Proposed health care changes: The local impact

One thing is sure about the health care legislation being crafted in Washington: The overhaul, even if modified to pass a Senate now lacking a Democratic supermajority, will affect virtually every citizen and shake up health care markets large and small.
In Columbia, with two major hospitals, many specialty care providers and a growing senior population, the reform’s impact on the local economy looms large.
What will happen when thousands of newly insured people seek care at Columbia clinics and when new rules limit the growth of Medicare reimbursements?
To gauge the impact of an industry overhaul, the CBT talked with an MU health care expert, state hospital association and medical association lobbyists and a nursing home director, and the CEOs and CFOs of hospitals, specialty clinics and the state’s primary health care consulting firm.
“If this bill is passed, it’s not going to lead to gold-paved streets all of a sudden,” said Professor Kristofer Hagglund, associate dean of health policy and academic affairs in the MU School of Health Professions. “There are going to be unintended consequences and legislation that needs to be passed to fix problems.”
Medicare, the government insurance program for the elderly, is the single-largest insurer in the country, and the fate of providers everywhere often hinges on reimbursement rules crafted by the Centers for Medicare and Medicaid.
A substantial part of the overhaul’s cost will be financed by reductions in the annual growth of Medicare reimbursements — $226 billion during a 10-year period in the Senate bill and $282 billion in the House bill.
Opponents say this will lead to a decrease in benefits and access, while supporters claim minimum benefits are mandated and payment reductions will be offset by the expansion of insurance.
No one is quite sure how the Medicare reductions will play out once enacted, though some fear many providers will not make it through the transition.
The chief actuary of the Centers for Medicare and Medicaid released a report after the Senate passed its version of the bill in December and stated some of the Medicare savings envisioned by the bill are “unrealistic.” According to the report, many providers would find it difficult to keep up with the efficiency improvements the bill ties to reimbursements. As a result, some providers could end their participation in Medicare altogether, “possibly jeopardizing access to care for beneficiaries.”
Most of the reductions would be in Medicare Part A, which pays for non-physician care such as hospital visits and nursing home costs. The theory is that the expansion of insurance coverage in the overhaul would offset reductions in Medicare reimbursements.

How will hospitals cope?

Half of the hospitals in the country are operating in a deficit, which is making them vulnerable, Hagglund said. Although there’s a possibility some hospitals might go under, he doesn’t think any of them would stop accepting Medicare patients.
But the changes will make hospitals perform a “balancing act” as they adjust to the lower rate of Medicare payment increases, said Daniel Landon, vice president of governmental relations for the Missouri Hospital Association.
Medicaid, the government’s insurance program for the poor, would be greatly expanded if the legislation becomes law.
The MHA’s analyses so far suggest that hospitals that rely mostly on Medicare and don’t see a lot of patients on Medicaid would struggle the most. But Landon doesn’t think the change will be so great that it makes it hard for Medicare beneficiaries to find care.
“If things work as they propose, you won’t see a decrease in access,” he said.
Kevin Necas, a CFO with University of Missouri Health Care, said he doesn’t think reductions in Medicare payments, which are already below those paid by private insurers, will make hospitals turn away Medicare beneficiaries.
Despite relying on Medicare for 37 percent of its payments, University Health Care also provides about $40 million in uncompensated care each year, Necas said. The question is whether the decrease in care provided to the uninsured mitigates reductions to Medicare, he said, but “it’s difficult to see what the offsets are going to be.”
“I’m sure that something this size for the nation is going to have some bumps in the road, and I’m confident with the attention it’s gotten, the bumps will be addressed,” Necas said.
Whether hospitals and other providers can balance their bottom line is a significant question to the approximately 27,000 Medicare beneficiaries in Boone and surrounding counties. Beneficiaries in some parts of the country already have trouble finding a physician who will accept the lower Medicare payments.
Richard Royer, CEO of the non-profit health care consulting firm Primaris, said he doesn’t think the cuts are substantial enough to drive hospitals out of business because they’ll have a decade to adjust.
“We have not seen any specific evidence that providers are ceasing to take Medicare patients,” Royer said.
“However, it’s happening in more and more places,” he said, referencing the Mayo Clinic’s recent announcement that one of its Arizona centers would no longer accept Medicare.

Jobs, services at stake

Some practices, such as Missouri Heart Center, are already reeling from changes to Medicare’s rates for certain procedures. CEO Allen Goree said some cardiovascular imaging services were cut by more than 30 percent at the beginning of the year. Further reductions in Medicare payments won’t help the Heart Center, which relies on Medicare for 60 percent of its business.
“We haven’t put any restrictions on Medicare patients as of now, but as these changes take effect, we’ll have to take a serious look at whether we can continue that,” Goree said.
Missouri Heart Center, which employs about 100 people in mid-Missouri, is also one of the only specialty providers in some areas. The practice has already instituted hiring and wage freezes, and Goree said he thinks it’s inevitable some services to rural Missouri will have to be cut back. Throughout the recession, the health care sector was one of the only areas of the economy to post job gains. Goree said that’s about to change.
“I’ll tell you, it’s about to not be a good place for employment,” he said. “The picture is not looking as rosy as it did.”
Physicians such as those employed at Missouri Heart Center also have to worry about whether Congress will pass a bill to keep Medicare from cutting physician reimbursement rates by as much as 21 percent. Known as the “doc fix,” Congress has passed a temporary patch every year for the past seven years and kept the cuts from taking effect.
Tom Holloway, director of government relations for the Missouri State Medical Association, said not fixing the reimbursement rate would have a huge impact on access across the country.
“That could be, I don’t want to use the word catastrophic, but significant,” he said.
The organization Holloway represents took a strong stand against the proposed health care bill, and Holloway said among physicians in the state, “there’s widespread opposition to most of it.”
Goree, on the other hand, said he’s not talked to a physician yet who’s against health care reform. But making sure physicians are fairly compensated is important to ensure access, he said.
“We already have a shortage of physicians, and I don’t think it’s going back to a time when people became doctors just to be doctors and got paid in cows and chickens,” Goree said.
What about nursing homes?
Among the institutions likely to feel the largest impact are nursing homes. The House bill calls for $22 billion in reductions to Medicare reimbursements for skilled nursing facilities. Both bills create a new federal insurance program for long-term care, but they also promote at-home nursing care.
Dr. Gary Sluyter, executive director of The Bluffs, said he expects some major changes to result from the health overhaul. The 132-bed skilled nursing facility he runs relies on Medicare and Medicaid for 60 percent of its residents. But despite the changes, Sluyter said there will always be a need for facilities such as The Bluffs, even if the overhaul pushes incentives for at-home care.
“It’s a good trend,” he said. “But I also believe in many cases that people get to the point where that’s not sufficient.”
Royer at Primaris said he thinks the Centers for Medicare and Medicaid will see the risk to nursing homes and work to minimize the impact. An expansion of long-term care could well offset the Medicare reductions, he said. Even so, “It’s going to be a little precarious for nursing homes.”
But the bills do raise some payments, mostly for primary care physicians. Relative to their peers, primary care doctors are underpaid, Hagglund said, and the increases called for — about $7 billion in the Senate bill — would help to close the gap and attract students to primary and geriatric care. That would be a huge benefit for older Americans on Medicare, he said.
“I’m out there making friends with as many geriatricians as possible because they’re hard to find,” Hagglund said.
Another boost for beneficiaries is the House’s attempt to close the coverage gap in Medicare Part D, which insures prescription drugs. If it remains in the final bill, many beneficiaries would no longer be stuck with exorbitant out-of-pocket costs for drugs that do not reach the threshold required for coverage.
“It would have a noticeable impact on beneficiaries, definitely… If we can afford to pay for it.” Royer said.
But the biggest shake-up Royer sees is what will happen if the bills cut more than $100 billion in payments to insurers providing Medicare Advantage. The majority of the calls received by the senior health insurance counseling service operated by Primaris have been about the changes to Medicare Advantage, he said.
Royer said the reduction in government funding for the program will likely cause insurers to drop many of the fringe benefits they offered to attract seniors to the plans. And some insurers will just drop out altogether, like they did after the Centers for Medicare and Medicaid reduced payments in the early 2000s, he said. “A number of people remember that.”
Whatever bumps in the road materialize if reform is passed, Royer said he doesn’t think Medicare patients should worry about large changes in benefits or access.
“I believe CMS (Centers for Medicare and Medicaid) is going to do its best to make any effect on beneficiaries as small as possible.”