Administrative oversight of state Medicaid payment policies: giving teeth to the equal access provision.

• Author: Bienstock, Julia

Introduction I. Deconstructing Medicaid A. The History and Development of Medicaid B. The Operation of Medicaid: A Federal and State Partnership 1. State Medicaid Plans 2. Provider Payment Rates a. The Equal Access Provision b. Enforcing the Equal Access Provision II. Assessing the Administrative Enforcement Scheme with Respect to the Equal Access Provision A. SPA Process B. Compliance Action III. Strengthening CMS' Oversight of States' Medicaid Provider Payment Rates A. Require and Enforce Prior Approval of Medicaid Rate Cuts B. Benchmark Medicaid Rates to Medicare Conclusion INTRODUCTION

After enrolling in the Illinois Medicaid program, the public health insurance program for poor and disabled Americans, Tessinia Rodriguez and Elissa Bassler both sought a physician referral from the Medicaid hotline. (1) The hotline gave Rodriguez the names of approximately ten doctors, all of whom practiced more than thirty miles from her home; not one accepted Medicaid. (2) Bassler received the names of eight doctors, none of whom accepted Medicaid. (3) Benita Branch had difficulty finding a doctor to treat her children on Medicaid, and when she finally did, the doctor did not schedule appointments. (4) Branch had to bring her children into the doctor's office and take a number, often waiting more than an hour--and sometimes several hours--before being seen. (5) Sara Mauk was able to find a doctor that would see her daughter; however, the doctor required Medicaid patients to wait until after all privately insured patients had been seen. (6)

Over sixty million low-income individuals rely on Medicaid for their health insurance coverage. (7) The majority of Medicaid beneficiaries are parents and children. (8) The most medically needy and costly are the elderly and disabled. (9) For both groups, however, Medicaid is intended to be a lifeline to essential health and medical care. (10) Although Medicaid patients have freedom of choice to select among participating providers, (11) physicians also have freedom of choice to participate in Medicaid. (12) Congress has recognized that "without adequate payment levels, it is simply unrealistic to expect physicians to participate in the [Medicaid] program." (13) In fact, low reimbursement rates have led many physicians and particularly specialists to stop treating Medicaid patients. (14)

Despite the well-established correlation between Medicaid provider payments and physicians' willingness to treat Medicaid recipients, states continue to make budget-driven cuts to their Medicaid provider reimbursement rates. (15) Although the economy is improving slowly, states still face a dire fiscal situation and growing Medicaid costs are a key contributor to state budget gaps. (16) As a result, nearly every state has proposed or implemented cuts to Medicaid in their 2011-2012 budget year, reducing payments to doctors, hospitals and other health care providers that treat Medicaid patients. (17) As the stories of Tessinia Rodriguez, Elissa Bassler, Benita Branch, and Sara Mauk exemplify, cuts to state Medicaid programs can make it difficult, and sometimes impossible, for Medicaid patients to find a doctor who will see them. (18) Cuts in reimbursement rates for providers can and have resulted in dramatic consequences for Medicaid patients. (19) For example, in a highly publicized case, a hospital in Clare, Michigan closed its obstetrical unit in direct response to the state's inadequate Medicaid payments. (20)

Congress enacted Medicaid in 1965 to ensure that poor and disabled Americans had access to "mainstream" and often life-saving medical services. (21) The goal was to provide beneficiaries with meaningful access to medical services, not merely a Medicaid card. (22) Title XIX of the Social Security Act, 42 U.S.C. [section] 1396 (Medicaid Act) gives individuals who meet Medicaid eligibility requirements a legal right to have payments made to their providers for their needed medical services. (23) The federal government and states jointly fund services rendered to Medicaid-eligible individuals. (24) States receive federal matching payments for all state spending on covered services. (25) To receive federal payments, however, states must implement their Medicaid programs consistent with minimum federal requirements. (26) For example, 42 U.S.C. [section] 1396a(a)(30)(A) requires states to adopt payment rates that "are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area." (27) This provision is often referred to as the "equal access provision." (28) Today, the Center for Medicare and Medicaid Services (CMS), a subdivision of the United States Department of Health and Human Services (HHS), is charged with the administration of the Medicaid program at the federal level. (29) CMS oversees state Medicaid programs to ensure that they comply with the minimum federal requirements promulgated under the Medicaid Act, including the equal access provision. (30)

This Note discusses Medicaid beneficiaries' access to health care in the context of the federal Medicaid Act's equal access provision. (31) After examining state Medicaid payment policies and legal challenges to state rate cuts specifically, this Note finds that states have failed to comply with and the federal government has failed to enforce the equal access provision of the Medicaid Act. (32) This Note concludes with policy recommendations that will enhance CMS' oversight of states' payment policies, thereby ensuring that Medicaid beneficiaries have access to meaningful care, as required by the Medicaid Act.

Part I of this Note reviews the history and structure of Medicaid and describes the Medicaid provider payment system in the context of the requirements, history, and rationale of the equal access provision of the Medicaid Act. Part II analyzes administrative tools available to CMS to ensure state compliance with the equal access process, highlighting the limitations of the administrative system. Part III proposes alternative administrative mechanisms by which CMS could hold states accountable where they fail to adopt rates that are adequate to ensure that Medicaid beneficiaries have sufficient access to care, as required by the equal access provision.

1. DECONSTRUCTING MEDICAID

   To provide the necessary background and context for the discussion of the limitations of the current Medicaid enforcement scheme discussed in Part II, this Part describes the federal-state partnership in which Medicaid is grounded, providing an overview of both the development and operation of the Medicaid program. First, this Part explains Medicaid's current role in the American health care system and how it grew from a small welfare program to a significant health insurer. Next, this Part focuses on the operation of the Medicaid program, specifically, looking at how the state and federal governments interact to administer state Medicaid programs and set provider reimbursement rates. This Part concludes with a description of litigation challenging Medicaid provider payment policies.

   1. The History and Development of Medicaid

      Enacted as part of the Social Security Amendments of 1965, Medicaid was created to provide medical care to the poor, blind, and disabled. (33) When first created, most government officials and legislators viewed Medicaid as a welfare program, not health insurance, as Medicaid eligibility was tied to cash assistance. (34) Since its inception, welfare (cash assistance to the poor) has faced forceful opposition, and Medicaid did not escape the welfare stigma. (35) Significantly, Medicaid was "de-linked" from welfare in 1996. (36) The 1996 Welfare Reform Act ended the federal entitlement to cash benefits for the poor by creating separate welfare programs administered by each state. (37) Eligibility for welfare now had no bearing on eligibility for Medicaid. (38) By "de-linking" Medicaid and cash assistance, states had greater flexibility in their Medicaid decision-making and Medicaid began to shift out of the welfare frame and into the health insurance frame. (39)

      Today, Medicare and Medicaid are the two largest components of public health care spending in the United States. (40) Medicare is a federal program that provides health coverage to about forty-seven million Americans, primarily individuals age sixty-five and older but also including several million younger adults with permanent disabilities. (41) Medicaid provides health coverage and long-term care services and supports for sixty million low-income Americans including nearly thirty million low-income children, eleven million persons with disabilities, and six million elderly individuals. (42) Medicare is financed entirely with federal money; by contrast, the federal and state governments jointly fund Medicaid. (43)

      In 2002, Medicaid surpassed Medicare for the first time as the largest government health care program, providing benefits to more people than any other public or private insurance program. (44) Nationally, Medicaid accounts for roughly 17% of all health care spending and 7% of the total federal budget. (45) During the current economic recession, the number of Medicaid enrollees has grown as the number of Americans affected by loss of work or declining income has risen. (46) For federal fiscal year 2010, Medicaid spending totaled $406 billion, with a federal share of $274 billion and a state share of $132 billion. (47) For states, Medicaid represents a major budget item and the largest source of federal revenues. (48) The majority of spending is to reimburse hospital, physician, and other acute care providers, as well as nursing home and other long-term care services. (49)

      The Patient Protection and Affordable Care Act (ACA), enacted in 2010, will significantly expand the Medicaid program in 2014, requiring that states...