The Insidious Non-Optional Medicaid Expansion That Further Clouds the Future for States

So much about Obamacare has been “by any means necessary”, from the legislative gymnastics to get the bill through Congress to the current mandatory expansion of Medicaid that is here now even though largely unnoticed.  Here now?  But wasn’t Medicaid expansion optional?  Some yes and some no as it turns out.  This almost unknown stealth expansion was required of the states and imposed on them despite the Supreme Court ruling because it is being funded 100% by the Federal Government, but only for two years 2013 and 2014, after which, funding abruptly ends.  Because a strong constituency is being created (or bought) that will demand this expansion be continued past 2014, and no one can predict the outcome of those likely demands, further possible complications and risks arise for those states that decide to embrace the optional Medicaid expansion.  Allow me to explain.

Because of current constraints to participation by medical professionals both by low reimbursement rates, 1800+ pages of cumbersome rules, and audits that go beyond financial fraud to interfere in actual treatment decisions, there are at present not enough willing doctors to adequately serve those now eligible for Medicaid benefits.  Realizing this, and attempting to avoid making the optional expansion to 133% of poverty and influx of new eligibles a disaster, “any means necessary” was once again deployed.

On November 6, 2012 (surprisingly not a Friday) CMS published a Final Rule to go forward.  146 primary care Medicaid services identified by the ACA would, by regulatory proclamation, be compensated at the higher Medicare rate, starting with 2013 but only for two years.  Since Medicaid reimbursement rates relative to Medicare reimbursements vary tremendously from state to state, the percentage increase covered by Federal funding varies accordingly.  At one extreme are two states that surprisingly pay higher Medicaid fees for the covered services than they do for Medicare.  These states will receive no additional Federal funding.  At the other extreme is Rhode Island, where Medicaid fees will increase 198%.  Five other states will receive boosts of over 100%.  Pennsylvania is number seven on the list and doctors will be compensated an additional 96% to equal the higher Medicare rates.  On average across the nation Medicaid fees for the ACA primary care services will rise 73% at an estimated cost of $11.9 billion, all in an attempt to keep willing physicians on board, expand their willingness, and attract newcomers.

The problem, of course is what happens after 2014.  It is unimaginable that doctors enjoying the higher reimbursements for two years will do anything but lobby stridently to extend the increases and indeed have them made permanent.  Realizing, otherwise, the carrot to participation would no longer exist, this outcome can be considered probable.  The mystery is who would then pay?  Would the increase be included in the ultimate 10% state funding under optional expansion to 133% of poverty or even some formula that would require states to pay more? Would the increases fall to each individual state or be averaged over all the states?  The point is that today no one knows.  While perhaps not being the main reason to avoid the optional Medicaid expansion, especially those states with the greatest percentage “temporary” increases need to consider the possibility of very serious consequences in the aftermath of this two year attempt by the Federal government to buy a loyal constituency for implementation and avoidance of massive failure.  It is also interesting that the current reimbursement increases were only applied for two years, as estimates for the cost of Obamacare have been made over a ten year period, allowing more, for now, to remain hidden from view.

The two main sources used for this post were a policy brief from the Henry J. Kaiser Family Foundation and an article in American Medical News published by the American Medical Association.  More details can be found at these two locations.  Also used was a recent article written by the President of the Texas Medical Association.

Note: This post was shared to WatchdogWire-Pennsylvania on Sep 24, 2013.

One response to “The Insidious Non-Optional Medicaid Expansion That Further Clouds the Future for States

  1. It’s interesting to note that a recent report indicates that, in March of 2013, three months into the first year of the increased rates, not a single state has actually increased those Medicaid rates.

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