Health Reform Could Harm Medicaid Patients

Health Reform Could Harm Medicaid Patients

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Dr. Miller is the Dean and CEO of The Johns Hopkins University Medical School.

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.

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40 Comments on "Health Reform Could Harm Medicaid Patients"


Guest
Jeff Goldsmith
Mar 7, 2010

I emphatically agree with Ed Miller. The Medicaid expansion is a reckless move, both fiscally and for the reasons Miller cites. States will never be able to afford even a portion of the cost of this expansion, and the only way to make it fly economically will be to further savage safety net provider payments, which are already being cut as states attempt to balance their recession savaged budgets.
The only reason it’s part of health reform is because it’s CHEAPER than expanding private coverage, and the reason for that is unsustainable payment levels to providers. I think it’s ironic that hospitals killed a modest (3 million) Medicare expansion for uninsured boomers, but “agreed to” a 15 million person Medicaid expansion. This is terrible health policy. It’s like TennCare times ten.

Guest
Peter
Mar 7, 2010

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.
JHM is to be commended, but Dr. Miller, does this mean that JH does not insitute the same cost saving measures to it’s non-Medicaid, well insured patients?

Guest
Ben
Mar 7, 2010

Of the countless teams who have tackled impossible goals, there are those that say “no, I can’t do this” and those that say “it’s impossible, but we’ll find a way.” The latter, if they have a great leader and a great team, do indeed figure it out however complex and vexing.
Yes, we can argue whether expanding Medicaid or whatever is the right approach. But there’s a bigger issue here, isn’t there?
What I don’t hear from Dr. Miller is the huge demand for leadership talent who can create the next Geisinger, the next Intermountain, and all the Accountable Care Organizations to drive a more coherent delivery system. It seems like he’s in a unique position to help create the leaders who bring “yes I can.”
It can’t be done in a vacuum, so here are the legislative and judicial steps which should accompany it:
(1) expanding primary care. Shift from specialists
(2) driving reimbursements to at-risk and episodic payments
(3) big investment in transparent and comparative quality measures
(4) break up anti-trust protections to foster competition (on quality)
(5) incentives for creating clinical practice teams that can compete (on quality)
(6) shift medical education to create a new generation of leaders
My two cents

Guest
Gary Lampman
Mar 7, 2010

So the Medicaid argument is not to expand medicaid? The reasons are: It involves a larger group of uninsured patients. Patients that never see a Doctor because they do not qualify because of preexisting conditions.Patients who have chronic problems because they have been rejected for coverage and /or excessively charged to maintain Coverage.Patients that of (largely)no fault of their own;have been denied this privilege to be included as a member of the human race.
Who’s Fault is That?
Insurance bets overwhelmingly on the Healthy and will denied opportunities just based on a suspicion or a feeling.Some patients are born with these preexisting conditions and this profession has accepted the premise of insurance selection. Our prerequisite to the Human Condition and our predisposition as members of the Human Race has predetermined who lives and who dies.
I applaud the efforts of Doctors to meet the demands of the poor and disadvantaged. However, The extension of medicaid would cover disadvantaged populations with a reimbursement to the Profession.
Is it only about the Money or do we need disadvantaged populations so we can feel good about ourselves?

Guest

I could not disagree more with my good friend Dr. Miller. Maryland will benefit under the health reform proposed in Washington today. First Johns Hopkins like all Maryland hospitals will be paid for all patients under the current all payer system at adequate rates even for Medicaid patients. Maryland physicians will also see reimbursement for a variety of patients that they now get no reimbursement for. The good news for Maryland’s uninsured citizens is they will not have to go to the Hopkins ER and will now have a medical home with a doctor to see them.

Guest
Nate
Mar 7, 2010

“First Johns Hopkins like all Maryland hospitals will be paid for all patients under the current all payer system at adequate rates even for Medicaid patients.”
Medicare use to say this exact same thing, until the bill came due and Congress decided to eliminate it and start cutting reimbursements. If HCR passes history will repeat, even with the 4 year head start on taxes we won’t be able to afford it and Congress will start rewriting the promises.

Guest
Mar 7, 2010

Dr. Miller writes:
“We’ll meet the demands placed on us because serving poor and disadvantaged populations is part of our century-old mission.”
I would expand that sentence to read “and because if we don’t we could lose our tax-exempt status.”
Miller’s complaint that, under reform,poor people who may never have seen a doctor will have access to care auggets something less than a “century-old” dedication to helping the poor.
Moreover, as Dr. Benjamin points out, in Maryland Medicaid pays the same rates that private insurers pay. (In most states Medicaid pays roughly 30% less than private insurers.))
Medicare also pays the same rates private insurers pays. (These rates are set by the state.) And those rates have left Maryland hospitals with a 2% surplus after year.
That’s enough of a margin for a non-profit, especially because it’s been pretty consistent. This explains why “Maryland has consistently had the highest proportion of hospitals rated ‘investment grade’ of any state.” (Here i’m quoting from my part 3 if my Maryland post on healthbeatblog; you’ll find sources there: http://www.healthbeatblog.com/2010/02/how-maryland-broke-the-curve-a-solution-for-massachusetts-part-3.html
You’ll find part 2 of the post here.
Ronald Peterson, president of Johns Hopkins Health System recently told the Wall Street Journal that Hopkins’ surplus has been running between 2% and 4%.
(Ass part 3 of my post here http://www.healthbeatblog.com/2010/02/
massachusetts-problem-and-marylands-solution-we-dont-have-to-wait-for-washington-part-2-.html
So why is Dr. Miller poor-mouthing?
I would assume that, in the past, Johns Hopkins treated some uninsured patients who didn’t qualify for Medicaid and had to eat the cost– though when applying rates to individual hospitals, the state does adjust for how many uninsured patients they care for.
Perhaps Dr. Miller thinks that Johns Hopkins was doing better with the adjustment than it will do when it is paid the rates that Medicaid will pay for these formerly uninsured patients?
If so, this suggests that the adjustment was too high?
Finally, shouldn’t the headline read: “Health Reform Could Harm the Hopper?” (what some med students and residents call JH)

Guest

In all fairness, I think Dr. Miller is referring to loses incurred by the non hospital services they also provide for their capitated Medicaid patients.
I can see how adding folks to Medicaid will cost the state more money and I can see how the lack of risk adjustment would be a problem for JH.
However, I can also see, as Dr. Benjamin notes, that these newly covered people will not need to impose on JH charity care any longer.
So if hospitals like JH find themselves providing less and less charity care, until hopefully all care is reimbursed, would it still be proper for them to retain full non-profit status?

Guest
Nate
Mar 7, 2010

what does amount of charity care have to do with non profit status? I think we should do away with all non profits as it is more abused then properly utilized. We can start with healthcare providers then add the churches and “social” organizations and end with a double tax on political activity.

Guest
smith
Mar 7, 2010

Iam not for any healthcare with our president

Guest
smith
Mar 7, 2010

This health care package is makeing me sick. I mean sick. I think he should give up all of this because none of us want it the way it is written.

Guest

“what does amount of charity care have to do with non profit status?”
They have to provide a certain amount of charity care in order to maintain non profit status, but they don’t.
I wonder how much money we can collect if we revoked this nonsense from all providers and insurers?
Maggie has this frustrating story on her blog about a non profit hospital in New Jersey that has “A salon for couples’ massages with private shower.”
http://www.healthbeatblog.com/2010/03/hospital-breaks-new-ground-in-luxury.html
I bet you call it something else in Vegas….

Guest
notmd
Mar 7, 2010

some insight..
1)the uninsured who will become medicaid eligible are not new patients..they have been entering the hospitals emergency room as uninsured and when not admitted have left as uninsured..hospitals have effectively been the insurer of last resort..
2)medicaid should be expanded to cover community services like primary care and hospitals should be allowed to enroll patients under presumptive eligibilty..up to now we have left it up to the states who do not have an incentive to enroll..
3)when medicaid patients were enrolled in a managed care plan that plan had to add close to 20% of additional administrative costs for systems..all managed care plans should leave the administrative part to the state and the plan should improve the patients health status..

Guest
Nate
Mar 7, 2010

They have to provide a certain amount of charity care in order to maintain non profit status, but they don’t.
Where is this codified? I’ve never seen any requirement for charity care to be classified as a non profit. I would bet there are many ways to be a non profit provider besides delivering charity care.

Guest

Thanks for the interesting and informative post. I look forward to more in the future.