Tag, You're It: TMA Urges Physicians to Reexamine Medicaid Participation

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Cover Story - January 2008  



By  Ken Ortolon
Senior Editor  

At the outset of the 2007 legislative session, the Texas Medical Association launched a five-year strategic plan to get lawmakers to increase physician Medicaid fees. The goal was to make Medicaid fees competitive with Medicare and commercial health insurance rates, bring physicians back into the Medicaid program, and create medical homes where Medicaid patients could get cost-effective care.

Aided by a settlement in a lawsuit challenging the adequacy of the state Medicaid program, TMA got what association leaders have called an "excellent down payment" toward achieving that goal. In response to the settlement in Frew vs. Hawkins and pleas from TMA and state medical specialty societies, lawmakers boosted physician fees for children's Medicaid by an average of 25 percent and hiked adult Medicaid rates by roughly 10 percent.

Now, TMA is actively encouraging Texas physicians to show lawmakers they will do their part and rejoin the Medicaid program or increase the number of Medicaid patients they are willing to see.

"This is a multiyear, multisession strategy," said TMA President William W. Hinchey, MD, of San Antonio. "Getting physicians to demonstrate that we will participate, that we will respond to increased reimbursements will be tremendously important in our efforts to push for even more increases in future sessions."

While the improved Medicaid rates still lag well behind Medicare and other health plan fees, some physicians say the new rates make it easier to balance prudent business decisions with their ethical and moral obligation to patients.

"Now that they've upped the rates and put an emphasis on preventive services, I think it's feasible for physicians to start returning to Medicaid," said San Antonio pediatrician Dianna Burns-Banks, MD. "To me, it's part of a mission, an obligation that you should do." 

Stopping the Bleeding  

Physician participation in Medicaid plummeted in recent years, dropping from 67 percent of Texas physicians willing to accept new Medicaid patients in 2000 to only 38 percent in 2006. That compares to about 52 percent of physicians nationally who accept new Medicaid patients.

In a letter to legislative leaders before the 2007 session, then-TMA President Ladon W. Homer, MD, said the culprit for that decline was obvious - physicians hadn't seen a meaningful increase in Medicaid rates in 15 years; worse, their rates dropped by 2.5 percent in 2003.

"Inadequate reimbursement is the primary reason more physicians are leaving the program," Dr. Homer wrote. "Without a robust physician network, services that could be provided cost effectively by a physician end up getting pushed into more costly emergency departments or even to hospital inpatient services."

Dr. Homer called on lawmakers to restore the 2.5-percent cut in 2003 and increase rates across the board by 10 percent for each year of the biennium.

But physicians won an even bigger increase - at least for children's Medicaid - thanks to the Frew settlement. It prompted lawmakers to put an additional $1.8 billion in state and federal funds into children's Medicaid, most of which went into increased fees for physicians, dentists, and other health care professionals.

San Antonio pulmonologist John R. Holcomb, MD, chair of TMA's Select Committee on Medicaid and the Uninsured, says those fee increases, which took effect Sept. 1, should "stop the bleeding" for many Texas physicians, even though Medicaid rates are still well below those of Medicare and other insurance plans.

"At the very least, doctors will be losing less to see Medicaid patients in the future, and it probably gets them pretty close to a break-even rate for their office overhead," Dr. Holcomb said.

While the average increase for children's Medicaid was 25 percent, rates for some services went up even more (see " Medicaid Fee Increases ").  

Measuring the Impact  

While those increases may not have tremendous impact on some physician practices, Dr. Holcomb says they will be a substantial boost for border, inner-city, and rural physicians who have a "very high penetration of Medicaid."

El Paso pediatrician Carlos Gutierrez, MD, calls the increased fees "great news" for border physicians.

"In our practices, I dare say the average number here is 60 to 90 percent of all our patients being Medicaid," he said. "When the new reimbursement schedule came out, we were pretty ecstatic. That's going to be a tremendous help."

Dr. Gutierrez says the old payment rates were so low he was barely able to keep his doors open.

"If you have a private practice, which most of us do, you're the last one who gets paid," he said. "There've been many times that I didn't get a check for two or three months."

Dr. Burns-Banks, managing partner of South Texas Center for Pediatrics, which operates five clinics in San Antonio, says the increases will also significantly impact her group, which has two offices that treat a high percentage of Medicaid patients.

"It definitely increases our ability to service that population of patients," she said. "It makes these offices viable concerns, rather than dying concerns."

Still, TMA leaders say some physicians are not convinced the rate increases are sufficient to allow them to open their doors to more Medicaid patients.

Dr. Hinchey says he hears a "really mixed reaction" when he talks with physicians about getting back into Medicaid. "Some are positive, some have no comment, others are saying the percentages sound big, but the total dollar amount is still insufficient compared with what it costs to provide a service," he said.

Norman Chenven, MD, founder and chief executive officer of Austin Regional Clinic, says his large multispecialty group currently limits its Medicaid load to between 6 and 8 percent of its patient population, roughly the same percentage as the Medicaid patient population in the Austin metropolitan area. He does not foresee changing that policy despite the fee hikes.

"Our board has established a benchmark policy that says we will do our fair share of Medicaid for our community," Dr. Chenven said. "We feel like we owe it to our community to have access available for these patients, but we also need to protect our own economics."

"No," Sugar Land internist Don Ford, MD, said in response to a Texas Medicine e-mail survey asking physicians if the fee increases would cause them to start seeing Medicaid patients again or increase the number they see now. "They still are one of the lowest payers, and I am plenty busy as it is. Why would I want to displace better payers in my practice when overhead is already eating up my take-home pay?"

Another physician, Harker Heights pediatrician Ray M. Johnson, MD, said his clinic never stopped taking Medicaid patients. "Others in our community have limited their Medicaid patients but have never officially stopped taking Medicaid patients because of the high rate of Medicaid OB patients, and pediatricians are required to take call in the nursery. To currently take Medicaid patients and make a living requires volume." 

Drawing in the Subspecialists 

Dr. Holcomb says the pediatricians, obstetricians, and other primary care physicians who are "doing yeoman's work right now seeing Medicaid patients" are not the ones who need to be convinced to increase their participation. Instead, it is the subspecialists, who he says have "voted with their feet and left the program."

TMA leaders say Medicaid patients have difficulty getting referrals to some subspecialists because so few are accepting new patients. Unfortunately, rates for some of those subspecialists did not increase as much as did the fees for some of the evaluation and management and preventive services.

Dallas pediatric cardiologist Lee Ann Pearse, MD, says she does not limit the number of Medicaid patients in her practice, but says many of her subspecialty colleagues are concerned about taking Medicaid because of low rates and the hassles associated with the program.

"Many of these physicians ask themselves why deal with something that doesn't reimburse well to begin with and then also deal with what are felt to be the hassles that come with the program." She is concerned that higher fees are not enough to attract the subspecialists back into the program. 

Streamlining the Process  

TMA, however, is working with the Texas Health and Human Services Commission (HHSC) to eliminate some of the difficulties in Medicaid. Helen Kent Davis, director of TMA's Office of Governmental Affairs, says the association recommended several ways to simplify the program. She added that HHSC has adopted a "real collaborative" attitude toward implementing some of those suggestions.

"They've really looked to us for a lot of recommendations, and they're very open-minded about new things that can be done," Ms. Davis said.

Chris Traylor, HHSC associate commissioner for Medicaid and the Children's Health Insurance Program, says his agency is committed to making the program as "user-friendly" as possible for physicians.

HHSC plans to implement an online Medicaid provider application beginning in February. The online application will reduce the number of errors during the application process because it will not let the physician submit the application if information is missing or incorrect.

The agency also is rewriting the current paper application form, which is more than 30 pages long.

"They understand our concern that the application is really long and complicated," Ms. Davis said. An advisory committee of agency staff and physicians will make recommendations for streamlining the application, she adds.

"Obviously, we have to balance the need for program integrity and program information with the simplified application, but we do intend to go through that," Mr. Traylor said.

Other measures are designed to make Medicaid more physician- and patient-friendly. They include:

  • A rewritten Medicaid manual that is easier for physicians and other health care professionals to understand and that eliminates inconsistencies.
  • An online database that lists every participating health care professional. The database maintains current information on each provider by requiring them to update their password every 90 to 120 days. When the password is changed, the provider also must update other information, such as whether the practice is closed to new Medicaid patients. The online provider database can be accessed on the nonsecure portion of the Texas Medicaid & Healthcare Partnership Web site at www.tmhp.com.
  • A simplified Medicaid preferred drug list that makes it easier for physicians to find information about the preferred drug list, including a summary of preferred drugs (available at www.txvendordrug.com ).

Ms. Davis says HHSC also is more aggressive about sanctioning Medicaid HMOs for marketing and other violations of Medicaid rules or their contracts with the state.

Finally, Mr. Traylor says HHSC in September began an electronic process for obtaining prior authorization, which is available for ambulance services, home health care, inpatient and outpatient hospital services, and early childhood intervention services. 

Getting Buy-In  

While initial reaction to the fee increases is mixed, TMA and other organizations encourage physicians to look again at Medicaid in light of both the fee hikes and administrative simplifications.

"We've all got to step up to the plate and say, number one, the state has demonstrated good faith and has provided as well as can be done at this point in time and, number two, there's a certain civic duty in medicine to take care of poor people as well as people who are well insured," said Dr. Holcomb. "We all have to shoulder the burden here in Texas."

TMA, the Texas Pediatric Society, the Texas Academy of Family Physicians, and other groups are launching a campaign to encourage physicians to return to Medicaid or open their practices to additional Medicaid patients. That campaign will include recruiting physician "ambassadors" to contact their colleagues about opening their practices to Medicaid. The groups also plan to work with county medical societies, hospitals, Medicaid HMOs, and others to promote participation.

And, TMA encourages members to use the Hassle Factor Log program so that it can document and report issues that need to be addressed with HHSC.

Dr. Holcomb says members of his select committee already are using their personal influence to convince colleagues to rejoin Medicaid. He says this is critical, especially in getting the subspecialists back in the program. "I don't think the money, by itself, will drag them back in."

Meanwhile, Dr. Hinchey continues to carry the message that it will take multiple legislative sessions to truly achieve competitive Medicaid rates.

"We need to make a little investment if we can, and can afford to, to show the state that if they do bring those Medicaid rates up, doctors will participate, and we'll be able to save the state money," Dr. Hinchey said.

North Carolina has demonstrated it can be done, he says. It dramatically increased physician fees, boosted participation to about 85 percent, and saved $100 million the first year by keeping minor ailments out of the emergency room, Dr. Hinchey says.

This year's increases were a good first step, but TMA will be back in 2009 and subsequent sessions looking for more improvements, Dr. Holcomb says.

"I don't think our five-year plan has changed."

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at  Ken Ortolon .   


Online CME Available for THS Physicians

If you are thinking about getting back into Medicaid but are uncertain how the program works, you might want to check out a series of online continuing medical education (CME) courses available on the Texas Department of State Health Services Web site.

The online courses provide valuable information on the Texas Health Steps (THS) and Vaccines for Children programs for physicians who want to treat children on Medicaid. THS, also known as the Early and Periodic Screening, Diagnosis, and Treatment program, is Medicaid's comprehensive and preventive child health service.

Located at http://txhealthsteps.com/catalog , the courses provide information on adolescent health screening, case management, developmental screening, cultural competency, immunizations, mental health screening, newborn hearing screening, and more.

This training is designed to improve comprehensive preventive health, mental health, dental, and case management services for Medicaid-eligible children up to 20 years old.

The 16 self-paced courses are free and offer CME credit. Target audiences for the various courses include physicians, nurses, physician assistants, midwives, dentists, and other health care professionals. 


Pediatrician Recommends Simple Steps to Make Medicaid More Viable

Medicaid may be the worst paying health plan, but Texas physicians say there are steps you can take to make sure you are managing your Medicaid patient population in a way that does not negatively impact the financial viability of your practice.

San Antonio pediatrician Dianna Burns-Banks, MD, managing partner of the South Texas Center for Pediatrics, says increased Medicaid fees that took effect Sept. 1 are now "fairly comparable" to some other payers, particularly for preventive services. She says that makes it easier for physicians to balance sound business decisions with their ethical obligation to provide care for low-income patients.

"Maybe before, when Medicaid was paying $27 for routine care and $68 for a physical, that was probably not something some physicians wanted to consider," she said. "But now that they've upped those fees and put an emphasis on preventive services, it's more feasible for physicians to come back to the program."

Dr. Burns-Banks says the first thing physicians who want to see Medicaid patients must do is determine their actual cost of seeing each patient. A midlevel office visit for an established patient in children's Medicaid now pays $37.64. That puts the fee very close to the break-even point for many physicians, she says.

"It's hard for doctors to look at their expenses and to look at how much it costs to see a patient," Dr. Burns-Banks said. "But that way you can decide what number of patients you can see. Our costs run about $30 to $35 per patient, so I know we're now coming close with what we're getting to cost."

Another important step, Dr. Burns-Banks says, is transmitting your Medicaid claims electronically and submitting them every day or every other day.

"Pediatrics, in general, is very volume driven, and you have to be able to turn your money quickly," she said. "Even though your profitability may not be up there, your cash flow keeps up with your expenses."

Dr. Burns-Banks says it also is important for Medicaid participants to join Texas Health Steps (THS), Medicaid's preventive care program for children. THS fees increased dramatically this year.

And, she says, be proactive in providing preventive services under THS.

Community First, a Medicaid HMO operating in San Antonio, routinely sends her offices a list of patients who need preventive care. Those patients are then called to remind them to go in for that care.

"It's important to get a reputation that you will do regular checkups and preventive services; otherwise, they'll be done in schools and public health clinics, and the concept of a medical home is missed," Dr. Burns-Banks says. "If you're a medical home, you definitely need to be doing the preventive services."




Medicaid Fee Increases


Medicaid Payment  Before 2007 Rate Increases  

New Medicaid Rate for Children's Services (effective 9/1/2007)  

New Medicaid Rate  for Adult Services (effective 9/1/2007)  

Current Medicare Payment (Rest of Texas)  

Established patient visit (midlevel exam)





New patient visit (midlevel exam)





Emergency room visit(midlevel exam)





Vaccine administration* (depending on number of antigens)



No change


Preventive care/EPSDT for children


Fee varies by age of child and whether patient is new or established.

New patient:

Established patient:

Not a covered benefit in traditional Medicaid; adult Medicaid HMO enrollees entitled to one annual physical exam

New patient: $102.30-$117.24, depending on age

Established patient:
$78-$95, depending on age


Psychiatric diagnostic exam





Medication management



No change


Vaginal delivery with postpartum care





Sources: Texas Health & Human Services, U.S. Centers for Medicare & Medicaid Services  

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