Since its sponsor's rise from three-term Utah governor to administrator of the Environmental Protection Agency and then nomination for HHS Secretary, the Utah Medicaid waiver program that first brought Michael Leavitt national healthcare attention has drawn both praise and criticism.
The waiver program represents the highest-profile healthcare exposure in Leavitt's career, and his elevation could signal President Bush's desire to replicate Utah's experience nationally, opening the door to Medicaid block grants.
Utah hospitals generally gave the program high marks but said nearly three years after it was announced it requires some serious tweaking.
The Utah waiver marked the first time the federal government approved a state Medicaid program that failed to cover inpatient hospitalization and physician specialty-care services, and reduced benefits to some beneficiaries in order to expand them for others (Feb. 18, 2002, p. 6). When the waiver was announced in February 2002, the program was hailed as visionary and innovative. It was seen as a way cash-strapped states could reduce their growing Medicaid budgets by cutting benefits and costs.
Under Utah's program, called Primary Care Network, the state expanded basic primary healthcare benefits- such as physician visits, lab, X-ray, urgent and emergency-care visits, prescription drugs, immunizations and various screenings-to 25,000 uninsured, poor working adults whose income was below 150% of the federal poverty level. But to pay for the package the state cut benefits to 17,600 of the state's higher-income beneficiaries and increased their copayments. The theory was that if those beneficiaries had access to primary-care services they would improve their health, reduce hospital emergency room visits and decrease inpatient hospitalization. The state signed a pact with Utah hospitals to hold the hospitals' portion of the costs of caring for those patients to below $10 million annually. The state assigned two caseworkers to seek donated specialty care for the newly insured patients who needed it.
Joseph Krella, president and chief executive officer of the Utah Hospital Association, said the association is generally supportive of the Primary Care Network, or PCN, plan. "But we have mixed feelings," Krella conceded. Some hospitals carry a disproportionate share of the load, he said, and the $10 million cap on hospitals' costs will be exceeded this year. "We're advocating for payment once the cap is exceeded," he said, "and the state is aware of our concerns."
Program Director Michael Hales said enrollment has averaged about 17,000 in the first two years of the program. Hales said hospitals reported charges of $6.9 million in the fiscal year ended June 30, 2003, and $9.1 million in the fiscal year that ended June 30. "Enrollment rose to 19,000 in fiscal 2004, but it's dropped since then. The hospitals' share could be close to $10 million, but we think it will be near that figure and we're trying to work through these issues with hospitals."
Richard Fullmer, president and CEO of the University of Utah Hospitals and Clinics, Salt Lake City, said his system was hopeful about the PCN program. "But the jury's still out," he said. Fullmer said the university hospital sees a disproportionately high number of the sickest people. While primary-care clinics are working well under the new system, the expected reduction in the number of ER visits has not materialized. In fact, ER visits have increased. "This program was created to take care of patients who've fallen through the cracks, and there are so many more of those than anyone ever expected," he said. The cost of providing specialty care and inpatient hospitalization has exceeded the program's reimbursement, Fullmer said. His system will treat roughly 25% of Utah's PCN patients and lose several million dollars doing it.
"No good deed goes unpunished, and those being punished are the hospitals," he said. "People are using PCN. Our primary-care physicians are being reimbursed. But we're not being reimbursed for our specialty care or inpatient hospitalization."
Judi Hilman, health policy director for the Salt Lake City advocacy group Utah Issues: Center for Poverty Research and Action, said the organization had high hopes for the program and said some young and healthy beneficiaries have indeed benefited from it.
"But if you come down with something serious or have a chronic condition, it looks like you're covered when you're not," Hilman said. "Now that Leavitt has been nominated as HHS secretary, we're worried that he'll use the PCN plan as a national precedent for other Medicaid programs, and that would be a disaster." She called Utah's program "a warm-up for block grants," and said that other states could do better.
The plan does not offer the catastrophic coverage that some very sick beneficiaries need, Hilman said, but only a patchwork of specialists occasionally willing to donate services for patient visits.
John Nielsen, senior legal counsel and director of governmental relations for Intermountain Health Care in Salt Lake City, said the state's largest hospital system views the program as "a very innovative experiment in providing early access to primary care for low-income uninsured patients." But Nielsen also said it's too soon to tell whether the program has improved health outcomes or reduced reliance on emergency rooms.
He said Leavitt is a "bright and innovative guy" and is willing to try new things. "He's not one who enjoys the status quo," Nielsen said, "and you'll see that in the way he runs the department."