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State Medicaid Officials Announce that Doctors Rates Could Drop Back to Pre-Obamacare Levels as Soon As August 1

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

Doctors who take Medicaid patients could see what they are paid by the government to treat Alabama Medicaid patients drop as early as August 1 in a plan outlined by state Medicaid officials on Wednesday.

The controversial Patient Protection and Affordable Care Act of 2010 (popularly referred to as Obamacare) inflated the rates that doctors received for treating poor people under the enormously expensive entitlement program in order to encourage more doctors to take Medicaid patients as Obamacare expanded Medicaid enormously.

Alabama successfully sued the Administration not to be part of the Expansion but the “bump” in the payment rates for doctors remained in the legislation. That increase was paid for entirely by the federal government for the first two years.

In 2015 the Alabama legislature voted to raise taxes on cigarettes, nursing home beds, and prescription drugs and transfer use taxes from the education trust fund (ETF) to the state in order to continue to compensate the doctors at this higher level for the 2016 fiscal year which began October 1.

Despite this the cost of administering the enormously expensive Alabama Medicaid program have continued to rise. Coupled with that are startup expenses to implement the Regional Care Organizations (RCOs), which are supposed to lower the costs of running the program going forward, but which require enormous upfront costs in order to get promised matching dollars from the Obama Administration. Despite the tax increases in September, Governor Robert Bentley (R) requested a $90 million increase in state funding for the program, which has grown exponentially since 2008. The legislature refused and funded the program for fiscal year 2017 at slightly higher than 2016 levels. This meant that implementing the RCOs is going to have to be delayed at least one year and according to Alabama Medicaid officials it means that doctors who take Medicaid patients are going to lose their “bump” rates of payments.

State Representative Tim Wadsworth explained, “Alabama drops payment rate for doctors back to original Medicaid rate. Savings to Alabama is around $14.7 million a year. The Affordable Care Act required Medicaid payments to doctors to increase for years 2013 and 2014 to same level that Medicare pays doctors. This was called a bump and it was 100% funded by Federal government. After 12/31/14 the 100% Fed funding ended. Alabama was 1 of 6 states that elected to continue paying the higher fee to doctors. 44 states other than Alabama had previously dropped the rates that were forced to be increased by Affordable Care Act. (Some partially dropped) Part of need for more Medicaid funding in Alabama was due to Alabama not following what other states had previously done. The issue is whether the drop in bump payments resulted in doctors not taking on Medicaid patients and whether Doctors’ overall income dropped since more patients were eligible for Medicaid.”

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Hardest hit by this will be pediatricians. Alabama Medicaid insures over forty percent of Alabama children and if the parents qualify for the government entitlement under Obamacare rules they are not allowed to buy private insurance so are forced to use only those doctors and hospitals that accept Medicaid…….and the Medicaid rates. Pediatricians whose caseload is primarily poorer Alabamians could see their income cut substantially.

Alabama Medicaid Commissioner Stephanie Azar said in May, “I think it’s important for Medicaid providers and recipients to prepare for the impact of these cuts, because this is the budget for Medicaid at this point in time.”

The Alabama Hospital Association has been urging Governor Bentley to call a special session in order to try to force the legislature to craft some sort of a plan to get more money for the troubled state Medicaid Agency. The group warns that cuts to Medicaid will mean that some healthcare providers will go out of the business, a particular concern are rural Alabama hospitals. The group wrote on social media: “The healthcare crisis in Alabama is real and it affects everyone. It won’t matter what insurance card you carry if your pharmacy, doctor or hospital isn’t there to care for you.”

Sources in the legislature are very skeptical that a second round of massive tax increases is going to pass the legislature in a summer special session. A lottery to fund general fund agencies like Medicaid is one option being considered.

Medicaid costs the state $700 million a year. The program is by far the largest component of the $1.8 billion a year SGF.

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