April 1, 2005
Volume 49, Issue 13
Joint Finance Takes First Crack at Medicaid Budget
Sen. Olsen, others pose tough questions on cigarette tax, provider payments and cost shifting
On Wednesday, March 30, the Joint Committee on Finance took its first hard public look at the Medicaid portion of Governor Doyle’s 2005-07 budget. The examination came as part of the Committee’s ongoing briefings from state agency heads and cabinet secretaries.
Testifying for Department of Health and Family Services (DHFS) was Secretary Helene Nelson.
"Despite the state’s $3.2 billion deficit in the last biennium, and the erosion of the federal funding partnership for Medical Assistance, we in Wisconsin made choices in the 2003-2005 budget to preserve the health care safety net for these vulnerable populations," Nelson stated in her testimony.
According to WHA, in the 2003-2005 state budget, Wisconsin hospitals took almost $80 million in all funds cuts. "In the last budget, Graduate Medical Education (GME), a Medicaid supplemental payment to hospitals that train new physicians, took a 77 percent cut, and the rural hospital supplement was almost eliminated," said WHA’s Eric Borgerding. "The safety net was preserved, but other critical programs were almost erased."
Secretary Nelson urged the Committee to continue giving priority to funding health care for the most vulnerable people in our state.
But, Committee Co-Chairman Rep. Dean Kaufert (R-Neenah) questioned if Medicaid was, in fact, a priority for the Governor. "There is $1.6 billion in projected revenue growth in the 2005-07 budget, but the Governor chose to put just $115 million of that into Medicaid," Kaufert noted. "That doesn’t seem like much of a priority to me, especially when he is putting $750 million more into K-12 education."
Sen. Luther Olsen (R-Ripon) expanded on Kaufert’s comments by touching on the issue of cost shifting.
"Hospitals are showing us they are getting $94 from Medicaid for $13,000 surgeries," Olsen said. "We are not paying for this program; we know other businesses are. What are we going to do to pay for this?"
In response, Secretary Nelson noted the state spends $4 billion on Medicaid, and that federal law requires hospitals to serve every patient that walks through their doors, whether they are paid or not, implying that some payment from Medicaid is better than no payment at all.
In 2004, WHA estimates Medicaid reimbursed hospitals just 55 cents for every dollar hospitals spent providing care to Medicaid patients. That meant some $450 million in unpaid costs were shifted to the private sector, a situation Wisconsin Manufacturers and Commerce (WMC) is dubbing, "the hidden health care tax."
"As strange as it sounds, much of the Medicaid program is being paid for by, well, not being paid for," said WHA’s Eric Borgerding. "I take that back; businesses and their employees across the state are paying for Medicaid through cost shifting."
Sen. Olsen also questioned the Governor’s use of one-time funding sources to pay for Medicaid instead of raising the cigarette tax.
"I have the spine to talk about raising the cigarette tax, but then I read in the paper today that the Governor opposes that because he does not want to become dependent on cigarette tax revenue," Olsen said. "So instead the Governor uses money taken from the patients compensation fund and $130 million in bonding to provide one-time funding for Medicaid. Do you really think that is a better idea? Doesn’t that leave us in the same situation in two years? As the head of this division, what would you advise him to do on the cigarette tax?"
"This is one of those questions I think about at 2:00 in the morning," Nelson responded. Nelson said the Governor has taken great pains to find every possible means of funding in the short-term and that we must find long term solutions to the cost and funding of Medicaid. She also encouraged the Committee to raise these and other funding issues with DOA Secretary Marc Marotta.
Sen. Olsen was not satisfied with the answer.
"Why don’t we hear the Department (DHFS) saying you will work with us on the cigarette tax? Why should we, on this Committee, go out of our way on this if we can’t even get help from the Governor or DHFS?"
Rep. Kitty Rhoades (R-Hudson) summed up the situation with this final statement. "This is the department that is the last to get the money and gives up the most. Medicaid is not a priority in the Governor’s budget, but we will make it one in ours. We have to pay for this program."
Agency budget briefings are expected to continue next week.
Last week UW Health held its first "Project Medical Education" — a one and a half day program using interactive teaching techniques to give participants an insider’s glimpse at the complex medical education system and how it is funded.
Over a dozen state and federal lawmakers and staff participated in the event. Donning lab coats, participants assumed the roles of medical students, interviewing patients and experiencing patient care delivery in pediatrics, internal medicine and surgery. The role players were then fast tracked into residency with some participants changing into scrubs and observing a procedure in the operating room.
Participants were also told of the significant cost to educate residents. At UW Hospital and Clinics (one of Wisconsin’s several hospitals that train future physicians) the total cost for FY 2005 is over $25 million, but government reimbursement is only $8.2 million. Additional state Graduate Medical Education (GME) funds are needed to prevent further cost shifts to commercial insurance companies.
Restoring some $40 million in all funds cuts to the GME program as a result of the last state budget, is a key priority for UW Hospital and WHA in the 2005-07 budget.
The program was deemed a success with all the participants giving strong recommendations to continue the event. A similar event is being held on April 1 in Milwaukee. All five Milwaukee hospital systems are collaborating to host the event.
On March 25, State Sen. Joe Leibham (R-Sheboygan), a member of the key budget-writing Joint Finance Committee, took some time to visit with officials at St. Nicholas hospital in Sheboygan.
The March 25 meeting was held at the hospital and included a good discussion on issues like Medicaid reimbursement and the "hidden tax," billing and collection practices, technology, operating costs, and workforce.
Ed Bradley, director of business development for St. Nicholas, understands the importance of grassroots advocacy and meeting with legislators at home.
"We have a good relationship with Sen. Leibham, in part because we take the time to keep him informed about the hospital, and because he takes the time to listen," Bradley said. "WHA does a good job for us in the Capitol, but we know as Sen. Leibham’s constituents, we play an equally important role here in Sheboygan – we have to do our part."
Others from St. Nicholas participating in the meeting were Mary Brasseaux, administrator; Mary Jo McBrearty, director, fund development and communications; and Donald Pieters, assistant administrator, financial/support service.
We want to hear your grassroots stories! Contact Jenny Boese (608-274-1820) to report a recent meeting or conversation you have had with your state legislators.
The average Medicaid IQ of the Wisconsin Legislature advanced at least a half dozen points recently when State Representative Curt Gielow (R-Mequon) chose to hold a series of public hearings on Medicaid. Gielow, chair of the Assembly Committee on Medicaid Reform, is holding hearings that are actually focusing on educating lawmakers and staff on the scope and breadth of Wisconsin’s Medicaid program.
Rep. Gielow (a past WHA Health Care Advocate award winner) deserves praise for choosing the seldom-deployed State Capitol tactic of subjecting lawmakers to comprehensive information. This tactic is actually serving to chip away at a series of myths that cloud understanding of the Medicaid program.
In a similar vein, WHA has produced a brochure—Wisconsin Medicaid Myths—that similarly seeks to educate the public through a myth vs. fact format.
This week, we highlight two myths: "exploding costs" and Medicaid’s share of the Wisconsin State Budget.
MYTH: Medicaid program costs are exploding – mainly due to use of health care services and higher provider payments.
FACT: While Medicaid costs have increased in recent years, it has been a result of a greater number of people enrolled in the program. In fact, enrollment has increased by 87% over the past five years! This is largely due to the Governor and Legislature creating new Medicaid programs like BadgerCare and SeniorCare.
MYTH: Medicaid is taking over Wisconsin’s state budget.
FACT: Wisconsin’s Medicaid program comprises a relatively low percentage of the State budget. According to the National Association of State Budget Officers, Medicaid represents just over 11% of the Wisconsin state budget, a figure well below the national average and below surrounding states such as Illinois (23%), Minnesota (20%) and Iowa (14%).
At the Capitol on Thursday, March 31, WHA and WHA members were victorious in their ongoing battle against the Department of Health and Family Services’ (DHFS) attempt to require health care providers to provide copies of medical records for less than the cost of producing the records.
DHFS proposed an administrative rule that would limit the amount health care providers could charge for copies of medical records to 31 cents per page. Throughout the rulemaking process, WHA member hospitals and others have provided volumes of information to DHFS concerning the actual cost to produce copies of medical records. It is unclear why DHFS disregarded the legislative directive to promulgate a rule that reflected the costs of providing the service. The Wisconsin Academy of Trial Lawyers continued their attempt to force the shifting of medical record copy costs to employers and other purchasers of health care services, in effect forcing employers and other purchasers to subsidize the attorneys’ practices through the subsidized copies.
WHA, the Civil Trial Counsel of Wisconsin (defense attorneys), and the Wisconsin Insurance Alliance achieved a compromise fee package that was supported by the Senate Health Committee, but was rejected by DHFS, causing the rule to proceed to the Joint Committee for the Review of Administrative Rules (JCRAR). JCRAR voted to object to the rule as proposed by DHFS.
"WHA appreciates the support demonstrated by Rep. Gottlieb, Sen. Grothman, and other Committee members who objected to the DHFS rule," commented WHA’s Laura Leitch. In her testimony, Leitch asked the Committee to object to the rule until the rule ensures that "health care providers can provide cost effective medical record copy services while discouraging further cost shifting within the health care system."
Peggy Schmidt from Aurora Health System, Theresa Eckman from St. Marys Hospital in Madison, and Debra Case from All Saints in Racine championed the cause for Wisconsin hospitals at the hearing. Beth Malchetske from ThedaCare and Lynn Olson from St. Clare Hospital in Baraboo provided written testimony and have provided information throughout the long process.
Plaintiffs challenging not-for-profit hospital billing practices received a significant rebuke this week when the U.S. District Court for the Southern District of New York dismissed all federal and state claims against New York Presbyterian Hospital and the AHA with prejudice, thereby preventing any of the claims from being refiled in federal or state court. This suit was one of a series of lawsuits organized by Richard Scruggs and filed around the country challenging hospitals’ tax-exempt status and alleging unfair billing and collection practices.
The dismissal was of particular significance because it was the first case in which a federal court has dismissed state claims with prejudice. Previously, where the courts have ruled on state claims, the claims were dismissed with prejudice permitting them to be refiled in state court.
Judge Loretta A. Preska’s opinion harshly criticized the plaintiffs before dismissing their claims: "Plaintiffs have lost their way; they need to consult a map or a compass or a Constitution because plaintiffs have come to the judicial branch for relief that may only be granted by the legislative branch." She further criticized the Scruggs’ backed lawsuits as an "orchestrated assault on scores of non-profit hospitals, necessitating the expenditure of those hospitals’ scarce resources to beat back meritless legal claims [that] is undoubtedly part of the litigation explosion that has been so well documented in the media."
In a final statement, Judge Preska noted that "no federal or state statute and no principal of common law requires a private not-for-profit hospital to charge uninsured patients the same, or less, than the rates it charges to members of health insurance plans or the rates such hospital accepts from Medicare or Medicaid."
In March 2004, WHA released "Billing and Collection Guidelines for Wisconsin Hospitals," to help provide guidance to Wisconsin hospitals in balancing their responsibilities to their patients. Wisconsin hospitals have a long tradition of providing needed health care to their communities, 24 hours a day, seven days a week. That care is provided regardless of ability to pay. In fact, the Guidelines note that in 2002, Wisconsin hospitals provided uncompensated care to almost 2,300 patients EACH DAY at a cost of more than $1.2 million, and that in all, over 836,000 individuals received over $428 million in uncompensated care from Wisconsin hospitals that year. The Guidelines can be found at www.wha.org/newsCenter/pdf/2004uncompcare.pdf.
On March 24, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule that would revise requirements in the hospital conditions of participation (CoPs) for completion of history and physical (H&P) examinations, authentication of verbal orders, securing medications, and completion of post anesthesia evaluations. In its press release, CMS stated that the intent of the proposed rule is to alleviate hospitals of overly burdensome regulations and allow doctors and nurses to focus more time and energy on patient care.
As stated in the CMS press release, the revised requirements include:
The entire CMS release can be found at www.cms.hhs.gov/media/press/release.asp?Counter=1401. A copy of the proposed rule and CMS’s discussion of the rule can be found at http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-5916.pdf.