Health and Human Services over another provision of the health law that requires all Americans to purchase health insurance by 2014. Meanwhile, consumers, "burdened by rising premiums and a weak economy, are mostly unsure about what to expect" (Khan, 11/12). 

Charleston Daily Mail: In West Virginia, the state's Medicaid program is now facing at least two lawsuits "alleging it significantly underpays doctors and hospitals." West Virginia's Medicaid program covers 270,000 low income West Virginians, but hospitals and physicians "have long complained about the poor payouts of government-run programs like Medicaid and Medicare." The West Virginia Primary Care Association and the University of Virginia Health System recently spoke out against the state's payment rates, with the latter announcing it would stop accepting the state's Medicaid patients. Physicians argue that increasing Medicaid reimbursements would encourage providers to treat more people, which could lower costs in the long run by preventing avoidable chronic illness. "In West Virginia, the feds typically pay about 75 cents or so of each dollar the state spends" on Medicaid, a figure that is higher now due to the federal stimulus program (Rivard, 11/12).

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This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.