Gov holds Medicaid funding
The state administration is not releasing $8 million appropriated by the Legislature to increase reimbursements this fiscal year for doctors caring for Medicaid/QUEST patients.
However, their rates will be raised starting July 1, the begining of the new fiscal year, with $8 million set aside for the purpose, said state Human Services Director Lillian Koller. The state money will be matched by about $10 million in federal funds, she said.
Last year's Legislature provided $8 million in a bill Gov. Linda Lingle allowed to become law (Act 284) without her signature. She cited "serious concerns" about the measure.
Koller said the department completed a lengthy process involved in implementing the law last month.
Retroactive increases would have had to be paid to the doctors back to July 1, 2007, but Budget Director Georgina Kawamura felt paying an increase for services already rendered would amount to a bonus, Koller said.
The budget director said that was not the purpose of the legislation -- that it was intended to encourage doctors to be more willing to take Medicaid and QUEST patients, Koller said.
Virginia Pressler, executive vice president of strategic business development at Hawaii Pacific Health, said at least 60 organizations and physicians sent letters to the governor last fall when she didn't release the money.
"She said she would release the money despite her reservations. I have it in writing," Pressler said.
She said Medicaid pays only 60 percent of Medicare's fare schedule, and doctors say Medicare doesn't cover costs.
"The physicians have provided care in good faith that they would be receiving relief soon," Pressler said. "Now the administration has reneged on care that has already been provided."
Cliff Cisco, senior vice president of the Hawaii Medical Service Association, was among those urging the governor to release it.
"We have encouraged the state to increase medical reimbursements because it reduces pressure on the private sec tor to pay more and cover the shortfall of government programs," he said.
Lingle told senators in a letter last July she feels it is "vitally important" to increase physician reimbursement rates, but SB 1672 would be hard to implement. She also objected to the bill because the expenditures were not included in the state's six-year financial plan.
Koller said it would have been difficult to pay increased amounts to doctors for services in 2007-08. "We would have to recycle all claims already paid to physicians in 2007 and the first quarter of 2008 to capture the additional amount. Going forward will be easier to do."
She described a complicated process to implement the new rates. Data had to be collected on claims paid for 40,000 fee-for-service Medicaid clients in the Aged, Blind and Disabled Program and 154,000 clients of four health plans providing QUEST managed care, she said.
An analysis had to be done of services for which claims were paid to determine how to distribute the money, she said.
Vendors had to be paid to change the reimbursement codes in the fee-for-service program and the DHS had to seek permission from the health plans to amend QUEST contracts to distribute the increase in reimbursements, Koller said.
The federal Centers for Medicaid and Medicare Services also had to approve the plans, which just came last month, Koller said.
"All of this is virgin territory. It has never been done before in a managed care environment, a mandated pass-through. It had to be negotiated," she said. Also, it's only a one-time rate increase, she noted. It's not clear whether it will be built into the next biennium budget.
Senate Ways and Means Chairwoman Rosalyn Baker (D, Honokohau-Makena) said it is disappointing that the administration "just sat on the bill" last year.
Many doctors won't take Medicaid or Medicare patients, she said. "We had an opportunity here to step to the plate and begin to address the shortage."