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Insurance & Benefits

TMA: More Texas Doctors Abandoning Medicaid and Medicare

By Steve Jacob |

Cedar Hill orthopedic surgeon Stephen Ozanne had not accepted Medicaid patients in the past, but decided he would try to accept two a month. Things quickly unraveled. He found his patients had transportation problems getting to the office and tended not to follow prescribed treatment. He also found Medicaid’s reimbursement process cumbersome. He calculated that he spent $500 in staff time to collect less than $50.

End of experiment.

Ozanne, the former president of the Dallas County Medical Society (DCMS), is not alone. Texas physicians are turning their backs on Medicaid and Medicare in growing numbers.

According to a recent Texas Medical Association survey, the percentage of physicians who accept new Medicaid patients has dropped to 31 percent, which is less than half of 67 percent who accepted those patients in 2000.

Cardiologist Richard Snyder, current DCMS president, said the Dallas County Medicaid acceptance rate is 24 percent—and 19 percent for primary-care physicians.

The TMA results were based on an email survey sent to nearly 28,000 Texas physicians, which had a 4 percent response rate. Although the findings may not be as statistically valid as a random-sample survey, TMA basically has used the same methodology since 1990 and likely captures an accurate trend in Medicaid acceptance.

A study in the August edition of the journal Health Affairs used a survey of more than 4,300 office-based physicians to calculate state-level Medicaid acceptance. According to that analysis, 69 percent of Texas physicians accept Medicaid.

The survey also found the percentage of physicians who accept new Medicare patients is now 58 percent, compared with 78 percent in 2000.

The state legislature cut Medicaid rates by 2 percent in 2011. In January, Texas also discontinued using Medicaid funds to pay the $140 deductible for patients who are also on Medicare. Because many patients are too poor to afford the deductible, physicians either must absorb the cost or turn patients away.

Legislators also changed physicians’ co-payments for Medicare Part B for the so-called dual eligibles. Previously, Medicare paid for 80 percent of the bill and Medicaid paid for 20 percent. Now reimbursement is at the lower Medicaid rate.

Ongoing, Steep Cuts

Physicians also have faced the threat to steep Medicare payment cuts every year for the past decade. They face another hefty cut—this time 30 percent—Jan. 1, 2013, because of Medicare’s sustainable growth rate (SGR) formula.

Several factors contribute to the erosion in both programs. Physicians say government insurance reimbursement does not cover the cost of care. Texas is the fastest-growing U.S. state and, especially in suburban areas, doctors have been able to replace government-insurance patients with those who have higher-paying commercial  insurance.

According to the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary, Medicare payments are about 80 percent of private health insurance, while Medicaid payments are 58 percent of private insurance. However, those gaps may be significantly greater for dominant medical groups that can negotiate better rates.

The Jackson Healthcare’s 2012 Physician Practice Trends Survey recently reported that, of all U.S. physicians:

• 36 percent said they were unable to accept new Medicaid patients

• 26 percent said they do not see Medicaid patients at all.

• 17 percent said they were unable to accept new Medicare patients.

• 10 percent said they do not see Medicare patients at all.

CMS proposed in May to raise Medicaid payments to equal what Medicare pays for the same primary-care services for 2013 and 2014. The federal government would pay 100 percent of the $11 billion needed to close that gap. The goal is to make newly insured Medicaid patients more attractive to physicians. However, the fear is that either physicians will release those patients after the Medicaid surcharge ends, or that the federal government will be pressured to keep those higher rates—creating a new “reimbursement cliff,” like the one physicians face annually with Medicare.

Even if Gov. Rick Perry’s decision not to expand Medicaid stands, about 3 million more Texans will be insured under health reform through the health-insurance exchanges. Because those newly insured will be covered by higher-paying commercial insurance, they could further squeeze even more Medicaid and Medicare patients out of physician waiting rooms. The state’s population growth just adds fuel to the fire.

Physicians also are weary of what they see as an onerous administrative burden.

Frisco family physician Chris Noyes, M.D., says he had a “straw that broke the camel’s back moment” with Medicare in 2009.

“I had a patient who moved from out of state to be with his kids. He had lung cancer when he came in, and he ultimately died. We wrote off a fairly large balance,” Noyes said. “Two years after he died, we got a letter from Medicare saying they had overpaid for a flu shot for him by $2 and they wanted the money back with interest and a penalty, and if I didn’t pay it all within 30 days they would prosecute me.”

Darrel Jordan, a Dallas obstetrician and gynecologist, said he stopped accepting Medicare because of the looming penalties for not having electronic medical records by 2015. He estimated the cost to be between $50,000 and $80,000, which he said he would never recoup.

Jordan said Medicare pays $59 for an annual exam while a commercial insurer pays two to three times more for the service. He pointed out elderly patients require more time because they have more chronic conditions.

“Divide that ($50,000-$80,000) by $59. How many patients would it take to pay that off?” Jordan said.

Steve Jacob is editor of D Healthcare Daily and author of the new book Health Care in 2020: Where Uncertain Reform, Bad Habits, Too Few Doctors and Skyrocketing Costs Are Taking Us. He can be reached at [email protected].

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