NEWSWATCH

Sequestration Impact: Medicare Reimbursement To Physicians To Be Cut

Thousands Of Doctors Contracted With Molina Healthcare To Be Hit

Tiffany Rider - Senior Writer

March 26, 2013 – Thousands of physicians currently treating Medicare patients through Molina Healthcare plans are among the more than 500,000 doctors expecting to see a significant drop in pay as a result of program cuts at the federal level.

Spending cuts known as sequestration brought down the hatchet after more than a decade of Congress delaying Medicare reimbursement cuts, trimming 2.3 percent from the government-sponsored health program for seniors. That cut will result in a pay reduction of about 30 percent for physicians caring for Medicare patients, according to Lisa Rubino, who serves as Molina Healthcare’s senior vice president of Medicare, dual eligible patients and health exchanges implementation nationwide.

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“There are a number of changes that came about when CMS (Centers for Medicare and Medicaid Services) issued their advance notice to health plans a few weeks ago,” Rubino told the Business Journal. “One of the things we’re looking at, and we’re working very close with our national trade associations on, is the cut to physician reimbursement.”

According to a recent poll of 567 physician leaders, conducted by the American College of Physician Executives, 58 percent said sequestration cuts would negatively impact their organizations. Several respondents expressed a fear that the full effect of the cuts wouldn’t be known for some time, however, Rubino said the federal government is recalculating the Medicare fee schedule and will reduce funding to health plans by an estimated 4 percent to 5 percent as a result of the cut.

Most of the doctors working with Molina Healthcare plan networks are contracted providers, according to Molina Healthcare spokesperson Laura Hart. “The exception is our Molina medical clinics, which are operated by American Family Care, a subsidiary of Molina Healthcare,” Hart said. “But that is a pretty small percentage of our network.”

The timing of the cut is interesting, Rubino said, because Medicare physicians are facing a cut at the same time Medicaid physicians are getting a reimbursement increase as a result of the Patient Protection and Affordable Care Act. The intent of the Medicaid reimbursement increase is to incentivize more doctors to accept more Medicaid patients. “They have increased the federal poverty level from 100 percent to 133 percent,” she said, which results in more individuals qualified for the government-sponsored health plan Medicaid.

Molina Healthcare, which offers health plans through government-sponsored plans Medicare and Medicaid, operates in 11 states and serves approximately 1.9 million members, Rubino said. The company is the second largest provider of Medicaid in California (known as Medi-Cal) with 350,000 members. There are currently about two million people enrolled in Medi-Cal.

“Ninety percent-plus of our business is Medicaid,” Rubino said. About eight percent is through Medicaid’s Children’s Health Insurance Program (the Golden State’s version is the California Healthy Families Program), and a smaller portion is in Medicare special needs plans, she said.

The Medicaid-to-Medicare Fee Index, available on the Kaiser Family Foundation website, is based on what the federal government says is the cost to provide services in a particular geographic region. According to the 2012 index, the relative fees between Medicaid reimbursement and Medicare reimbursement for physicians in California are 51 percent for all services.

In comparison, physician reimbursement to Medicare reimbursement in Texas is 65 percent for all services. The lowest ratio is in New Jersey at 45 percent of all services, and the highest is 134 percent of all services in North Dakota. “California has always been on the low end,” Rubino said.