The rise of Medicaid
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ACA-driven growth requires dermatology practices to prepare for new patient population

Due in part to the beginning of Medicaid expansion efforts in a number of states, 2014 is poised to be a game-changing year for medicine. The extension of the program to entirely new populations (see Facts at Your Fingertips) and the enhancement of reimbursement under Medicaid will create new challenges and opportunities for practitioners as the Affordable Care Act’s (ACA’s) methods for extending coverage to the uninsured are implemented. Adapting to the change will require not only re-evaluation of existing procedures, but also an understanding of where the health system is heading.

What’s driving expansion?

Central to the implementation of the ACA is the extension of Medicaid benefits to low-income adults. Along with a temporary increase in Medicaid reimbursement rates to levels comparable to that of the Medicare program for primary care providers, program coverage was greatly expanded to cover the majority of non-senior adults whose income falls below certain thresholds, which are being determined by the states in some cases. Originally, covering anyone under 138 percent of the federal poverty line through Medicaid was a mandatory step, but the 2012 Supreme Court decision that upheld the law also made the expansion of state Medicaid programs optional on a state-by-state basis. 

Given the highly politicized nature of health coverage expansion in the U.S., governors provided an early barometer of the future of their states’ Medicaid programs, according to health system expert Kip Piper, a senior advisor to multiple health care firms and former director of the Wisconsin state Medicaid program.

“When the ACA was passed and the Supreme Court created an option for what was then a mandatory expansion, you looked at what the different state governors said afterward,” Piper said. “They fell into three camps — yes we’ll expand, no we definitely won’t, and those who waited to decide.”

Many of those who waited, Piper said, entered into negotiations with the federal government to set up an expansion uniquely fitted to the state’s circumstances.

“If you think about health reform, generally speaking, when it comes to low-income populations and markets, typically state-based reforms are more successful for a variety of reasons. You can design it to the needs and druthers of a particular state,” Piper said. “In Wisconsin, the governor [Republican Scott Walker] certainly did not want to do things the federal government’s way. So they’re trying to cover everyone at or below poverty level with Medicaid and those above poverty level can turn to the exchange.” [pagebreak]

Some states, however, are taking a much more straightforward path to expansion. In California, Piper said, expansion of the state’s MediCal program is estimated to involve a 40 to 50 percent increase in the number of covered patients. That state, and others that see a significant increase in the Medicaid rolls, could feasibly use the negotiating power of massive patient numbers to apply pressure on providers to drive reimbursement rates downward — a fear that many specialists, including dermatologists, hold in the back of their minds.

A changed landscape

While patient demographics and reimbursement schemes may be difficult for the individual dermatologist to predict until a few months into an expanded Medicaid patient base, one thing that is clear is that under the ACA, patients have an easier route into the program and an easier time remaining in the program passively. The demographic shift to Medicaid among non-senior adults, Piper said, is a long-term reality.

“Every state, including those that have decided not to expand, is mandated to substantially streamline and simplify eligibility and enrollment in Medicaid,” Piper said. “They have to create a portal for people to apply online with electronic signatures and no physical documentation. It shifts the burden of proof, and I’m grossly oversimplifying, over to the state to demonstrate that the person is not eligible.”

In addition, he said, it’s important to recognize that not all of the patients will be newly eligible Medicaid enrollees. What tends to happen when government programs open up, he said, is a significant bump via publicity of patients who were previously eligible but unaware of their eligibility. He refers to this as the “woodwork effect.”

“It refers to the fact that the marketing, exchanges, and mechanisms out there recognize the fact that when Medicaid is offered in a state, not everyone signs up. You always have some people out there in the so-called woodwork. When you make it easier, faster, simpler for people to sign up, you’re going to bring in some of those folks,” Piper said. “Right now, we’re seeing early on and anecdotally that of those who are signing up now, perhaps between a third and half of those that are signing up are from that category. They’re not newly eligible; they just didn’t sign up for whatever reason.” [pagebreak]

In observing the early lessons of her home state of Massachusetts, Bowling Green, Ky., practice management consultant Penny Noyes said that the woodwork effect was pronounced. In that state, Medicaid was expanded to children and to adults at 133 percent of the federal poverty level. According to an October 2013 Boston Globe article, “Exporting Romneycare,” about 61,000 residents who gained coverage from MassHealth (the state’s Medicaid program) in the first years after the law passed were newly eligible due to the expansion — while 190,000 more who enrolled had already been eligible under the old rules.

Massachusetts also saw insurance industry consolidation in the wake of Romneycare, Noyes said. “I worked for Blue Cross Blue Shield in Massachusetts for years, and there were so many HMOs and private plans in the ’70s and ’80s. Now, it’s pretty consolidated at this point,” Noyes said. “It’s Harvard-Tufts, BCBS, and then all the other major carries — Aetna, Cigna, and United Health Care — that barely make a dent.”

The main thing, Piper said, is not to look at the expansion of the Medicaid program as an isolated development in the big picture of health system reform. The success of Medicaid expansion, patient access, and provider participation will in turn affect the mechanics of health exchanges, insurer behavior, and the future of medicine.

“I like to joke that this rapid expansion of health coverage is a simultaneous nonlinear equation from hell. You have to look at all of these pieces, moving constantly and interacting with each other,” Piper said. “As the previously uninsured but covered go online to discover they’re eligible, we’re looking at not just a new cohort, but a greater percentage of the existing one. It’s going to bring in a lot more patients in 2014, and it’s why estimates of new patients or the number of uninsured can be unreliable.”

Challenges for dermatology practices

University of California-San Francisco dermatologist Jack Resneck Jr., MD, who serves as advisor to the American Academy of Dermatology Association’s Council on Government Affairs, Health Policy, and Practice, said that while the expansion is often framed as an increase in access, the administrative burden poses a significant challenge to system-wide change. [pagebreak]

“While getting health insurance coverage to more people is a positive, the lack of access to specialty care for Medicaid patients is an enduring problem,” Dr. Resneck said. “While the ACA will temporarily raise Medicaid payments to Medicare rates for primary care physicians, it does not increase payments for specialty care. The extremely low Medicaid payment rates in most states, combined with administrative burdens, continue to harm patient access to care.”

Formulary issues

Indeed, one of the most significant challenges to participating in the Medicaid program for dermatology practices is the additional administrative work, according to Murfreesboro, Tenn., practice manager Gabi Brockelsby. About 15 percent of her practice’s patients are on Medicaid. The administrative hurdles, she said, may include the need for providers to work around formulary restrictions and for practice staff to repeatedly obtain authorizations for an ever-changing list of approved therapies.

“If you’re going to have a large volume of Medicaid patients, depending on what the individual state structure is going to be, you may very well have to plan additional staff hours for prescription authorizations and approvals,” Brockelsby said. “And you have to become very familiar with what the alternatives are that may be non-prescription. The great difficulty with that is that the patients cannot always afford those.”

Practice manager Jill Sheon, who runs Children’s Dermatology Services and Acne Treatment Center, a part of Children’s Hospital of Pittsburgh of UPMC, agreed that formulary issues are a bigger problem with Medicaid than other payers. She said that an increasingly restrictive Medicaid formulary has led her practice to put dedicated staff resources toward pursuing and tracking approvals for medications. As manager of one of the few pediatric dermatology facilities in her region to accept Medicaid, one that sees patients travel two to three hours, Sheon has seen what may be in store for many dermatology practices that see an influx of adult Medicaid patients.

“There are formulary restrictions related to a lot of the conditions we see, but I have a staff member who does authorization full time,” Sheon said. “At this point, it doesn’t pose much of a problem for us. But she’s gone from doing it about one fourth of her day, to doing it for half of the day, to it eventually becoming her full-time job.”

Even when treatment options are quite similar, according to Noyes, the issue of drug restriction and the ensuing effect on compliance can create challenges for both physicians and practice staff. [pagebreak]

“At a recent client visit, I happened to overhear a Medicaid patient screaming at the front desk staff about the fact that Medicaid would only pay for a drug that had to be taken four times a day rather than the far more expensive time-release ones,” Noyes said. “To that patient, they felt as if they were being discriminated against. You have mixed feelings about that — what is the right answer for your staff when that happens?”

Even where the perfect patient comes in, the system provides difficulties in swift delivery of care, Brockelsby said. The aforementioned formularies can make getting from point A to point B on a patient’s condition a substantially longer process than under Medicare or private health plans. 

“I think that what our nurses are finding is that it’s a moving target. They’ll find that they’ll put something through for a request that was approved for last month and this month it’s not. What ends up happening is the patient has a tremendous delay in receiving treatment and the provider spends time going back and revising the plan of care, hoping to find something that’s covered,” she said. “What we’re seeing is basically anything with benzoyl peroxide is not approved. Acne is not covered for anyone over the age of 21 in Tennessee. Alopecia is not covered. Some prescription shampoos are not covered. Trying to find something that even works for those patients is very challenging.”

A new patient population

Practices that see more Medicaid patients can also expect to see a higher no-show rate and more difficulties with treatment plan compliance than they may be accustomed to.

“It takes a lot of staff time to manage the population,” Brockelsby said. “Everything from setting the appointment to collecting the funds to managing the patient’s care in between,” she said, is more time-consuming. Practices planning to take on additional Medicaid patients should give themselves a slightly larger margin of error until the unique managerial realities of treating the newly arrived patients reveal themselves, she added. [pagebreak]

“I think there needs to be some more forethought in cash flow, particularly at the beginning of the year, so that practices don’t find themselves in an unexpected financial hole should they overextend their ability to provide care to this population. There has to be some real analysis on the part of the practice to determine how much their practice can afford to provide care to these patients,” Brockelsby said. “You can’t take someone on and risk an accusation of abandonment, so I would be very careful that I’m only going to accept the number of patients that I am going to be reasonably able to care for from a financial perspective.”

In addition to the scheduling and administrative issues, Noyes said that the increased percentage of no-shows typically seen among Medicaid patients is something her clients in dermatology and other specialties find troubling.

“Financially, patients under Medicaid don’t have anything at stake,” Noyes said. “There’s no penalty for not showing up. You have to pay attention to the percentage of no-shows and adjust your plan accordingly.”

Brockelsby agreed, saying that the no-show rate among Medicaid patients at her practice fluctuates between 25 and 35 percent at any given time. Requiring physician referral has helped somewhat, she said, but the number remains stubborn. In a practice that sees Medicaid patients in addition to those on Medicare, private insurance plans, or other options, it’s important to recognize the differences in treatment options for each population and relate to the patient in the proper manner. Some, she said, are hesitant to pay out of pocket for any additional treatment.

“There can be a certain mentality among the patients we’ve seen that this program pays for everything, so I shouldn’t have to pay for anything myself,” Brockelsby said. “And what a lot of our TennCare [the Tennessee state Medicaid program] patients are finding at this point is that the formularies have become so restricted that they’re very limited in what they’re able to receive as a prescription drug.” [pagebreak]

In addition, among her clients, Noyes has observed dermatologists needing to emphasize treatment compliance with their Medicaid patients a bit more than with their non-Medicaid patient base.

“Most physicians that I talk to, in all specialties, feel that this patient population in general does not comply as well with the recommended treatment plan. They fear that it adds to the malpractice concerns that they would have, because these people are not following their doctor’s orders. It’s no fun to deal with somebody who won’t do what you say and doesn’t have an improved outcome,” Noyes said. 

In short: as Medicaid expands, dermatology practices may find themselves with more challenging patients and some tricky practice management issues to address. But there are rewards for taking Medicaid, according to Sheon. Last year her practice saw 30,000 pediatric dermatology patients, 18 percent of which were children on Medicaid. The ability to provide care for such a large proportion of the state’s Medicaid patients, Sheon said, enhances the perception of the practice in the region, positions dermatology as a specialty that is willing to help patients who need it, and ensures that those patients receive the best possible care.