SAUSALITO, CA (ASRN.ORG) -- Medicaid is in desperate financial trouble. The states know it. Hospitals know it. Doctors know it. And as each group cuts back on services to try to save money, increasingly patients know it, too.

Add 17 million people to the Medicaid rolls in 2014, and the problem grows exponentially. Indeed, that's just what the Affordable Care Act will do unless 26 states facing insurmountable financial burdens win their challenge in a case now before the Supreme Court.

In the meantime, states (which shoulder more than 40% of the Medicaid burden) are responding to this pressure by cutting Medicaid services. Though this spending needs to be curtailed, the cuts must make medical sense. Many, sadly, don't.

An extensive 2009 report from Thomson Reuters examined inefficiencies, errors, lack of care co-ordination, unwarranted use, avoidable care, fraud and abuse, and determined that $700 billion or one third of all annual health care expenditures (including within Medicaid) are wasteful.

Yet instead of finding those billions of dollars bleeding into the system, many states are cutting to the bone first.

Pulling back on hospital care

The Kaiser Health News recently reported that several states are restricting coverage for hospital stays to try to save costs — Florida to 45 days per year, Mississippi 30, Arkansas 24, Alabama 16 and Hawaii an unworkable 10.

Practicing physicians say that this won't work. Where will Medicaid patients go to receive care after they are forced out of hospitals or threatened with bills they can't pay after the quota has been reached? Keep in mind that doctors are just as unhappy financially with Medicaid as states are. A new study by the Kaiser Family Foundation found that more than 50% of primary care physicians are limiting, at least partially, their treatment of Medicaid patients. The more doctors drop out, the more Medicaid patients have only one place to receive care: hospitals.

So what happens when a patient runs out of Medicaid-covered hospital stays? We might soon find out. Hawaii will make exceptions for children, pregnant women, cancer patients, the elderly, the blind and the disabled, but what about hernias or cardiac stents or biopsies? Some states, such as Alabama and Arkansas, have billed patients for days not covered by Medicaid, though in most states, hospitals end up eating the costs. But neither hospitals nor poor patients can afford these payments.

Oh, the emergency room won't turn anyone away, some will argue. It's true that federal law mandates that hospital ERs treat all patients with emergencies, but once they are stabilized, those without coverage can be sent home without follow-up care.

There are smarter ways to cut Medicaid bloat. For example, why should Medicaid pay for patients to purchase new wheelchairs every few years rather than simply repairing them? Any meaningful Medicaid reform must also involve restricting excessive or duplicate services.

But when bureaucracies are asked to cut, medical sensitivity is left on the cutting room floor.

Take North Carolina. The current $350 million cut in Medicaid services from the state budget involves discontinuing routine eye care or eyeglasses, limiting outpatient physical therapy to three visits a year and deep-cleaning dental treatments for gum disease to once every other year. On the surface, these cuts seem wise until you consider that untreated gum disease can occur quickly and lead to heart disease, and that three visits from a physical therapist aren't nearly enough for someone who has just had an operation or a stroke and wants to seek employment. It is prudent to limit a new pair of eyeglasses to once every five years the way Mississippi is doing, but doing away with them all together as in North Carolina could lead people with poor vision to fall or get into car accidents.

Other states are also limiting services somewhat arbitrarily. Nebraska is cutting back on payments for adult diapers. California is eliminating adult day care services. Colorado has stopped covering circumcisions, a procedure that can decrease the risk of certain infectious diseases. Texas, Florida and New Jersey are promoting Medicaid HMOs, without any definitive evidence that the move will hold down costs or improve care.

Build on co-pay system

Instead of cutting services and asking questions later, states should let patients in on the decision-making by getting more of their skin in the game. I'm talking about co-pays. Adding a co-pay for "well" visit services such as dental or eye care or physical therapy is a better solution than eliminating or severely restricting these services. States could discourage overuse of services by adding a co-pay to non-essential visits.

In the Deficit Reduction Act of 2005, Congress gave states the power to impose cost-sharing in Medicaid, which was already on a dangerous trajectory and now covers 70 million patients and cost our government a whopping $427 billion in 2010. But only a dozen states do so. Co-pays should be used in all 50 states to make a real impact, and these fees should be raised, as necessary, to control costs while maintaining an adequate level of care.

We’re sympathetic to the states that are being bled by costly and expanding federal mandates. But government's greater involvement in health care decisions should not come at the cost of patient care.

 

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