Analysis: How ‘Reform’ hurts public health

Mar 5, 2009

By Paul Metts
3/5/2009 Florida Health News

If Medicaid "Reform" expands in Florida without significant changes, it will cripple many county health departments to the point they can no longer provide services for the many patients who depend on them. It will take away the funds that counties receive from the state Medicaid program to  underwrite the cost of health professionals who

Paul Metts provide dental, medical and nursing care for the indigent, both Medicaid and uninsured.

And the hospitals that would inherit these non-emergency patients would be overwhelmed. 

In September, the Medicaid payments that support health departments will begin to shift away in the five counties now participating in Medicaid Reform. Duval’s loss is projected at nearly $8 million, while Broward’s would be around $2 million. 

The total cost to Florida’s Department of Health and its county units, in a conservative estimate, is $1.5 billion. I’ll explain below how I arrived at this figure, but first a bit of background: 

  • The Department of Health operates county health departments (CHDs) in all 67 counties in Florida. They operate more than 200 clinics, where more than 70 percent of patients have family incomes below the federal poverty level. They are major safety net providers. 
  • The average cost of a visit is about $75. The same non-emergency visit to a hospital emergency room would cost taxpayers $1,015, according to the Agency for Health Care Administration.
  • Medicaid payments for these clinic visits subsidize those by uninsured patients who can’t pay. Medicaid accounts for a substantial portion of the CHD’s clinical services revenue. 
  • Medicaid “Reform,” as it is currently construed, has the potential to diminish this source of funding to the point that some units would no longer be able to provide clinical services.
  • If this is allowed to occur, these patients must go somewhere. The only place that has to take them is a hospital emergency room. This would overload the ER’s with non-emergency patients. That in turn could cause delays in service to trauma patients.
  • Because it costs hospitals more to see these uninsured, non-emergency patients than it would cost a clinic, hospitals could take a financial hit of nearly $4 billion a year.

Here is how I came up with these conclusions:
 
Data on the 634,144 patients who were treated by County Health Departments in the fiscal year 2006-07 show the safety-net role: Uninsured accounted for 52 percent; Medicaid accounted for about 39 percent, with other payers picking up the rest.

Of the 1.5 million visits, the uninsured accounted for 45 percent, Medicaid patients for 44 percent and others the rest. (The data cover a wide variety of programs besides primary care, including sexually transmitted disease, AIDS, TB, hepatitis, prenatal care and dental care.)

Medicaid has been supporting a substantial portion of the CHDs’ primary care professionals' salaries and other infrastructure costs under a reimbursement system known as "cost-based reimbursement." It's calculated based on the actual clinical cost as well as ancillary services associated with the control of infectious diseases, the management of high-risk pregnant women and children, and special education and counseling services. It's a higher fee structure than standard Medicaid rates.

The CHDs use that money to take care of low-income uninsured, who represent the majority of patients. Without it, health professionals would have to go and clinics would have to close.

In Medicaid Reform, all Medicaid patients must be enrolled in an HMO or similar health plan that receives capitation -- a flat monthly premium each month that's supposed to cover all health services. Current experience shows that the HMOs would not pay CHD clinics more than standard Medicaid rates, which would cover only about 30 percent of the health-department clinics' costs.

Like CHDs, Federally Qualified Health Centers (FQHCs) are part of the primary care safety net for the low-income uninsured. Under federal guidelines, FQHCs are eligible for supplemental payments from Medicaid that help cover their costs if they treat a Medicaid recipient enrolled in a managed care organization. This payment, called the "supplemental wraparound," keeps the FQHC from losing money. It should be applied to County Health Departments, too.

Editor's  note: Paul Metts, a certified public accountant, was CEO of Shands HealthCare for 10 years before becoming a health-care consultant. He served as deputy secretary for Florida's Health Department from May 2007 to August 2008.