Alabama Medicaid restores physicians' funding

It won’t be a smooth ride for the Alabama Medicaid Agency, but physicians will be happy there’s a bump along the way.

Gov. Robert Bentley and Medicaid Commissioner Stephanie Azar Thursday announced that the agency would restore a primary care bump for doctors, cut in August amid a shortfall in state funding for the program. The restoration will begin Oct. 1.

“Our primary care physicians are the ones most affected by Medicaid,” Bentley said at a press conference Thursday. “Almost all our primary care docs take Medicaid. A large percentage of people they see, especially children, a large percentage of those take Medicaid.”

The Legislature approved a plan earlier this month that provided the money the program said it needed to maintain services and create regional care organizations (RCOs), aimed at slowing cost growth in the program. A budget approved in the springtime left the program about $85 million short.

Medicaid covers over 1 million Alabamians, mostly children, elderly and the disabled. The program plays a critical role in keeping doors open in hospitals and primary care providers, particularly pediatricians.

The bump was first funded out of the Affordable Care Act, but the state continued providing it to keep Alabama physicians in the program. The cut to the bump reduced reimbursements for many services. Physicians saw reimbursements for a 25-minute office visit fall from $101 to $67. Reimbursements for a 70-minute hospital visit fell from $194 to $113.

State physicians’ groups said many practices laid off employees after the cuts went into effect Aug. 1, which increased waiting times and made it harder to access care.

“When you consider what the commercial market pays for services that are performed by pediatricians and family physicians, the Medicaid fee schedule before the bump didn’t come close to truly or adequately paying for those services,” said Linda Lee, executive director of the Alabama Academy of Pediatrics.

The bump in total will total $49 million. The state will provide about $14.7 million. The federal government, which pays for more than two-thirds of Alabama’s Medicaid Program, will match it with about $34.3 million, according to the governor’s office.

“It will allow those providers to continue to pay their overhead and necessary expenses,” Azar said after a press conference Thursday. “Which is very important, because if they have to cut their staff, they will not be able to see Medicaid patients quite as quickly. Or they may not be able to see our Medicaid recipients, which would be quite detrimental.”

In some cases, said Mark Jackson, executive director of the Medical Association of the State of Alabama, the cuts amounted to 30 or 40 percent of medical practices’ revenues.

“Regardless of what kind of business you’re in, if you’re seeing cuts of 30 and 40 percent, it’s going to make a major impact on your bottom line,” he said.

The restoration will not be retroactive, which could affect the rehiring of laid off employees, Lee said.

“The pediatricians went through two months of a difficult time,” Lee said. “The layoffs that took place in certain practices, I’m not sure where that puts them now.”

The restoration of the bump will also allow the state to continue to implement RCOs. The RCOs will work as managed-care type organizations, with a goal of moving from a fee-for-service model to one that provides payments based on health care outcomes. The funding approved by the Legislature in the spring time imperiled the implementation of the RCOs, but Azar said they would be able to begin rolling them out by July 1 of next year.

The RCOs could make Alabama eligible for up to $748 million in federal dollars over five years, both to implement the program and reach certain health care benchmarks, such as reductions in infant mortality. Azar said the state could start drawing down that money in January or February.

Bumps ahead

Despite Thursday’s good news, Medicaid still faces a host of uncertainties going forward. Hospitals say changes in their reimbursements in the coming years will require the state to opt into the Medicaid expansion offered under the Affordable Care Act to bring the program to all adult making 138 percent of the poverty line or less -- $16,394 a year for an individual; $33,534 for a family of four.

Bentley said Thursday he would “like to access that money,” but said the lack of revenue in the General Fund would make it difficult for the state to pay its share of the expansion. The federal government would pay the vast majority of the expansion costs, but the state would have to pay up to 10 percent of the costs by 2020.

“We have such difficulty funding program we have right now, we cannot afford that at the present time,” the governor said. The situation could particularly hurt rural hospitals; Bentley suggested transforming them into emergency care clinics if expansion does not take place.

The agency lost a pharmacy tax and will have to deal with increased costs in other services in the 2017 fiscal year, which starts Oct. 1. Azar said she “remained optimistic” Medicaid would be able to meet those costs with the extra $85 million the agency received as a result of the special session that concluded earlier this month.

The Legislative Fiscal Office estimates Medicaid may need up to $865 million in state dollars in 2018, and while the Legislature allocated $105 million for Medicaid that year, both that money and this year’s fix came from the state’s share of the BP settlement money, a one-time source of revenue. Azar said the agency will have a budget shortfall, though the extra money would help.

“It looks to be a $60 million shortfall, a $60 to $80 million shortfall,” Azar said. “But I’m so grateful we’re not talking about a $160 million shortfall or a $170 million shortfall. That’s how important that BP money was to Medicaid. It made a huge difference.”

The uncertainties will affect physicians’ practices. Lee said many pediatricians had become “gun shy” about making major expansions in their offices, due to the funding problems. But getting the bump back, she said, would allow them to maintain their current services.

“The payment bump gave pediatricians and I would assume other family physicians the confidence to move forward and provide the best care possible to those patients,” she said. “Without it, there were concerns about continuing to take Medicaid, so this helped pediatricians remain committed to taking care of Medicaid patients.”