by Rep. Holly Richardson (R-Pleasant Grove)
Medicaid – a program designed to help the disabled, the mentally ill and the truly destitute – has been eating up our state budget at an unprecedented rate. As it does so, it competes with every other service provided by state government – education, transportation, corrections – all are squeezed by exploding Medicaid costs.
In Utah, the Medicaid budget in 2000 was 9% of our general fund. In 2010, it was 18%. Unchanged, it is projected to be 36% of our general fund by 2020 – and that is without the additional projected expansion under The Patient Protection and Affordable Care Act. Once the affordable care act goes fully into effect in 2014, Medicaid is expected to consume as much as 46% of our state’s general fund. That is obviously unsustainable.
Medicaid is no longer the safety net it was once meant to be. It has become a luxury hammock. In fact, it is the best “insurance” money can’t buy. It requires no premiums, pays for all FDA-approved drugs but one (Viagra), and requests (not mandates) a tiny co-pay. Under the affordable care act, the Medicaid rolls are projected to grow quickly. Asset testing will be dropped, single males will qualify, the income limits will be raised and additional pressures on the work force are likely to make Medicaid a more attractive option for some than traditional insurance.
Under the current Medicaid structure, we have a fee-for-service model. The more services provided, the higher the pay. Why do one lab test when we could be paid for 20? Why do “just” a CAT scan, when doing the more expensive MRI means we’re paid more? As we “pay per procedure” and tie providers hands when it comes to innovation, we in fact, are providing perverse incentives. We “reward” over-treatment and we punish innovation and efficiency. Not a great combination.
We are also required to pay for any Medicaid eligible candidate, up to 90 days retroactively, making it impossible to adequately budget for those expenses. How can you possibly account for things that haven’t happened yet? Each year, we must pour tens of millions of dollars into ongoing Medicaid funds, even while we are cutting vital programs, including education. This year, we were finally able to fund a little bit of education growth – while Medicaid expenditures got an additional $40 million in ongoing funds and some $13 million in one-time funds.
As Utah looked at ways to address Medicaid, we knew that we would need a comprehensive approach that fundamentally restructured the Medicaid payment system, looked at waste, fraud and abuse and worked towards returning Medicaid to the states.
Utah believes that the best way to cap Medicaid payments is to move Medicaid to a managed care system. That will require a block grant waiver from the federal government, a change in how we manage patients in the system and in how we pay our providers. We want our providers operating in an evidence-based fashion, as we know that unnecessary procedures push costs up. We will restructure how we pay providers to treat and prescribe for their patients, so we have a system that rewards rather than punishes innovation and efficiency. Right now, the system drives people to the ER for even their most basic needs. Emergency room care is, of course, the most expensive option for medical treatment. As we change our payment model, moving to a bundled payment, or accountable care approach, we expect to see a decrease in the bottom line – something that is good for all concerned.
Another area that needs attention is the area of Medicaid fraud and abuse. A recent audit of both state-run and private clinics showed “upbilling” to be a problem in on overwhelming majority of cases. We will continue to tighten up our Medicaid eligibility requirements and implement appropriate follow-up to ensure the requirements have indeed be met. We plan to upgrade our claims tracking and will be prosecuting Medicaid fraud through our Attorney General’s office.
Finally, we believe that Medicaid needs to be refocused as a state program that serves the neediest among us. We believe that states are the best suited to run their Medicaid programs, including the determination of eligibility. There is not a one-size-fits-all policy that can adequately represent all citizens living in Tennessee, Alaska, Hawaii, Massachusetts, and Utah. Each state has unique circumstances and should be able to tailor their Medicaid program to fit their state. Utah should be able to administer the Medicaid program in the way that best meets the needs of all Utahns – and that could eventually means we wean ourselves off of the federal program completely.
The bottom line is no state – including Utah – can afford to continue the status quo. There is an answer that balances the needs of those Medicaid was designed to help without bankrupting the state – and I think this year we found it. SB180, sponsored by Senator Dan Liljenquist (R-Bountiful) passed unanimously in both bodies and was signed by the Governor. Senator Liljenquist spent the entire interim working with all interested parties and came up with a balanced restructuring that is already being hailed as a model for the nation. It is this type of innovative thinking that continues to place Utah out in front of the nation on fiscal issues – a really great place to be.