Slashed Medicaid Rates Likely to Hurt Both Providers and Consumers

by Jerrold Bartholomew

Earlier this fall, Michigan legislators considered a new proposal calling for a 3% tax on physicians’ gross revenues, a move which would allow Michigan to raise its low Medicaid re-imbursement rates by 4% across the board. The proposal, as it turns out, ignited a firestorm of opposition, with several hundred doctors and others in the medical community organizing in protest at the Capitol in Lansing. The bill was quickly killed in the Michigan Senate by a 32-4 vote following earlier passage in the House.

In the wake of that bill’s defeat came a sucker punch for those providers who accept Medicaid payments: an 8% reduction in the already-low rates.

The cut comes on the heels of a 4% rate reduction in July, making Michigan Medicaid re-imbursement rates just 55% of private insurance rates, and 50% of Medicare rates. Readers can find a synopsis of the rate changes on the AMA’s American Medical News website, as well as budget changes discussed here, here and here.

So how does this impact consumers?

Unfortunately, Michigan residents already face difficulty finding quality medical care that Medicaid will cover. Now fewer and fewer physicians will be able to serve patients receiving Medicaid coverage without going out of business. In short, this added rate reduction will further intensify the problem of access to quality care and scarcity of providers.

Those receiving long-term care Medicaid should not notice significant changes to their care, but Michigan’s 400 or so nursing homes will surely feel the sting of major revenue reductions (after all, a full 69% of nursing home residents rely on long-term care Medicaid to cover their nursing home expenses for some portion of their care). This means that placement in a quality facility will become more and more challenging as nursing homes throughout the state struggle to stay in the black. That makes working for a quality placement with an elder care team of professionals – an elder law attorney, geriatric care manager and/or social worker – more important than ever.

It also remains to be seen whether nursing homes adjust their private pay rates to help offset Medicaid losses. If they do – and it’s difficult to imagine how they can avoid doing so – planning ahead will be increasingly important as private pay rates consume family resources that much more quickly.

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