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Keeping Their Bottom Lines Healthy

With health care reform expected to place up to 1 million more Texans on the state rolls in the next several years, experts predict a surge in the number of doctors who opt out of accepting Medicaid and Medicare patients, thanks to reimbursements well below private-payer rates.

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Dr. William Jones spent years losing money on Medicaid and Medicare patients — until he stopped seeing them.

“You can’t make money caring for them,” the Austin primary care physician said. “A lot of my colleagues are hanging on by their fingernails because their Medicaid and Medicare patients are such a negative cash flow.”

Jones is still the exception, not the rule. But his decision is becoming increasingly common. The proportion of Texas doctors accepting all new Medicaid patients has tumbled in the last decade — falling from 67 percent to 42 percent, according to a Texas Medical Association survey. Medicare acceptance took a similar spill in that study, dropping from 78 percent to 64 percent. (Medicare is federally run and serves senior citizens; Medicaid is state-run and covers children, the disabled and some poor adults.)

With health care reform expected to place up to 1 million more Texans on state rolls in the next several years, experts predict an almost certain surge in low-income Texans seeking long-overdue doctors appointments. With federal and state reimbursements well below private-payer rates, that will drive more physicians to opt out of the programs, experts say.

“In essence, physicians are donating their services every time they see someone on Medicare or Medicaid,” said Dr. Susan Bailey, a Fort Worth allergist and the incoming president of the Texas Medical Association. “It just becomes a matter of whether or not you can keep your bottom line healthy.”

A 2009 study by the health care consulting firm Merritt Hawkins found that the combined Medicaid acceptance rate for cardiologists, dermatologists, gynecologists, orthopedic surgeons and family practice doctors is just 38.6 percent in Dallas — the lowest of the 15 big cities the firm analyzed. Houston’s average acceptance rate for those five specialties was 47.8 percent. Minneapolis, by contrast, was on the opposite side of the spectrum, at 82.4 percent.

State officials say they’re doing everything they can to maintain — or even grow — their fleet of Medicaid and Medicare providers. In the year after lawmakers passed a Medicaid rate increase in 2007, roughly 3,200 new doctors started accepting state insurance, said Stephanie Goodman, spokeswoman for the Texas Health and Human Services Commission. “It’s definitely harder to attract doctors when you’re the lowest payer in the market,” Goodman said. “It doesn’t do any good to expand the number of people with Medicaid coverage if they can’t find a doctor who will take Medicaid.”

That same year, the Texas Medical Board started bumping doctors seeking state licenses to the top of the pile if they agreed to see Medicare and Medicaid patients for at least five years. Since lawmakers instituted the line-jumping practice, the percentage of licensees agreeing to treat these patients jumped from 12 percent to 32 percent, said Jaime Garanflo, the board’s director of licensure. The tactic is effective because it can take months, or even longer, to get a license application approved in Texas. “Whenever we can, we say, 'Let’s reorder this' and make sure these folks get to the top of the list,’” Garanflo said.

Many of these doctors are immigrants. Of the more than 1,500 newly licensed doctors the medical board has fast-tracked since 2007, roughly 40 percent graduated from international medical schools — compared to 28 percent of all physicians licensed in that time period.

In Texas, urban patients don’t struggle to find primary care doctors like rural patients do, Goodman said. But regardless of where a patient lives, finding a specialist who accepts Medicaid can be incredibly difficult. 

At least one state is considering sticks, not carrots. Massachusetts, which has seen wait times for primary care doctors grow since the state made health insurance mandatory three years ago, is debating forcing doctors to accept Medicaid and Medicare.

Right now that’s unlikely in Texas, said Tom Banning, the CEO of the Texas Academy of Family Physicians. “Forcing doctors to participate in a program as a function of their licensure would certainly be seen as indentured servitude by many in the profession,” he said.

But Banning said he worries what kind of legal trouble the state could get into if Medicaid patients start facing extraordinary wait times to see a doctor — particularly in light of the Frew lawsuit, which the state settled in 2007 to give children on Medicaid better access to care. “If faced with a legal challenge in the future, I could see a case being made to at least look at what Massachusetts is having to explore,” he said.

Jones, the Austin primary care physician, said he thinks he’ll “be dead” before that happens in Texas but has no idea what lawmakers in Washington will do. He said they’ve been elected by “people who want benefits without contributing much to the system.”

Jones didn’t just drop Medicaid and Medicare patients from his practice. He quit accepting any kind of insurance seven years ago, opting instead to charge full-paying patients an annual retainer fee for assured access to care. Almost immediately, his 3,000 patients dropped to 600 — but his income didn’t drop.

“Why should I take [Medicaid or Medicare] patients who could be seen at a clinic, at [the public hospital]? My practice is full already,” Jones said. “Nowadays, everyone thinks they’re entitled to health care — they want the same type of care Michael Dell gets, but for free.”

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