OHP Docs Face Hefty Reimbursement Cuts
Doctors who accept the Oregon Health Plan have had minimal increases since the state Medicaid plan began in 1996
EDITOR'S NOTE: This story has been corrected from its original
February 10, 2011 -- For anyone wondering whether Governor John Kitzhaber would be influenced by roughly $500,000 in campaign contributions from Oregon’s Medicaid managed care plans, the answer so far is ‘no.’
Included in the Governor’s proposed budget released last week are reductions in benefits and reimbursements to doctors and some hospitals under the Oregon Health Plan.
For an opening bid in what’s to become a heated debate at the legislature, Kitzhaber is calling for 19% reductions in reimbursement to physicians and some rural hospitals as well as raising the bar on the prioritized list by about 40 conditions and treatments. The resulting benefit reductions could mean denying care for cochlear implants and treatment for bronchitis.
Payment reductions for doctors could have significant effects on access to care, said Betsy Boyd-Flynn, deputy executive director of the Oregon Medical Association.
Physician reimbursements under the Oregon Health Plan have not increased since the program’s inception in 1996. Reimbursements to managed care plans have increased just 6 percent in 10 years. Physician payments are set by the plans. Fee for service rates set by the state have increased slighly more. So physicians are already absorbing losses whenever they take such a patient, she said.
“We’re already in a situation, depending on your contract, where something like 60% or less of a doctor’s overhead is covered,” said Boyd-Flynn. “An additional 19% cut on top of that is going to create a problem with access.
Roughly a quarter of all primary care physicians in Oregon, and about 18% overall, refuse to accept additional Medicaid patients mainly due to low reimbursements, according to the most recent physician workforce study published in 2009.
“There are going to be a lot of physicians that are just not going to make ends meet that continue to see these patients or accept new ones,” said Boyd-Flynn. “Will that have the effect of pushing more people to the emergency rooms or the ranks of uncompensated care? It certainly seems like a logical conclusion.”
She cautioned, however, at rushing to judgment too soon. “We’re still trying to figure out exactly how that’s going to play out because it doesn’t sound like the legislature is very happy about this.”
Kitzhaber’s overall human services budget pens out to about 40% less than department heads have indicated they need to maintain current service levels.
The governor is betting, however, that the effects of proposed cuts will be short-lived as he and others attempt a comprehensive reform plan led by the Oregon Health Authority and a recently convened Health System Transformation Team. In all, Kitzhaber hopes to achieve reductions in state healthcare costs around 7% next year and up to 30% in the long run.
Jeff Heatherington, president of FamilyCare – the state’s third largest Medicaid managed care plan – would like to see the state reduce payments to urban hospitals, which don’t face the same reimbursement crunch like doctors. Unlike physicians, urban hospitals are paid a percentage of their overall costs under the Oregon Health Plan.
“So every time they raise their prices they get an increase,” Heatherington said. “They’ve been doing this for years, but the department doesn’t want to take on the hospitals.”
EDITOR'S EDITION: Patty Wentz, communications director for the Oregon Health Authority, refutes this characterization. "OHA reimburses urban hospitals based on cost or based on Medicare payment methodologies, both of which do not increase when hospitals increase their prices. Prices typically increase more rapidly than cost."
In 2009, Oregon’s urban hospitals (Type DRG) recorded operating margins on average above 4% while their smaller more rural counterparts (Type B hospitals) averaged 2.2% and the most rural (Type A hospitals) averaged –1.8%, based on the most recent hospital financials put out by OHPR.
The potential of reducing the number of managed care plans that administer benefits under the Oregon Health Plan is far more threatening, Heatherington acknowledged. No details have been announced, but discussions are under way to create a more regional approach.
It’s unclear yet where Kitzhaber falls on this final point. And given the hefty campaign contributions from many of those same plans – among his largest group of contributors – there are some obvious expectations.
“We’re hopeful that he (Kitzhaber) will continue to recognize the value the health plans have brought to the Medicaid population over the past 15 years and will continue to work with us in the future,” Heatherington said.
Feb 10 2011