Missouri is changing the terms for how health care providers are paid after caring for certain Medicaid recipients, a move some rural hospitals warn could lead to financial losses.
If providers do not come in-network with the three insurance companies contracted by the state to provide coverage to certain Medicaid recipients, providers will be paid 10 percent less than they’re used to. The change went into effect Sunday.
Providers sounded off at a public hearing last week in Jefferson City. The public meeting was held by the Department of Social Services, which oversees the state’s Medicaid program.
“We’re truly in a situation where every dollar matters,” Mat Reidhead, a board member of Hermann Area District Hospital, said at the hearing.
Tim Wolters, director of reimbursement for Citizens Memorial Hospital, a rural facility north of Springfield, told the Post-Dispatch the decision could create a potentially dire financial situation for hospitals.
“Medicaid overall is a huge payer for us, and if we lost 10 percent that would probably be $1 million dollars off our bottom line, and our bottom line is about $1.6 million,” Wolters said.
Financial issues are among the stresses on rural hospitals. More than 120 rural hospitals have closed nationwide since 2005, according to the North Carolina Rural Health Research and Policy Analysis Center at the University of North Carolina at Chapel Hill.
The Department of Social Services said the intent of the change was to increase provider participation in managed care plans, but some physicians warned that it would discourage private practices from accepting Medicaid, which typically is reimbursed at low rates, typically lower than traditional employer-based commercial coverage.
“I think it’s very serious,” Dr. Randall Haight, vice president of Capital Regional Medical Center in Jefferson City, told the Post-Dispatch. “It will reduce access to physicians that are willing and able to care for the Medicaid population.”
Without private practitioners willing to see Medicaid patients, Haight fears Medicaid patients may turn to emergency rooms.
Typically, providers and insurance companies negotiate pricing terms for providing care to Medicaid patients.
Now, some are wondering what incentive there is for the insurers to negotiate with the providers if the state has tipped the scale in favor of the insurers, giving them greater bargaining power.
The hospitals feel particularly aggrieved because they tax themselves to help the state pay for the Medicaid program.
“I will tell you, however, that this definitely puts the hospitals in a negative bargaining position,” Tom Luebbering, chief financial officer of Capital Region Medical Center in Jefferson City, said at the hearing.
Luebbering said his organization found it odd when one of the three managed care plans terminated its contract with Capital Region this summer without even attempting to negotiate. He said it now made sense given the state’s policy change.
Many hospital leaders, including those with Creve Coeur-based SSM Health, said they had had the same experience with insurers terminating plans.
However, a representative for one of the health plans, Missouri Care, said payment rates were higher in Missouri than for similar business in other states. Ultimately, he said, lowering the rates will mean cost savings for the state.
As of May, about 713,930 individuals were enrolled in one of the three Medicaid managed care plans.
The managed care system covers eligible children, pregnant women and parents of children 18 and under who are also enrolled in the program.
The state’s Medicaid program is broken into two parts: fee-for-service or managed care.
Under fee-for-service, health care providers are paid for each service they perform and the rates are set by the state.
Under managed care, three insurance companies are paid a set fee each month for each member enrolled in the plan.
Individuals under managed care have the option to choose from either Home State Health Plan (Centene), UnitedHealthcare or WellCare.
Some providers, including specialty children’s hospitals and public health providers, will be exempt from the policy.
Samantha Liss • 314-340-8017
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