Is It Time To Charge Medicaid Members for ER Usage?

Is It Time To Charge Medicaid Members for ER Usage?

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No one would deny that we’ve reached a point in public healthcare finance where tough choices have to be made about what gets covered and what doesn’t. There is, however, one fairly easy choice, and that is to reconfigure the $3 copay for Medicaid members using the emergency room.

I would propose a replacement benefit of $0 for the first visit and $20 for each subsequent one, in a given calendar year. Not every state, but any state that reaches certain thresholds for physician access or urgent care availability may switch to this policy.

Here are the arguments in favor. First, each $3 visit costs the state and federal government about $500.  There are few discretionary or semi-discretionary patient decisions that cost so little to trigger so much taxpayer spending.  (Hospitalizations have that kind of ratio, but a patient can’t check himself into a hospital the way he can visit an ER.)

Second, one must consider the historical context. The $3 copay (“$3” is a shorthand for $0 to $10 — I don’t think it is over $10 anywhere) is a vestige of the bad old days when it was very difficult to find physicians who accepted Medicaid patients. That is still the case in some locales; they would not be eligible for this waiver. The world has changed, but the copay hasn’t.

Third, ER utilization rates in the TANF population, which because of its average age is generally pretty healthy, far exceed that of the commercially insured population. This is despite the fact that TANF members in general cost much less than commercially insured people, a gap that widens still further once birth events are removed from the calculation. Clearly there is much excess utilization.

Fourth, while avid readers of this blog may recall that I am no fan of North Carolina Medicaid, my objections are confined solely to their consultant’s math — Milliman USA embarrassed themselves and their client by coming up with obviously impossible conclusions. See here. By contrast, I do think they (meaning Community Care of North Carolina) have done as good a job as possible under public-sector constraints to enhance access to care for Medicaid members, and my hat goes off to them for the tremendous efforts they’ve made.

However, what we’ve learned from that experiment is that the best-designed network in the world won’t attract Medicaid members if the ER is basically still free. Yogi Berra called this one right:  “If people don’t want to come to the ballpark, you can’t stop them.”  For this model or any other access models to be given a chance to work (and to be given a chance to pay for themselves), member economics have to support the access strategy.

Finally, this is not a take-away. The proposal would be $0 for the first visit — a cost savings. And obviously if someone shows up for a second visit without $20 and it’s a true emergency, that person wouldn’t be denied care.  (It also may not be easy to check eligibility for the $20, but most of the value of this policy is in people thinking that they might be charged $20, and deciding to go to their doctor instead.)

All the old objections need to be discarded or can be addressed. Yes, transportation may be hard to come by but most doctor offices are more accessible than most hospitals. Yes, after hours doctor offices aren’t an option.  That could be addressed by a call to a doctor to clear a visit to the ER.

I’m sure there will be objections — the THCB regulars are nothing if not opinionated — but please make sure to propose an alternate way to save a large chunk of money involving more savings and less of a take-away.

Al Lewis, president of the Disease Management Purchasing Consortium, is author of the critically acclaimed 2012 humorous look at the innumeracy of health plans, consultants and vendors, Why Nobody Believes the Numbers.

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62 Comments on "Is It Time To Charge Medicaid Members for ER Usage?"


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Dr. Mike
Nov 24, 2012

Help me understand why the ER (i.e. hospital) would want to disincentives in place for Medicaid patients – as stated they stand to generate $500 in revenue for each visit.
And Help me understand why most primary care docs would want to see more Medicaid patients in their office – they stand to lose money (or make very little) on each visit.

Guest
Nov 24, 2012

Until we ensure that routine non-emergency care is available for Medicaid patients, and actively discourage non-emergency use of ERs, this problem will remain unsolved. Using financial disincentives may be part of this, but should not be all we do.

For example, let’s encourage more PAs in 24×7 strip mall and drug store based clinics. They will be able to treat many problems and correct triage patients who may need to go to ERs.

Guest
Nov 24, 2012

If we want to solve a problem, maybe we should figure out what causes the problem.
Assuming that Medicaid members go to the ER more than other people, why do they do that? Certainly, it’s not because the ER is cheaper than a doctor’s office. In my State, the ER copay is indeed $3 and the physician copay is $1. One could say that the difference is not large enough to dissuade people from going to the ER, but that implies a preference for the ER. So why would folks with Medicaid insurance prefer the ER?

Rejecting offhand the hypothesis that Medicaid members are somehow “different” than non-Medicaid patients, one possibility would be that the ER is providing them with better care, and the other possibility would be that the ER is more available.

Considering the reluctance of many physicians to accept Medicaid insurance, and considering that those who do accept Medicaid are often overbooked and overextended to the hilt, and considering that some States have quick-access rules (at least for children) in the ER, then I would say that the ER is more accessible.
For many Medicaid patients, lacking a personal physician, the ER may very well be the one place where they get to see a real doctor, and guess what? They can tell the difference….

The solution sort of writes itself at this point, doesn’t it?

To validate that this is indeed the right solution, go find some of those saintly doctors, usually pediatricians, who take lots of Medicaid and care for their patients equally well, no matter who their insurer is. Their patients don’t go to the ER.
Since we cannot all be saints, just pay doctors a fair amount for Medicaid patients. Pay them more than private insurance.
We experimented with stinginess for a very long time and it doesn’t work.

Guest
Nov 24, 2012

Abolish Medicaid.

Guest
Nov 24, 2012

Now there is a great idea!

Guest
tcoyote
Nov 25, 2012

I’m sort of with Bobby. Give the chronic care part (and most of the federal match) and therefore the dual eligibles unambiguously to Medicare, and let the TANF’s get care directly (e.g. no billing) thru safety net providers like VA, FQHC’s and critical access hospitals via state capitation contracts.

Medicaid WON’T pay physicians enough because they “make too much money”, and stand behind hospitals and nursing homes in the present Medicaid “slop line”. There is no practical way to reverse the disappearance of docs from Medicaid participation unless you force them to take the patients as a condition of licensure (like Massachusetts discussed).

Present Medicaid program is unsustainable, and so is giving it to the managed care companies. They’ll be on way out with the payment cuts that happen in the next recession.

Guest
Nov 24, 2012

In theory it sounds like a good idea to de-incentivize by charging higher co-pays for Medicaid patients, but in reality many of them are not worried about paying their co-pays if they cannot afford them, and of course I am generalizing. They will either a. make payments on a $20 co-pay or b. never pay it and the account either gets written off or sent to collections. Either way, they aren’t going to be turned away for non-payment. Good article. Nice idea, but too many things sound good in theory.

Guest
MD as HELL
Nov 25, 2012

In1979 Minnesota Medicaid required physicians at Hennepin County General Hospital to verify in each case that use of the ED and EMS was a true emergency. If it was not verified, then the hospital would not be paid.

How useless waspatients ain that? Of coursse they were all true emergencies. they did their part and provided the service. Why should they get screwed?

We first need to change the behavior of government. It really is Santaland. They are giving out that which is not theirs.

Medicaid patients in the ED are like lottery winners, reckless and irresponsible. They have no tolerance for uncertainty. They have no capacity to manage their own healthcare. Broad generalization? Yes. But more true than not true. That is why the government treats them like pets with a vote.

Guest
Peter1
Nov 26, 2012

“That is why the government treats them like pets with a vote.”

MD, do you really believe the government would continue to treat Medicaid patients as second class citizens if they actually voted?

Medicare recipients get unsustainable blue ribbon care because THEY do vote and are organized via AARP. For the most part the poor don’t vote – thank your lucky financial stars.

I’m with BobbyG, abolish Medicaid.

Guest
Nov 27, 2012

Margalit,

the proposal is only for states that reach acceptable thresholds of access to primaries.

To other (adult) comments:
yes, not a total solution but part of one
yes, some of the $20s will not be paid. written off etc. Not a panacea but should be part of an overall solution

Guest
James
Nov 27, 2012

“Rejecting offhand the hypothesis that Medicaid members are somehow “different” than non-Medicaid patients…”

If your reject as off-hand that the patients themselves are different, then you have tossed out what may be the single largest factor. It will be a critical error in addressing the problem.

Medicaid patients ARE different. For one thing, they are either very low income or disabled. They have lower levels of education and far lower medical literacy on top of it. They smoke in much larger numbers than the general population. They are more likely to be single (almost no married couples qualify). They may have a higher ethnic minority population than private insurance counterparts. They may be more likely to speak a language other than English as their primary one. They have a higher incidence of mental illness, chronic diseases, are often seen as difficult to manage, and have high”no show” rates for appointments.

This is not to denigrate, but just the demographic and medical facts. If one is to solve a problem, one must know the factors — and client characteristics matter. What is effective to change behavior for one population/culture/group may fail in another. We know that from public health (and politics and just life in general)..

Now, if one is to look at the problem, one must also split our the over-users. Most of Medicaid is moms and relatively healthy kids. Some go to the ER for non-emergent condition (baby feels warm, the kid has an earache) and some do it a lot for various reasons (sometimes reasonable, like no PCP available and sometimes not). Various states are reducing reimbursements for ERs for treating non-emergent conditions that could be done at a clinic level or PCP.

However, it is in the SSI population where one sees the true super-fliers. These are where one finds the folks where you can have 100+ visits a year. Their general characteristics are chronic disease (often more than one), mental illness, and quite a bit of drug/alcohol abuse & addiction. Some of their visits are likely drug-seeking behavior (various pains and migraines) some are driven by mental illness, and a number of them are indeed emergencies rooted in their terrible health and rough lives (lots of open wounds, skin infections, etc.). You will see a surprising number of sickle cell crisis cases for the extreme fliers (the 100+ club).

ER co-payments can have a role with some of the ER overuse. However, one must look at how Medicaid patients are different. One must also look at how even within Medicaid the patients are different depending on the type of Medicaid (moms/kids vs. SSI).

Again, if one wants to help (and some of these cases are Book of Job tragic), one has to know ALL the factors driving the ER overuse.

Guest
Nov 28, 2012

It is possible that the disease burden and the socio-economics are different, but the people are just people, and a solution that works for the rest of the country should work for those who happen to have Medicaid.

Guest
Peter1
Nov 28, 2012

Exactly Margalit! To attempt to segregate this “population” of patients misses the point entirely. They are people who need health care in a system that creates uneven tiers of treatment based on where the subsidies come from. Employed, you get tax free employer subsidies. Got Medicare, you get subsidized care.

There should be no “go to the back of the line” care anywhere.

Guest
Dude
Nov 28, 2012

Again, patient characteristics matter and the attempts to inject polarizing racial terms like “segregation” and “go to the back of the line” appear an attempt to cut off discussion, not illuminate.

Medicaid is a subsidized health care system, run by the same federal agency as Medicare and created in the same legislation.

My point is that proposed fixes (from the left or the right, I add) that don’t take into account the reality of patient population characteristics within different insurance systems will fail.

Even Medicaid itself is not a monolith, as there are several distinct subpopulations within it, even within the same state. Different regions of the same state may have client/physician medical cultures that vary widely.

What works for one sub-population may flops for another, even within the same Medicaid program (and what works in State A may fail in State B). What works in the north part of a state may crach and burn in their south.

One works with the reality of a population if the goal is to improve their health and outcomes. Part of the challenge is that big systems tend to use one-size-fits-all solutions that allow little flexibility to tailor mini-fixes or address specific circumstances.

Guest
Peter1
Nov 29, 2012

“Some would say that all populations overuse the ER (just like we overuse healthcare in general), so it’s always a question of degree.”

“Again, patient characteristics matter and the attempts to inject polarizing racial terms like “segregation” and “go to the back of the line” appear an attempt to cut off discussion, not illuminate.”

Then why are we only picking on Medicaid? Medicaid was created because southern whites didn’t want to be in the same waiting room as blacks – that’s segregation and its always meant we pick on Medicaid clients (the poorest of the poor) because they’re an easy target.

Guest
Dude
Nov 28, 2012

No, it will fail for the same reason that a solution that works for a problem in the United States may fail miserably in the Middle East or China or Norway.

This is true in public health, politics, economics, and it is true in health care.

People are not just people. They are far more complicated than simple widgets stamped from a cookie-cutter. One has to look at the populations and tailer solutions to their particulars or one will fail.

Guest
Nov 28, 2012

The point is, quasi-free ER access for Medicaid HAS failed. It means that the best-laid plans for Medicaid PCMH and other access-enhancing innovations are themselves doomed to fail because the “competition” from the ER, despite the expense to the system, is so heavily subsidized.

Wouldn’t you agree that at least in some states the original rationale for $3 ER visits (meaning that doctors didn’t take Medicaid) has been obsoleted, and if the rationale is obsolete, perhaps so is the strategy? Perhaps it’s time to start encouraging Medicaid recipients to use more primary care now that it’s available?

Or put another way: if you were designing a system from scratch, isn’t there a better use of $500 than extra ER visits when a doctor is available?

Guest
Peter1
Nov 28, 2012

Is ER misused by Medicare patients?

Guest
Nov 28, 2012

Here in Vegas we have these fancy electronic billboards along our expressways where the various hospitals proudly tout their short wait times on digital minute clocks.

I don’t get that.

I know, I know, they’re fishing for high quality insureds.

My UHC PPO plan has a $200 ER copay. I will not be going to one unless it’s truly and emergency.

Guest
Peter1
Nov 28, 2012

$200 would keep Medicaid clients out of ER.

Guest
Nov 28, 2012

good question.

Some would say that all populations overuse the ER (just like we overuse healthcare in general), so it’s always a question of degree. Medicare members run not much higher in ER visits/1000 as Medicaid (TANF and disabled combined, meaning mostly TANF), but are presumably quite a bit sicker given their much higher hospitalization and death rates.

So just as over-medication is a Medicare issue much more than Medicaid or commercial, it would appear that overutilization is the reverse.

Guest
Peter1
Nov 28, 2012

If we rolled Medicaid into Medicare with same provider reimbursements would the Medicaid population get better access to primary care and reduce their ER use, if it’s possible to predict that?

Guest
Nov 28, 2012

$200 would keep everyone of the ER. I’d rather bleed to death on the sidewalk.

It’s a question of proportionality. You don’t want to set a price for Medicaid that keeps true emergencies away but you don’t want to make it free either. Now it’s basically free. I think $20 is the right number but I don’t know.

The point is, it has to be something. Times have changed since the $3 copay was introduced and it’s time to change with the times.

Guest
MD as HELL
Nov 28, 2012

EMS also must charge and collect a co-pay for the ride. Medicaid needs to be the hammer, not just the sugar.

Guest
Nov 28, 2012

Al, according to OECD data, the only thing we are overusing is imaging studies. The US is below average on everything else. I can’t find an ER specific indicator, but chances are that it is similar to our below average hospital use.
Trying so hard to reduce utilization, is absurd, in my opinion, because that is not where the problem is.

As to Medicaid patients, I will venture a wild guess here, that as soon as primary care “medical homes” or whatever they think of next, becomes truly available and accessible to all patients in equal amounts (and equal quality), their ER visits will level off after a period of learning and unlearning where one gets the best possible care at the shortest reasonable notice.

But I’m with Peter here, what’s the point of having two separate public systems? I know why they were created that way, but enough is enough. If the system started treating people with respect, perhaps they will be more inclined to reciprocate the attitude.

Guest
Nov 28, 2012

There is no way to make the argument that the US doesn’t overutilize a ton of stuff in healthcare. Our cardiac surgery rate is way higher than the EU.

But what you say could be true for the US as a whole but still not be true for Medicaid, since the Medicaid rate is so far above the US average.

Your guess on PCMH reducing ER visits is wrong, I’m afraid. There is an entire chapter in my bestselling book (well, it hit #2 today on Amazon in the health insurance category, so that’s close enough), Why Nobody Believes the Numbers, on the North Carolina Medicaid PCMH and ER visits have not come down one iota since they started tracking, vs. the rate in surrounding states. (They all went down a little, but NC not as much.)

I used to teach economics at Harvard, but you don’t have to know much economics to know that if you charge $3 for something that costs $500, it will be overutilized.