Expect healthy debate over ailing Medicaid

The Colorado Statesman

House Democrats struck first in the health care debate on Tuesday, unveiling the first of what is expected to be an onslaught of divisive bills addressing health care issues in the state.

The Innovations in Medicaid Act would restructure how health care providers in Colorado pay for entitlement medical services. The legislation asks health care providers to partner with the state Department of Health Care Policy and Financing to create pilot programs implementing a new adjustable model. The reform would shift the current so-called “fee-for-service” model to a “health outcomes-driven” system. Physicians are currently paid for each medical procedure, but under the new system providers would make payments based on how many patients are seen and the outcome of services provided.

Supporters argue that the new system would financially incentivize physicians to provide higher quality care, thus allowing the state to contain ballooning enrollment costs and improve quality.

The sponsor of the legislation, Rep. Dave Young, D-Greeley, said the bill would help balance Colorado’s budget at a time when Medicaid enrollment has reached an all-time high.

“Colorado families are still suffering from the after effects of the Great Recession, and thus Medicaid rolls continue to grow despite the natural budget crunch that comes with a recessed economy,” said Young. “Expanded access to care is simply unsustainable without changes in how states deliver and pay for care.”

Gov. John Hickenlooper’s office estimates that Medicaid rolls have grown by 72 percent since fiscal year 2007-08, with Medicaid and other health entitlement programs taking up about a third of the state’s budget. In just November alone, an estimated 615,000 Coloradans were on Medicaid, according to a presentation to the Joint Budget Committee on Jan. 4 by Sue Birch, director of the Department of Health Care Policy and Financing.

Dr. Judy Zerzan, the state’s chief medical officer and deputy Medicaid director for the Department of Health Care Policy and Financing, told The Colorado Statesman that reforming how the state pays for medical entitlement services is urgent in order to control spiraling costs and enrollment.

“There are three domains when looking at outcomes that are important to keep in mind: clinical, functional and patient satisfaction. Functional, which refers to the ability of clients to get around and perform tasks important in daily living at home or in their job, is an area that is often overlooked,” said Zerzan. “Changing to an outcomes-driven system can help put the focus on the functional part, which keeps clients healthy and active in their communities.”

Health care providers tend to agree that shifting to an outcome-driven system would improve the quality of health care, while lowering costs for the state. The Colorado Association of Health Plans (CAHP) is still reviewing the proposal, but generally agreed that Medicaid payment reform is necessary.

“Depending on the payment reform… in the sense that the more that health outcomes and payment structures are aligned, in theory, there could be positive change,” said Marc Reece, associate director of CAHP. “But it’s complicated in practice, I don’t think there’s going to be a magic fix one way or the other.”

Michael E. Huotari, vice president of legal and government affairs for Rocky Mountain Health Plans based in Grand Junction, said the provider would be working with lawmakers to implement the pilot program if it is to be created. Rocky Mountain Health Plans currently has about 22,000 Medicaid enrollees and has been an active Medicaid provider since 1974.

“We believe that the financial incentives in the health care field must be aligned with the quality of care goals, care coordination goals and patient satisfaction goals to address the health care issues that our country faces and the Medicaid program faces,” said Huotari, who also attended the news conference.

The Colorado Children’s Campaign, which has closely followed medical entitlement reform issues, especially those facing the state’s Children’s Health Plan+ program, believes payment reform is an obvious early step for the state to take in containing costs without cutting rolls. The Children’s Health Plan+ caseload has also increased dramatically, spiking by about 11,000, or about 19 percent, since 2007-08, according to the governor’s office.

While the Children’s Campaign has yet to fully review the legislation and has not taken a formal position, Cody Belzley, vice president of health initiatives, is encouraging lawmakers to begin addressing the issue of payment reform.

“Anything the state can do to better align financial incentives with positive health care outcomes is a good thing,” she said. “Improving health outcomes and making our system more efficient should be our key objectives for building a stronger, more rational health care system, and payment reform is at the heart of that.”

Gretchen Hammer, the executive director for the Colorado Coalition for the Medically Underserved and the chairwoman of the Colorado Health Benefit Exchange Board, is also a proponent of payment reform. The Health Benefit Exchange Board is currently working to implement a law passed last year that requires the state to create an online health insurance exchange where consumers can compare prices and services of health care plans.

Hammer had also not yet seen the language of the Innovations in Medicaid Act, but she generally argues for payment reform both on the public and private levels.

“I hope that this conversation is one that we have for all of our health care systems, not just our public programs,” she said. “The pressure of the state budget is making the conversation at this point in time about public health insurance programs, but I think it’s well known that the way we pay for all of our health programs, there is opportunity for change.”

Issue could be mired in politics

But the conversation could become bogged down in polarizing political ideologies, as Republicans and Democrats appear to fundamentally disagree as to how to go about entitlement reform. Republicans are focused this year on federal health care mandates, seeking ways to escape various federal entanglements.

The division was apparent Wednesday on the floor of the House during opening day remarks from House Minority Leader Mark Ferrandino, D-Denver, and House Majority Leader Frank McNulty, R-Highlands Ranch. While Ferrandino pointed out that there is no waiver the state can apply for, McNulty called for standing up to the federal government over entitlement programs.

“We understand that we face another challenging budget year, and we look forward to fulfilling our constitutional obligation to pass a balanced budget. That is why we have asked Gov. Hickenlooper to work with our congressional delegation and President Obama to find ways we can reform the federally mandated health care and entitlement system, which chews a larger and larger portion of our budget every year,” McNulty told his House colleagues before acknowledging that there is no “magic wand” to fix Medicaid. Ferrandino, making his first floor speech as the newly minted minority leader, struck back. “Let’s stop fantasizing about a magic Medicaid waiver that can make our problems go away. It just does not exist,” he said.

“Let me be clear: Medicaid is not a ‘tumor’ on our budget, as one political leader from a different chamber recently described it,” continued Ferrandino, referring to a comment recently made by Senate Minority Leader Bill Cadman, R-Colorado Springs. “Our Medicaid rolls are still growing because many people are still struggling. It’s as simple as that.”

Sen. Greg Brophy, R-Wray, on Wednesday immediately introduced a bill seeking a waiver from the federal government to allow for flexibility in managing the state’s medical entitlement programs. Senate Bill 32 would also require an asset test for eligibility in the programs.

But McNulty himself acknowledged that a waiver is probably off the table, telling The Statesman, “We agree. Our point has been, and continues to be, that Republicans and Democrats in the House, Republicans and Democrats in the Senate, standing with our Democratic governor, are an imposing force. Working together, we can do our part to bring change in Washington, D.C. with our congressional delegation and with President Obama.”

Medicaid payment reform is also likely to see resistance from the Colorado Medical Society, an advocacy group for Colorado physicians, residents and medical students. The organization points out that it helped to establish the Center For Improving Value In Health Care (CIVHC), which is working with a wide range of stakeholders — including patients, consumers, providers and physicians, to enhance the health care experience for consumers, including containing costs and premiums — and improving the quality of health care in Colorado. Alfred Gilchrist, chief executive of the Colorado Medical Society, cautioned against a rush to legislation.

“The Colorado Medical Society recognizes that payment reform is necessary, that is why we have helped establish the CIVHC program. We have been very pleased with the collaborative nature of CIVHC and have not seen a need for state legislation at this point,” Gilchrist said in a statement provided to The Statesman. “We are not at all convinced that state legislation is the answer to payment reform.”

Peter@coloradostatesman.com