To help ease the physician shortage in Hawaii, state lawmakers have allocated funds to raise the Medicaid reimbursement rates for all providers.
“It will not only help the few medical providers who accept Medicaid patients, but hopefully incentivize more care providers into accepting Medicaid patients,” said Big Island Sen. Joy San Buenaventura. “They are very few and far between.”
San Buenaventura had introduced a bill that would have boosted the rates, but it died during a conference committee meeting last week.
Instead, lawmakers opted to add funding for the rate hikes to the current draft of the state budget, which is scheduled for a final vote today before the 2023 legislative session ends.
The funds would increase Medicaid reimbursement rates by nearly 40% to match the current Medicare rates.
Lawmakers set aside $30 million in the budget annually for the reimbursements, which includes a $43 million match in federal funds.
Statewide, roughly 465,000 people are covered by Medicaid, which is offered to eligible low-income residents and those with disabilities.
“The improvement in reimbursements for Medicaid patients will benefit everybody,” said Scott Grosskreutz of the Hawaii Provider Shortage Crisis Task Force. “The hospitals, primary care providers, and particularly those in the community who have Medicaid that have had trouble finding a provider.”
But despite the Medicaid match, Medicare rates have not kept up with inflation. As the cost of providing services rose, Medicare reimbursement rates flatlined.
A recent report from the American Medical Association found that the value of Medicare reimbursements declined by 20% over the last 20 years due to inflation.
“There’s really no business on the planet that can survive for very long when reimbursements are stagnant or falling and your cost of providing services is skyrocketing,” Grosskreutz said. “While the loss of private practices may be slowed by the Medicaid reimbursements, in the long term, unless reimbursements for Medicare and (Hawaii Medical Service Association) are substantially increased, as well, we’re still going to see a loss of health care providers.”
Low Medicare rates could be addressed at the congressional level. House Resolution 2474, which is currently being considered, would allow the U.S. Congress to index the cost of Medicare reimbursements and help keep the rates paired with the cost of providing services.
“If you keep your Medicare reimbursements flat while the cost of providing services is just exceeding, sooner or later, the number of (providers) able to accept Medicare will continue to drop,” Grosskreutz said. “Unless things change, I think that most of the private practices in the state will no longer be here in three to five years.”
One state Senate bill that failed to pass this session was SB 1035, which would have exempted providers from the general excise tax for treating Medicare, Medicaid and TRICARE patients.
“Raising Medicaid to Medicare levels is welcome,” Grosskreutz said. “But even still, private practices are going to be struggling, particularly since the GET taxation on Medicare, Medicaid and TRICARE remains in effect for the state.”
Hospitals and other federally qualified nonprofit health centers are exempt from the GET, and one report from the Healthcare Association of Hawaii stated that many Hawaii hospitals would have to limit services or close if they were taxed with the GET.
“Many physicians don’t finish their training until their early 30s, with zero in retirement savings, no funds saved in the bank, and often educational loan burdens that can be as much as a quarter-million,” Grosskreutz said. “In the long run, if they set up their practices, and they’re not fiscally solvent, they won’t be able to stay in the state long term.”
San Buenaventura was surprised the GET exemption did pass this session, but she remains optimistic.
“I really thought that the GET tax exemption for Medicare, Medicaid and TRICARE, of all of the GET tax exemptions, would have been the one to go through,” she said. “Maybe next year.”
Email Grant Phillips at gphillips@hawaiitribune-herald.com.