Excerpt: "This district court opinion holds interest for health care providers and benefit fiduciaries alike. As against a motion to dismiss, the district court holds that the plaintiffs have stated a cause of action against the health care provider for balance billing, i.e., billing the balance 'owed' after their health plan paid the PPO discounted rate." (Attorney Roy F Harmon III in the Health Plan Law blog)

13 pages. Excerpt: "Health care providers and members of Congress have raised concerns that consolidation in the private health insurance industry may be resulting in less competitive markets and contributing to rising health insurance rates paid by consumers and employers. However, measuring the extent of changes in market competition over time or the effects of changes is challenging. . . . Despite [the] challenges, researchers have used the data available to study competition in health insurance markets, typically using one of two measures of competition: (1) HMO market concentration or (2) the number of HMOs in a market." (U.S. Government Accountability Office)

Federal stimulus funding has helped state Medicaid programs avoid drastic reductions in eligibility and physician fees, but program directors already are contemplating such cuts when the additional federal support runs out at the end of next year.

States faced unprecedented financial pressures in fiscal 2009, which ended on June 30 for most states. They experienced a surge in new Medicaid enrollees and a historic decline in tax revenues. States coped by trimming or freezing Medicaid fees and restricting benefits, among other actions, according to a ninth annual survey of state Medicaid directors released Sept. 30 by the Kaiser Family Foundation and Health Management Associates.

Medicaid enrollment grew by 5.4% in fiscal 2009 -- the highest rate in six years -- while total program spending increased by 7.9%, the fastest pace in five years. The enrollment spike was the main reason spending grew, according to report co-author Vernon K. Smith, PhD, principal with Health Management Associates. "As more people lost their jobs and lost their health coverage, more people became eligible."

Meanwhile, state revenues plummeted: Tax collections dropped by 16.6% in the 12 months leading up to June 2009, according to U.S. Census Bureau statistics. This contributed to a 6.3% decline in the state portion of Medicaid spending -- the first in the program's history, Smith said.

But the 2009 Medicaid cuts would have been much worse without the most recent federal stimulus package, Smith said. "Without any doubt, we would have seen widespread cuts to eligibility. Cuts to benefits and provider payment rates would have been much, much more severe." Twenty-nine states said they would have cut Medicaid eligibility had the stimulus act not prohibited them from doing so as a condition of accepting the additional Medicaid funding, the report said. Fourteen states had to reverse enacted cuts to obtain the federal money.

Medicaid enrollment grew by 5.4% in fiscal 2009.

Despite the stimulus, states are far from being on solid financial ground, Smith said. The additional federal Medicaid funding expires on Dec. 31, 2010. State revenues probably would not rebound for a year or two even under an immediate economic recovery, and Medicaid enrollment likely would remain steady for many months to come, he added.

Medicaid directors are worried about conditions when the stimulus funding runs out. For example, Nevada would need to find about $240 million in fiscal 2010 to maintain its existing Medicaid program, said Charles Duarte, administrator of the Division of Health Care Financing and Policy at the Nevada Dept. of Health and Human Services. New York would have to find about $6 billion for its Medicaid program, said Deborah Bachrach, the state's Medicaid director.

Some said Medicaid cuts that were unthinkable a few years ago may be necessary. Duarte said Nevada might reconsider a list of potential cuts he prepared last year that weren't implemented -- including wholesale elimination of eligibility groups, restricted home- and community-based benefits, and reduced hospital and physician Medicaid pay. "This could affect access, but we're at the point where that may be a secondary consideration."

Bachrach said physician Medicaid pay is an obvious target. New York increased payments by more than 50% in recent years in an effort to get them closer to Medicare levels. "That is one of the goals that may be shortchanged as a result of the plummeting resources."

Medicaid pay on the chopping block

Nine states cut physician Medicaid fees in fiscal 2009, and 13 have adopted pay cuts for fiscal 2010 -- the most since the Kaiser Family Foundation and Health Management Associates began tracking doctors' fees in 2004. But the situation could have been -- and still could be -- much worse.

Although legislatures have closed billions in budget gaps, they could face combined deficits of $350 billion in their 2010 and 2011 budgets, according to Robin Rudowitz, principal policy analyst for the Kaiser Commission on Medicaid and the Uninsured.

Additional Medicaid funding from the stimulus package expires on Dec. 31, 2010.

Also, spending and enrollment projections for 2010 don't add up, Smith said. State budgets predict an average 6.3% growth in Medicaid spending, but enrollment is expected to grow by 6.6%, the report found. State budget shortfalls are likely so large as to prevent states from matching expected enrollment growth with general funds, he said.

Washington state physicians, like those in California and Utah, saw Medicaid fees reduced for 2009 and 2010. "We had some increases the session before, and they took those increases away," said Jennifer Hanscom, spokeswoman for the Washington State Medical Assn.

The report found that some states, such as Maine, managed to boost Medicaid pay for office-based physicians for 2009 and 2010. But Maine's increases came at the expense of hospital-based physicians, said Andrew MacLean, deputy executive vice president of the Maine Medical Assn.

Other states' Medicaid rates essentially are holding steady. South Carolina trimmed Medicaid fees for physicians in 2009 before reversing the cuts for 2010, said Gregory Tarasidis, MD, president-elect of the South Carolina Medical Assn. But continued budget deficits could threaten those fees, he said.

Balking at the expansion price tag

Smith said state Medicaid directors are confident that the program could provide quality coverage to millions more low-income people without health insurance. But they're concerned that Congress will ask states to shoulder too much of the cost.

The House and Senate health system reform bills would expand Medicaid eligibility to any citizen earning 133% or less of the federal poverty level. Seventeen states offer some coverage to childless adults, but it is often very limited.

The House bill would pay for the expansion using only federal funds, but the pending Senate bill would provide less federal support to states that already enacted Medicaid expansions, such as New York. "In essence, we're being penalized for the decisions we've made in past years to invest state dollars to cover people who are very low-income individuals," Bachrach said.

Smith said states probably are waiting to see what Congress does on reform instead of adopting their own health care expansions. "If you go ahead and enact a change now, you will not be rewarded in the future."

This content was published online only.

Washington -- Backed by a recent government watchdog report, one key lawmaker is making the case that not only is beneficiary access to Medicare doctors good, in some areas patients might be accessing too many services.

Senate Finance Committee Chair Max Baucus (D, Mont.) commissioned the Government Accountability Office to assess the level of physician services used in the program. The agency determined that Medicare patients experienced few problems accessing doctors, and the use of services increased nationwide from 2000 to 2008. Physician willingness to accept Medicare patients also increased during that time, as did payments.

But the report, released Sept. 28, detected a pattern of potential overuse of services, especially in more densely populated urban regions and in the eastern part of the U.S.

Large metropolitan areas were much more likely to be "potentially overserved" than were rural areas, the GAO found. Patients in these areas received substantially more evaluation and management services, minor procedures and imaging services than did those living in other areas.

Beneficiaries in potentially overserved areas on average received 44% more minor procedures in 2008, including ambulatory procedures, eye treatments and colonoscopies. They also had 29% more laboratory tests and 19% more imaging services than those in other areas, the GAO reported.

Medicare patients nationwide used more services in 2008 than in 2000.

These findings of potential overuse did not sit well with Baucus. Part of the health system reform effort he is leading in the Senate is focused on squeezing dollars out of Medicare without harming beneficiary access.

"This report makes clear that serious work remains in determining why the use of certain services under Medicare -- like imaging and minor procedures -- is much higher in certain parts of the country than others, irrespective of a patient's real need, health status or the availability of doctors," he said. "Moreover, the potential abuse and excessive spending revealed in this report is further evidence the status quo of rising health care costs is unacceptable for America's seniors and the long-term fiscal health of the Medicare program."

But physician organizations said the situation was more complex than it might appear. For instance, some services may seem to be overused in certain areas of the country simply because they are medically necessary for the higher volumes of patients that live there, said American Medical Association President J. James Rohack, MD.

"The medical profession is committed to addressing variations in care, but it's important to note that high growth in services does not always equal overuse," Dr. Rohack said. "For example, services that the GAO identified as growing rapidly, like colonoscopies and office visits, are encouraged by Medicare policymakers to promote early detection, prevent disease and manage chronic conditions."

Dr. Rohack noted that the issue is too complicated for such broad solutions as redistributing funds from low-spending to high-spending areas. He said the most successful interventions on the utilization issue will be based locally.

"Through the AMA-convened Physician Consortium for Performance Improvement, physicians are developing evidence-based appropriateness measures that can be implemented at the point of care, and are working to integrate these and other quality measures into electronic medical records," he said.

The argument against cuts

While the GAO found that very few Medicare beneficiaries reported significant problems accessing physician services, the agency did note that the legislative uncertainty surrounding doctor fees points to an ongoing need to monitor access. Medicare physician payments are projected to be cut by 21.5% in January 2010 unless Congress intervenes, and additional years of reductions are set to follow.

"Absent congressional action, the Medicare trustees project payment cuts of about 40% over the next five years to physicians caring for Medicare patients," Dr. Rohack said. "Our concern, shared by AARP and lawmakers, is that these looming cuts will make it difficult for physicians to care for today's seniors and the huge influx of baby boomers into the Medicare program. Permanent repeal of the current payment formula should be part of health reform to keep physicians caring for seniors."

Despite the report's findings on imaging, the American College of Radiology said the overall growth rate for medical imaging in the Medicare system is down dramatically. The Medicare Payment Advisory Commission, for example, found the nationwide imaging growth rate for 2006-07 to be only 2%, which is less than the figure for the growth of physician services as a whole, said Shawn Farley, an ACR spokesman.

"The ACR has addressed unnecessary utilization for the last 20 years via the development of extensive practice guidelines, facility accreditation programs and appropriateness criteria to aid referring physicians regarding which, if any, scan should be prescribed for a given indication," Farley said. "Our highest legislative priority has been to get the Congress and the administration to adopt these utilization strategies for the Medicare program."

This content was published online only.

A recent Government Accountability Office report calling on state and federal health officials to ramp up their efforts against fraud and abuse of controlled substances in the Medicaid program raises the potential for increased scrutiny of physician prescribing, experts said.

A Senate subcommittee held a hearing on the issue on Sept. 30, the day of the report's release. It discussed findings that over two years, 65,000 beneficiaries, in five states alone, illegally acquired controlled drugs through multiple physicians -- a tactic known as doctor shopping -- resulting in $63 million in fraudulent Medicaid payments.

The report, which looked at claims in the five states for fiscal 2006-07, also found another $2.3 million in payments for prescriptions authorized by physicians or pharmacies that were barred from participating in federal health care programs. Other drug orders were approved using names of dead beneficiaries or dead physicians. The investigations of Medicaid programs in California, Illinois, New York, North Carolina and Texas targeted fraud and abuse of pain medications, anti-anxiety drugs and stimulants.

"It is clear that the Centers for Medicare & Medicaid Services need to do a better job of providing guidance and regulatory enforcement to the states. At the same time, states need to take greater responsibility for preventing and rooting out fraud, waste and abuse from their own backyards," said Sen. Thomas Carper (D, Del.), chair of the Homeland Security and Governmental Affairs subcommittee on federal financial management. "We can go a long way in paying for health care reform by eliminating [this] sort of abuse."

Carper and the GAO acknowledged that legitimate medical reasons exist for some suspect prescriptions, such as patients needing to see multiple specialists for the treatment of chronic conditions. But they highlighted ongoing problems with doctor shopping and potential overprescribing.

Gregory D. Kutz, a GAO managing director, said the report likely underestimated the costs associated with such fraud because it did not account for office or emergency department visits. He also noted inconsistencies in state anti-fraud controls, such as the types of drugs that require preauthorization, as well as limited law enforcement activities.

The GAO recommended that CMS work with states to implement more comprehensive fraud prevention programs -- a move some observers said could invite unwarranted, additional regulatory burdens on physicians and patient care.

Protecting legitimate care

States have long worked to prevent doctor shopping and overprescribing using such tools as prescription drug monitoring programs, electronic prescribing and medical board guidance, said Julia Krebs-Markrich, former counsel to the Virginia Medicaid program and a partner in Reed Smith's Falls Church, Va., office.

The statistics cited in the report represent a small portion of Medicaid participation and expenditures, "and my concern is, on the basis of these numbers, [the government] would overreact and impose additional penalties on doctors when they are not the problem," she said. "So many other things are being done, and the real issue is [the government] hasn't given states enough money" to get the technology and staffing they need to maximize existing efforts.

65,000 beneficiaries racked up $63 million in fraudulent Medicaid prescriptions over 2 years.

Scott Fishman, MD, past president of the American Academy of Pain Medicine, expressed concern that enhanced anti-fraud efforts, if not crafted carefully, could undermine patient care further. For example, existing programs already have the potential to snare physicians who treat large Medicaid patient populations with a real need for certain medications, he said.

"We know [drug diversion] happens, and we need strategies. But we need strategies that are going to arm doctors with the information they need to make good choices, so legitimate patients are treated appropriately, and those who use [controlled drugs] for illegitimate purposes are discovered," Dr. Fishman said. For example, California recently started allowing doctors to link electronically to its prescription drug monitoring program so they can make informed decisions at the time of treatment.

"The mistake we want to avoid is using tools that make doctors more afraid to prescribe, instead of more confident," he said.

Ann C. Kohler, director of the National Assn. of State Medicaid Directors, echoed those concerns in her testimony to the Senate subcommittee, noting that many states are restricted by tight budgets and a lack of information sharing between Medicare and Medicaid programs. States "must balance activities to identify fraudulent behavior with the need to ensure that the vast majority of honest providers and beneficiaries receive necessary services," she said.

Due diligence

Because the government has the ability to cast the net wide in such fraud investigations, Los Angeles-area health care attorney Wayne J. Miller recommended that physicians practice their own due diligence to avoid getting swept in. For example, they should check available state prescription drug databases regularly to avoid inadvertently aiding in illegal doctor shopping, he said.

Only 33 states have such resources, according to the GAO report. In the five states studied, the agency found low physician participation.

Routine face-to-face exams also are important to make sure patients are still alive and have conditions that require ongoing medication, said Miller, a partner with the Compliance Law Group PLC, which specializes in health care regulatory compliance. "In a practice with a high volume of patients, this may go by the wayside, so doctors should require that, no matter the condition, after a few refills there needs to be some exam."

Staying directly involved in the prescribing and billing processes also will prevent misuse of physician information, he added.

This content was published online only.