Both the House and Senate health-care reform bills call for a large increase in Medicaid—about 18 million more people will begin enrolling in Medicaid under the House bill starting in 2013, Centers for Medicare and Medicaid Services (CMS) Actuary Richard Foster estimates.
We at Johns Hopkins Medicine (JHM) endorse efforts to improve the quality and reduce the cost of health care. But we also understand all too well the impact a dramatic expansion of Medicaid will have on us and our state—and likely the country as a whole.
A flood of new patients will be seeking health services, many of whom have never seen a doctor on more than a sporadic basis. Some will also have multiple and costly chronic conditions. And almost all of them will come from poor or disadvantaged backgrounds.We know this because we’ve been caring for Medicaid patients in a managed-care setting for 14 years, as well as providing world-class care to people from all over the country and the world. Our experience provides a glimpse of the acute cost bubble that the health-care system will suffer with the reforms now being proposed.
Like Intermountain Healthcare in Utah, Geisinger Medical Center in Pennsylvania, and the Mayo Clinic, where, as President Barack Obama notes, “people fly from all over the world to Rochester, Minnesota in order to get outstanding care,” people also fly from all over the world to obtain care from JHM. But unlike those other institutions, we also serve a large number of people who can’t afford cab fare to the nearest hospital: poor, disadvantaged individuals, 150,000 of whom are in our Medicaid managed-care program, Priority Partners.
Priority Partners operates under a capitated system—that is, it receives a set payment per individual per month from the state. Over time, we’ve developed the ability to manage the care of these individuals in a way that is both cost effective and that provides them with quality care. We’ve done it by tapping into our extensive delivery system, which includes four hospitals, a nursing home, the largest community-based primary care group in Maryland, and much more.
We’ve hit above-national benchmarks on all clinical quality measures for our dialysis patients, reduced monthly costs for patients with substance abuse and highly complex medical needs, and 70% of our patients tell us they’re satisfied with our care. But the learning curve has been costly and steep, and provides a cautionary tale for what will happen under the health-care reforms currently in Congress.
The key fact is that for years the state did not cover all the costs our Medicaid program incurred. As a result of new patients whose costs were not completely covered by the state, Priority Partners lost $57.2 million from 1997 to 2005.
We stanched the losses by ensuring that the payment from the state was appropriately risk adjusted to match the health conditions of our members, and by investing heavily in primary-care and care-management and disease-management programs.
Yet this past year the losses began again, because the state expanded the program’s eligibility to 116% of the federal poverty level up from 40%.
So we are struggling with a large group of new patients—about 30,000 people. Today, like in the late 1990s, a health-care surge is overwhelming our managed-care system. The capitated rate for the new beneficiaries is not yet risk-adjusted. Priority Partners has lost a devastating $15 million in just nine months.
In time, we will be able to provide cost-effective, quality care to these new patients. But it will take years and careful management to, in the administration’s phrase, “bend the cost curve down.”
Congress can help, or at least learn from our experience to use the reform legislation to bend the cost curve if it encourages other states to institute and appropriately fund capitated systems that allow capable providers to adjust payments based on risk. There is nothing in the House or Senate legislation that does that now, even as both bills will expand Medicaid. We believe our example in Maryland can be replicated around the country. One such concept—the Healthcare Innovation Zone, currently in the Senate bill—envisions a regional alliance of an academic medicate center, local hospitals, and physicians that coordinate and deliver the entire spectrum of patient-centric care in ways that reward quality. The key is that federal support to states for Medicaid must appropriately adjust rates to match the risk of providing health care to the group of people who are covered by Medicaid.
The Senate bill would increase eligibility for Medicaid to those who make 133% or less of the federal poverty level. The Kaiser Family Foundation reports there are 308,000 people who meet that threshold in Maryland.
Even if only half of those individuals seek Medicaid coverage, such a large expansion would likely have an excruciating impact on the state’s budget. And Maryland is not alone. According to a Kaiser Foundation survey conducted earlier this year, three-quarters of the states have expressed concern that expanding Medicaid could add to their fiscal woes. Already, as Kaiser notes, 33 states cut or froze payment rates to those who deliver health care to Medicaid patients in fiscal year 2009; even more states (39) are slated to cut or freeze rates for fiscal year 2010.
We’ll meet the demands placed on us because serving poor and disadvantaged populations is part of our century-old mission. But without an understanding by policy makers of what a large Medicaid expansion actually means, and without delivery-system reform and adequate risk-adjusted reimbursement the current health-care legislation will have catastrophic effects on those of us who provide society’s health-care safety-net. In time, those effects will be felt by all of us.
This piece was first published in the Wall Street Journal.
DR. EDWARD MILLER was named chief executive officer of Johns Hopkins Medicine, the 13th dean of The Johns Hopkins University School of Medicine and vice president for medicine of The Johns Hopkins University in January 1997. His appointment followed a year-long national search for the first-ever CEO of Johns Hopkins Medicine, a then-new organization that formally integrated operations and planning of the school of medicine with the Johns Hopkins Health System and hospital to ensure their continued preeminence in education, discovery and patient care. As CEO, Dr. Miller is responsible for both the school and the health system and reports directly to the university president and the chairman of the board of Johns Hopkins Medicine.
Under his aegis, both The Johns Hopkins Hospital and school of medicine continue to be ranked among the very best in the nation
An anesthesiologist who has authored or co-authored more than 150 scientific papers, abstracts and book chapters, Dr. Miller joined Johns Hopkins in 1994 as professor and director of the Department of Anesthesiology and Critical Care Medicine and was named interim dean of the school of medicine in 1996. He came to Hopkins after eight years at Columbia University, where he served as professor and chairman of the Department of Anesthesiology. Prior to that, he spent 11 years at the University of Virginia.
Dr. Miller is a member of the Institute of Medicine of the National Academy of Sciences and is a fellow of the Royal College of Physicians and the Royal College of Anaesthetists. He is also a member of the State of Maryland’s Health Care Access and Cost Commission and serves on the boards of the Greater Baltimore Committee and the PNC Bank.
Born in February 1943 in Rochester, N.Y., Dr. Miller received his A.B. from Ohio Wesleyan University and his M.D. from the University of Rochester School of Medicine and Dentistry. He was a surgical intern at University Hospital in Boston, chief resident in anesthesiology at Peter Bent Brigham Hospital in Boston, and a research fellow in physiology at Harvard Medical School. He also spent a sabbatical year as a senior scientist in the Department of Pharmacology and Physiology of Hospital Necker in Paris. He and his wife, Lynne, are the parents of four adult children.