Idaho’s neighbor to the south, Utah, could show the Gem State a path to curbing ever-rising Medicaid costs while, two Utah legislators believe, improving health service delivery performance.
The Utah Legislature passed a plan to reform Medicaid this year with unanimous support from Republicans and Democrats. The plan includes moving to a managed care system, capping future spending, tying program growth to tax revenues and increasing certain co-pays to encourage responsible use of health resources.
The Beehive State is now waiting for approval on parts of the plan from the federal government, which would need to approve a waiver for certain provisions to take effect. Utah officials say they believe they will receive their answer by year’s end.
One of the backers of the plan, Utah state Rep. Holly Richardson, R-Pleasant Grove, told IdahoReporter.com that lawmakers in her Legislature acted in the best interests of other government programs, like public schools and higher education. Richardson said that Medicaid spending in her state is growing at a rate that would force cut in those and more areas if legislators hadn’t acted. “Where’s the money going to come from?” she asked. “We can’t just print money in the state.”
One of the central elements of the plan is that Utah’s spending on Medicaid is capped to be in line with tax revenues. That means that if the state budget grows, Medicaid spending can grow if needed. If revenues are flat, no new spending is allowed.
If no new spending is allowed when it may be needed, Richardson said Utah lawmakers would be forced to cut some services or programs. “It won’t be pretty,” she warned. The cap on spending does not require approval by the federal government.
For any state when tax revenues are flat or down, it typically means a poor economy and more need for Medicaid services. Richardson said that’s not what officials in her state found. “There were more people enrolled, but there was no huge increase in people actually treated,” she explained.
A top source on health systems in Idaho, Rep. John Rusche, D-Lewiston, is skeptical of that aspect of the plan, but isn’t completely closed off to the idea. Rusche, a physician prior to his retirement, says that setting a budget is extremely difficult and can sometimes be wildly incorrect if there are unexpected world events, like flu outbreaks. He also said a set budget could mean delayed payments for doctors, hospitals, nursing homes and others.
Rusche did say a capped spending amount could force doctors to be more innovative about their treatments and not perform unnecessary procedures or tests. He isn’t sure Idaho – or the country for that matter – is ready for capped health spending.
Another aspect of the Utah plan is a move toward a managed care system and away from the fee-for-service model. A managed care system is one in which services are coordinated within a network to more efficiently deliver procedures, tests, and appointments. A private contractor is typically given a lump sum of money and then asked to provide care for a group of patients.
The Utah Department of Health (UDH) says the new program will “deliver the necessary and appropriate care, while demonstrating that quality of care and access to care is not suffering.” Richardson said moving away from the fee-for-service model will eliminate the incentive for doctors to perform more tests or procedures than necessary only to make extra money off the system. “It encourages people to do more and more procedures,” she explained.
Rusche agreed that a fee-for-service model can provide incentives for unneeded services.
Idaho lawmakers have asked for a study of managed care systems and may be looking at moving that direction. The Idaho Department of Health and Welfare (DHW) is conducting the study and will report to lawmakers in early 2012.
A final aspect of the Utah plan is implementing some patient co-pays where there haven’t been any and increasing some already in existence. If the reform plan is approved by the feds, emergency room visits would jump by 75 percent to $15 and Medicaid patients would be asked to pay $6 for doctor appointments.
Another backer of the plan, Utah state Sen. Dan Liljenquist, R-Holliday, told The Deseret News he believes that Medicaid patients should be more involved in paying for their own care. “People should be responsible for their care,” he “I’m happy to offer a safety net but it should not be the best program out there.”
Utah is also looking to implement a sliding scale payment system for some programs, meaning that those Medicaid-eligible people who make the most will be asked to pay more for services, while those who make the least typically are not asked to pay anything.
The Gem State implemented a sliding scale co-pay system for one children’s health care program, but managed to bring in a mere $214,000 to help cover the $37 million budget.
Richardson warned that states are going to have to do something about Medicaid costs. “This is something states are going to have to address,” she said. “We cannot pretend these problems are just going to go way.”
Idaho is one of the states that may need to address spending on health services in coming years. While the Gem State’s share of Medicaid funding has been down in recent years, it jumped by $137 million this year because of less federal support for the program.
It’s that lower amount of federal support that could mean bad budget news for the Gem State.
Medicaid is funded partially by the federal government and partially by the state. In fiscal year 2010, for example, the state picked up 20.82 percent of the tab, paying $288.3 million. The federal government paid $1 billion for the program that year. In fiscal year 2011, the state paid slightly more, picking up 22.82 percent of program costs for $299.8 million. The feds paid $1.2 billion that year.
When the increased stimulus support ended this year, Idaho’s share jumped to 30.11, meaning the $137 million jump in state funding. In all, Idaho lawmakers planned $437 million in Medicaid spending this year. The federal government will still pay the rest and is picking up $1.5 billion.
DHW spokesman Tom Shanahan also warned that increased efforts to reduce the national debt and deficit could result in even fewer health dollars from the federal government in the future.
Another top-down problem that could jump Medicaid spending is the implementation of the 2010 Affordable Care Act. That law expands Medicaid access, which could mean that nationally more than 20 million more Americans could join the program, though they are funded by the federal government at a rate of 95 percent or higher for the first few years.
With that in mind, how feasible is reform for Idaho? Rusche says that in order to change the system in a constructive way, policymakers will need to focus on care management and not simply managing costs and the bottom line. In order for managed care to work on a large level, he explained, doctors, pharmacists, nursing homes and other must coordinate care and provide the most efficient service possible.
Is the Gem State’s health sector ready to coordinate care? Rusche says no. “Idaho is not there yet,” he said. He is, however, optimistic and believes that lawmakers would be wise to move in that direction.
“The fact is we need to do something real meaningful,” he concluded.