Capital News Service

of the Michigan State University School of Journalism

Health groups fear more Medicaid cuts

Capital News Service

LANSING – After an 8 percent reduction in Medicaid reimbursement for 2010, state health organizations say additional cuts for 2011could be overwhelming.

“To cut significantly more on top of last year would be devastating to the health care community and access for patients to health and physician services,” said David Finkbeiner, Michigan Health & Hospital Association senior vice president for advocacy.

“So we would say having already receiving an 8 percent reduction, that we cannot sustain any significant cuts,” he said.
To help resolve the state deficit, Senate Majority Leader Mike Bishop, R-Rochester, has said he wants to reduce Medicaid spending by anywhere from $160 million to $500 million by dropping either optional services or the number of people eligible.

Bishop hasn’t offered details on where he would make reductions. The state’s optional Medicaid coverage pays for some of the costs of residents in nursing homes and prescription drugs.

“The state is facing a $2 billion budget deficit. We’re not insensitive to that, but it comes down to the state prioritizing what services they’re going to fund,” Finkbeiner said.

“Gov. (Jennifer Granholm) said early last year that the state was going to have to stop funding important services in order to fund essential services, and we would argue that health care is an essential service,” Finkbeiner said.

In 1996, about 1 million people in the state were covered under Medicaid. Today 1.7 million people, one in six, rely on the program.

“That number is growing because of Michigan’s economically distressed environment,” Finkbeiner said. “People are losing their health coverage and fall onto Medicaid.”

Michigan State Medical Society said that rural counties have the highest percentages of children receiving Medicaid. In 2007 the top three counties were Wexford, Ogemaw and Wexford.

About 70 percent of residents in nursing facilities are covered, while another 17 percent are covered under the federal Medicare program, which has also been significantly reduced in recent years.

“We are always concerned when the state may be cutting Medicaid reimbursement to nursing facilities,” said Elizabeth Thomas, director of public relations and communications for the Health Care Association of Michigan. Her organization represents the nursing home industry.

“Seventy percent of our reimbursements are used directly for employee wages, so there really aren’t a lot of places for nursing facilities to cut costs other than staff, and reducing our staff obviously impacts the quality of care we provide,” Thomas said.

Through Medicaid, hospitals are reimbursed 74 cents on the dollar for the cost of providing services while physicians are reimbursed 50 cents on the dollar.

MSMS said that in 1999, 88 percent of physicians accepted Medicaid patients. However, the number of physicians accepting Medicaid patients has steadily declined due to reductions in reimbursements.

Finkbeiner said, “The state doesn’t pay hospitals and physicians the total cost of delivering care, and hospitals are like any other business, if your revenue doesn’t cover your expenses, then you have to make adjustments.”

The University of Michigan Health Systems which has an annual operating budget of nearly $2 billion and a large base of Medicaid patients said it has made adjustments due to recent reimbursement cuts.

“A sizeable percentage of our patients are covered by Medicaid because we serve a lot of people from around the state that don’t have certain services in their communities and it’s been a challenge with the recent cuts,” said Kara Gavin, its director of public relations.

The Legislature has already eliminated such optional services as adult dental care, chiropractic care, hearing aids, eyeglasses and podiatry.

The only optional services still covered for hospitals are mental health, prescription drugs, orthotics and prosthetics.
Finkbeiner said hospitals have experienced problems with patients with dental, feet and hearing ailments because Medicaid no longer covers those treatments.

“When we ignore paying the cost of routine checkups and preventive care, we pay for it on the back end when someone gets really sick,” Finkbeiner said. “We are hopeful that the Legislature won’t eliminate prescription drug coverage because that helps a lot of people on Medicaid stay out of the hospital.”

© 2010, Capital News Service, Michigan State University School of Journalism. Not to be reproduced without permission.

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