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HealthBiz: States see big Medicaid growth

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WASHINGTON, Oct 05, 2004 (United Press International via COMTEX) -- States continue to face increased Medicaid enrollment and costs, but the good news for providers is not many are turning to provider payment cuts as a way to hold down expenditures.

A survey of all 50 state Medicaid directors, conducted by the consulting firm Health Management Associates for the Kaiser Commission on Medicaid and the Uninsured, found most of the states in the past had frozen or reduced payments in at least one provider category, but many state Medicaid programs now are looking to increase payments to hospitals, nursing homes and other healthcare providers.

States also are increasing payments to managed-care organizations, because many now rely on these insurers to manage coverage for beneficiaries.

Low Medicaid reimbursement rates have contributed to problems some the nation's 52 million Medicaid beneficiaries have experienced in finding physicians willing to treat them -- not only in office settings, but also in hospitals, including emergency departments.

Vern Smith, of Health Management Associates, said states got some breathing room in 2003, when Congress responded to severe budget revenue shortfalls across the country by increasing Medicaid's federal matching share. That money expired in June, however, and for fiscal 2005, states again are struggling to deal with 9.5 percent growth in annual spending -- especially high considering across-the-board state programs have been increasing only by an average of 2.8 percent.

"Medicaid enrollment has continued to increase, actually fairly dramatically, over the past few years," Smith said.

The enrollment is responding to increases in the number of people living in poverty and the number of uninsured.

"So states are seeing dramatically large increases in the state share of state spending in 2005," Smith said, adding that state legislatures have authorized about 11.7 percent more money for their 2005 programs.

Children make up half of all Medicaid beneficiaries, but 50 percent of the program's money is spent on long-term care for the elderly and disabled, with another 18 percent going to spending on prescription drugs.

"That makes Medicaid the largest single purchaser of prescription drugs in the country," Smith told a news briefing on the survey.

It is these two areas where states are looking to curb spending as Medicaid now accounts for 16 percent of state spending -- a percentage that is expected to continue to grow. Only spending on education at the state level is higher than Medicaid.

Few states are seeking higher co-payments or eligibility restrictions -- as they have mostly exhausted those cost-cutting strategies, Smith said.


The Center for Medicare and Medicaid Services has backed down on its requirement that hospitals report a patient's immigration status to receive payments for emergency care of undocumented immigrant patients.

In a letter to the American Hospital Association this week, CMS Administrator Dr. Mark McClellan said providers "should not ask" about citizenship status in these cases and will not be required to do so to receive funding included in the Medicare Modernization Act set aside for this patient group.

The AHA commented that many hospitals are challenged to provide care to a growing number of undocumented immigrants who do not have health insurance. The association said healthcare providers are caregivers not border patrol agents and hospitals are safe havens.


The Health Coverage Tax Credit is a little known or talked about tax code provision and the Government Accountability Office said more should be done to make it easier for people to find out about it and use it.

The government watchdog agency said in a report this week the credit, passed in 2002 for displaced workers getting income support via the Trade Adjustment Assistance program and for retirees receiving pensions from the Pension Benefit Guaranty Corp., allows the Internal Revenue Service to pay 65 percent of the cost of health coverage for a qualified individual. The money can be accessed in advance by having the IRS pay the credit to a health plan or a beneficiary can get the credit via their tax return but has to pay the full premium upfront.

The GAO found 19,410 individuals received about $37 million in benefits from the tax credit in 2003 with 65 percent claiming the credit on their tax return. As of July, 13,200 people were signed up for the advance payment -- most from the PBGC.

"The number receiving the HCTC remains a small portion of the workers and retirees initially identified as potentially eligible," the GAO report said, because of the timing of the advance credit and a fragmented and difficult enrollment process.

The GAO suggested Congress change enrollment requirements to expedite a person's receipt of the HCTC and coordinate with other federal agencies to make enrollment faster and easier.


The healthcare industry had a lot of complaints about the time and administrative requirements of the Health Insurance Portability and Accountability Act of 1996 when it took effect last year. A Government Accountability Office report out this week on the Privacy Rule's first year shows it went more smoothly than expected.

Healthcare providers also said the new privacy procedures had become a part of their routine practice.

Two of the provisions, however, accounting for certain information disclosures and developing agreements with vendors and other companies that provide goods and services that affect patients -- so-called downstream affiliates -- still were called unnecessarily burdensome.

Some health providers suggested the problems could be solved with help from the Department of Health and Human Services' Office for Civil Rights.

The GAO report said "public health entities noted that some states have had to take concerted action to ensure that providers' concerns about complying with the Privacy Rule do not impede the flow of important information to

state health departments and disease registries."

Researchers also have complained the rule causes delays by reducing their access to research data.

The GAO said it still is "concerned about the burden of accounting for disclosures to public health authorities and

believes it is important that HHS more effectively disseminate information about the Privacy Rule."



Copyright 2004 by United Press International.


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