Utah hospitals are "cautiously optimistic" about a controversial new Medicaid waiver demonstration project recently unveiled by HHS Secretary Tommy Thompson and Utah Gov. Michael Leavitt that would expand health insurance coverage to 25,000 of the state's low-income workers but would not cover hospitalization.
The waiver marks the first time the federal government has allowed a state to offer a Medicaid benefit plan that fails to cover hospitalization and reduces benefits to current enrollees in order to expand access for others. Although state health officials and hospitals are hoping the primary-care coverage offered to the new beneficiaries will reduce the need for hospitalization and specialty care, health advocacy groups and hospital officials fear the waiver could set a precedent for other cash-strapped states seeking to cut costs (See related story, p. 8).
About 152,000 Utah residents between the ages of 18 and 64, or about 9% of the state's population, lack health insurance coverage, according to the state health department.
Under the plan, about 16% of the state's uninsured-about 25,000 low-income working adults whose income falls beneath 150% of the federal poverty level and who fail to qualify for Medicare and Medicaid programs-will receive a basic health benefits package. Included in the package are:
* physician, pharmacy, laboratory, X-ray, urgent care and emergency medical services.
* flu immunizations and needed medical equipment.
* health education, ambulance transportation and preventive dental services.
* prescription drugs, hearing tests and vision screenings.
The budget also includes funding for 150 high-risk pregnant women to receive full Medicaid coverage under the waiver plan. Children, seniors, the blind, the disabled and pregnant women are exempt from changes in the benefits package.
The newly insured group will not be covered for substance abuse, mental health, specialty physician care, nonemergency transportation, physical and occupational therapy and chiropractic services, which are covered by Utah Medicaid for current beneficiaries. To pay for the expanded coverage, about 17,600 adults among the state's 143,000 Medicaid beneficiaries will see their benefits cut and will assume a greater portion of their costs. For example, current enrollees will pay a new $100 per admission copayment for hospitalizations. Copayments for physician visits and drug prescriptions also will rise. The state hopes to launch the program by July 1.
"It's a grand experiment," said Richard Kinnersley, president of the Utah Hospital and Health System Association, which represents Utah's 47 acute-care hospitals.
Kinnersley said the state's hospitals worked with the governor's office on the waiver, which replaces a 1992 program called the Utah Medical Assistance Program. That plan called for hospitals to donate charity care for services to a population of working poor. The UMAP plan, however, has increased costs to hospitals to more than $10 million in 2001 from $2.5 million 10 years ago.
"Hospitals have been screaming for the state to do something about this," Kinnersley said. "We just can't continue to absorb such dramatic cost growth."
Kinnersley said the association backed the governor's plan because it hoped that by expanding access, the waiver would reduce the reliance of new enrollees on hospital emergency rooms and would, through early treatment, avoid the need for inpatient care.
"That's the big gamble," Kinnersley said. "If you provide primary care, can you keep them out of the hospital?"
But he acknowledged there is an access gap in the healthcare system and predicted that the number of eligible enrollees could be double the 25,000 the state estimated.
Kinnersley said Utah hospitals deducted $101.5 million in bad debt and $75.7 million in charity care from their revenue in 1999, the most recent year for which numbers are available.
He predicted that if the state is unsuccessful in capping the amount of donated hospital care at $10 million, as it has pledged to do, "that cost will have to be shifted somewhere else in this system."
He's concerned that the new enrollees may be unable to receive specialty physician care and that hospitals could be on the hook to absorb other unexpected costs.
"We're concerned about it, and there is concern from my counterparts around the country that this could set some kind of a precedent. We think it will do just exactly the opposite and expand access to a segment of our population who cannot qualify for the full Medicaid program and are waiting for a roll of the dice for their lives. We think this is a worthwhile effort."
John Nielsen, senior legal counsel and director of government relations for Salt Lake City-based Intermountain Health Care, was guarded in his assessment of the program. He applauded the expansion of access to a previously uninsured population but said he's not sure what financial impact the program would have on Utah's biggest healthcare system, or on insurers, small businesses and the self-insured. Ten percent of the patients treated at Intermountain's 18 Utah hospitals are Medicaid recipients.
He said hospitals have discussed their concerns with the governor's office.
"And they've been very open and understanding," Nielsen said.
Judy Hillman, health policy analyst for the not-for-profit Utah Issues: The Center for Poverty Research and Action, a Salt Lake City-based healthcare advocacy group, guardedly supported the waiver because it expanded coverage.
"It became clear to us that this was a train without brakes, and it was going to happen," Hillman said. "We were originally going to try to stop the waiver. But we realized if we opposed it and nothing went forward to help these people, that it would be bad. We are offering conditional support of the waiver and approaching it with cautious optimism. It is a bold first step. And it may be Utah can't do any better than this, but we fear it could set a dangerous precedent."
Cindy Mann, a senior fellow and policy analyst with the Washington-based Kaiser Commission on Medicaid and the Uninsured, questioned the Utah waiver and predicted it could result in denials of care.
She predicted that the obligation of current Medicaid recipients to pay a $100 copayment per hospital admission would lead to more bad debt for hospitals.
"We have no experience with anything like this," she said. "I think we're going to see a denial of care. This program challenges our common understanding of what it means to be insured and imposes costs of operating the program on low-income people."