Alaska Seniors Squeezed to the Back of the Bus by Medicaid

If Medicaid is expanded, what will be the effect on Medicare seniors? Should able bodied single people who choose not to work get health care before a senior citizen who has paid every working day of his/her life into Medicare and still is required to pay Medicare a minimum $105 per month just to see a doctor? Is this the right thing to do? Is it fair to the senior Alaskan?

The University of Alaska’s Institute of Social and Economic Research (ISER) completed a study titled “Improving Health Care Access for Older Alaskans” in June 2010.  This study was authored by Mark A. Foster and Rosyland Frazier.  The report addresses the current status of access of Alaska seniors to health care and potential solutions to this access. It also describes the impact of Medicaid on Medicare seniors.  This is especially important today due to the increased pressure on legislators to expand Medicaid to a new eligible population.  Here is an excerpt to the report relevant to Medicaid  (emphasis added):

The Future
The problem of limited access to primary care among older residents isn’t confined to Alaska,but it seems to be more acute for Alaskans, especially in the major metropolitan area of Anchorage (as we noted at the outset of this report). This issue is important in Alaska and nationwide not only for those already 65 or older but also for the many more who will be turning 65 as the huge generation of baby boomers ages into the Medicare system. The U.S. Census Bureau projects that the number of Americans 65 and older will increase about 35% in the next decade, up from about 40 million to nearly 55 million.(29) In Alaska, the growth is expected to be even more dramatic. The Alaska Department of Labor projects that the number of Alaskans over 65 will nearly double in just the next 10 years (Figure 5). And over time, the next generations of Alaskans and other Americans will also be reaching the age when they expect to use Medicare as their health insurance. Next we examine why access to primary care has become such a problem for so many Medicare beneficiaries.

Figure 5.

ISER MEdicaid fig 5








FN29 U.S. Bureau of the Census, U.S. Population projections, 2008;

Closed Doors
As Figure 6 shows, the 17% of primary-care doctors in Anchorage who said they were willing to take new Medicare patients at the time of the ISER survey in 2008 amounted to 13 doctors—and only a handful of those were in traditional private practices. Five were at the Anchorage Neighborhood Health Center—which gets part of its funding from the federal government and accepts all patients—and three were at walk-in, urgent-care clinics.
Figure 6.

ISER Medicaid study fig 6









More than one-quarter of the primary-care doctors ISER surveyed in Anchorage had already opted out of the Medicare system in 2008—that is, they didn’t accept Medicare payments at all and would treat only Medicare patients who agreed to pay the entire doctor’s fee out of their pockets. Since the survey, we have learned of seven more primary-care doctors in Anchorage who have opted out of Medicare, bringing the share of the original survey population who have opted out to more than a third.(30)

FN30 That includes six doctors in a primary-care group practice who notified their Medicare patients by letter that they were opting out of the Medicare program, but that they would still see patients who agreed to be “responsible for” the doctor’s bill and to acknowledge in writing that they understood Medicare would not reimburse them for the doctor’s bill.

Why Primary-Care Doctors Don’t Take New Medicare Patients
Figure 7 shows reasons primary-care doctors who don’t take new Medicare patients cite for their policies, in Alaska and in the U.S. as a whole.
Figure 7.

ISER Medicaid study fig 7


Alaska primary-care doctors who decline to see new patients universally say Medicare doesn’t pay them enough; about two-thirds nationwide also cite inadequate payment. Many doctors in Alaska and elsewhere also cite the complexity of paperwork and fear of audits as important reasons for turning away new Medicare patients—but Alaska doctors are more likely to cite those reasons. And nearly half of primary-care doctors who don’t accept new Medicare patients in Alaska and elsewhere cite as another contributing reason the “high clinical burden” of older patients—that is, older patients tend to have multiple medical problems that are complex and time-consuming to treat. One sign that federal policymakers recognize Medicare may underpay for primary care is a provision in the new health-care reform law that offers a temporary (2011-2016) 10% bonus above standard Medicare rates to primary-care providers—doctors and others—who see Medicare patients.(31)

FN 31 Public Law 111-148, HR 3590 as enacted, Section 5501(a).
Why is the Problem Worse in Alaska?
Why is the problem of primary-care doctors’ declining to see Medicare patients more common in Alaska, and particularly in Anchorage? Several things may contribute. All other major health insurers in Alaska pay doctors more for primary-care services than Medicare pays. That includes not only private insurance, but also Medicaid—the federal health insurance program for low-income Americans—and TRICARE, for military personnel and their families. If private insurance pays $1 for common office visits, Medicaid and TRICARE pay about 81 cents and Medicare pays 63 cents in 2009. The federal government sets Medicare payments, and Medicare pays the same nationwide, except for geographic cost differentials. Medicare has divided some states into more than one geographic area, but Alaska has only a single geographical differential statewide. Individual states have some discretion in setting payments for Medicaid because states pay part of the costs. Medicaid payments vary from state to state, depending on how much individual states are willing to spend. In Alaska, Medicaid pays doctors more than Medicare for primary care. In all other states except Wyoming, the opposite is true: Medicare currently pays better than Medicaid—at least as defined by the published reimbursement level for the same procedures.(32) Medicare pays twice as much in some states, and nationwide it pays on average 50% more than Medicaid for primary care (Figure 8). But that picture will change in the future: the new health-care reform law provides for increasing Medicaid payments for primary care to Medicare rates for 2013 and 2014, with the federal government funding the increases.(33)
FN32 See Zuckerman, Williams and Stockley “Trends in Medicaid Physician Fees, 2003-2008, Health Affairs, 28 April 09, @ hlthaff.28.3.w510, Exhibit 3: Medicaid-to-Medicare Fee Index, by type of service, 2008. We’ve flipped that to Medicare-to-Medicaid and focused on primary care to emphasize how Medicare compares with Medicaid, from the perspective of the relative value for primary-care practices of the two payers. While the geographic index for physician services was increased by 1.288 for Alaska in 2009, Medicare payments still lag behind Medicaid
payments in Alaska.
33 Public Law 111-152; HR 4872 as enacted, Section 1202, page 24.

Figure 8.

ISER Medicaid study fig 8


And although TRICARE payment rates for doctors are typically the same as Medicare rates, that’s not the case in Alaska in 2010. Since 2007, the U.S. Department of Defense has been paying Alaska doctors 35% more for treating TRICARE patients, in a temporary demonstration project to determine if the increase is enough to persuade more private doctors to see them. The demonstration project is currently set to run through early 2011.(34) With private insurance, Medicaid, and TRICARE all currently paying more than
Medicare, Alaska doctors can collect more seeing patients with other health insurance. This at least helps explain why Medicare patients in Alaska seem to face bigger barriers getting primary care doctors than they do in other states. Another contributing reason may be that Medicare patients make up a smaller share of all
patients in Alaska than nationwide. The number of older Alaskans is growing fast, but only about 8% of Alaskans are enrolled in Medicare, compared with 15% nationwide. Figure 9 shows shares of Alaskans with various kinds of health-care coverage, as proportions of a primary-care bus. As the figure shows, not only do private insurance and Medicaid pay more than Medicare for primary care in Alaska, there are a lot more of those better-paying patients than there are of Medicare patients. The position of the insurance payers from the front to the back of the bus represents the relative payments for primary care services.
FN34 See “TRICARE Tests Paying Doctors More in Alaska,” TRICARE Management Activity News Release, January 23, 2007 and Federal Register, December 18, 2009 (Volume 74, Number 242)

The green share at the front of the bus is employer-based insurance, which is the largest provider of health-care coverage and the best payer for primary-care services. For each dollar employer-sponsored insurance pays doctors for primary care, Medicaid and TRICARE pay 81 cents for the same service; Medicare is the lowest payer at 63 cents. (The revenue is based on 2009 payments for the most routine office visits to primary-care doctors.) So Alaska doctors who don’t see Medicare patients still have many potential patients, with better-paying insurance.”
Figure 9.

ISER Medicaid study fig 9


Are you in the back of the bus?


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