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Doctors Drop Medicaid to Maintain Bottom Line

Matthew Finneran, is a family practice physician in Wadsworth, Ohio. He's dedicated to his patients - but these days he doesn't help just any patient who walks in the door. Finneran only accepts patients who are insured privately or through Medicare, the government program for the elderly. Medicaid patients are out of luck.

FINNERAN: Medicaid's never been a profitable endeavor for family medicine, but we always felt it was our obligation to participate and help those less fortunate. But once it became involved with insurance companies and all the responsibilities that come with managed care, it now became unaffordable.

Unaffordable for family doctors anyway. An increasing number are joining Dr. Finneran, opting out of Medicaid. They say it's not a matter of choice but of financial necessity. The problem Finneran explains is overhead - in his practice he has to pay for everything - rent, administrative staff, not to mention medical equipment and supplies. But the amount he is reimbursed by Medicaid barely covers his time. For example, to see a new patient, Finneran says he gets around 60 dollars from Medicare, but only 40 dollars from Medicaid -a third less. With those rates, he says he simply can't make ends meet.

FINNERAN: No matter how altruistic you want to be you still have the responsibility to yourself, your family, your community to be business prudent.

But reimbursement rates are only a part of the problem. In 2006, Ohio Medicaid switched to a system called Medicaid Managed Care, where insurance companies, instead of the government handle Medicaid reimbursements. Doctors say the administrative costs of dealing with those insurance companies went through the roof. According to a survey of family physicians conducted by the Northeast Ohio University College of Medicine, more than half do not accept Medicaid patients and of the remaining half that still do, half of those are considering dropping them. Ruth Madden conducted the study. She says to make matters worse, the number of people eligible for Medicaid is growing at a time when the state can least afford to pay for them.

MADDEN:For every 1% increase in the national unemployment rate there is a 1 million person increase in Medicaid enrollment, and if you look at state revenues over that same time period a 1 percent increase in unemployment equals a 3-4 percent decline in state revenues.

Fortunately for Ohio, the stimulus package will increase the amount of money that Ohio gets from the federal government by about 3 billion dollars, which Madden says will be a tremendous help. And in his recent budget proposal Governor Strickland outlined a plan to increase Medicaid reimbursement rates - though not by much. But Finneran and others say the real problem isn't Medicaid at all- but a system that undervalues the work of general practitioners and consequently pays those doctors unfairly. Anthony Costa is a family physician and a teacher of family medicine at Northeast Ohio University College of Medicine.

COSTA: The right thing to do might be to pick up the phone and talk to the patient for five minutes - but if I do that in today's system I make no money at all. The only way we get paid in our current system is if a patient and I are in the same room at the same time. If anything else happens - pretty much --then I can't turn in a bill, and I've done it for free.

Medicaid patients often have complex health problems. Treating them is more work- and it's the least well paid. So it's no wonder physicians are electing to drop them. But where will all the unwanted Medicaid patients go? Increasingly, says Costa, they turn to hospital emergency rooms where the cost to taxpayers is significantly higher, and complicated health problems are poorly managed.

Yet the question of how to entice doctors to provide care for the growing numbers of Medicaid patients looms large. One solution Costa, Finneran and others would like to see is a monthly fee-based system that compensates physicians for all aspects of care - everything from phone calls, to chart reviews, and consultations with specialists. Another suggestion is a single national insurance plan - that Costa says would cut back on administrative costs and level the playing field.

COSTA: The problem with making decisions about Medicaid is that those decisions are made by people who aren't insured by Medicaid - they're made by the governor, they're made by you, they're made by me - My interest in Medicaid might be to save money, that might not be my interest in my own health care system.

For now, Costa fears the problems with Medicaid are merely a canary in the coal mine - an early indicator of a larger failing of the health care system that alienates doctors and patients.

Gretchen Cuda, 90.3.