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Four ideas that could work

Everyone agrees that fixes are needed to help Medicaid bureaucracies, which spent $9.3 billion in tax dollars in Ohio, and $3.8 billion in Kentucky, last year. Among the ideas:

1. Spend more to prevent illness — not just to treat it.

Medicaid often doesn't pay doctors to treat people before health problems turn into emergencies, which are far more expensive. Doctors say that needs to be changed.

For Dr. Ron Levin, a family with a handicapped child needs family care. When Caitlyn Cramer, 6, comes to the office with her disabled brother Zachary, 8, she complains of trouble sitting cross-legged in school, so Dr. Levin is quick to check her feet.
(Michael E. Keating photo)

"There is no flexibility at all in the rules" in Ohio, says Dr. Ron Levin, a pediatrician at Cincinnati Children's Hospital Medical Center. A doctor who's lobbied before Ohio legislators to change the way Medicaid works, Levin treats 500 of the region's sickest children and has another 500 on a waiting list. "Even if you can save the state money and get better care for a child, if it's not spelled out in Paragraph Three, Section 24 of some regulation, they won't let you do it."

Kentucky doctors experience similar problems, says Dr. Donald Neel, an Owensboro pediatrician and past president of the Kentucky Medical Association. "Medicaid has been late in discovering how to prevent problems rather than treat them," he says.

Doctors in both states also want to be paid for time spent coordinating procedures with other specialists. A doctor who is planning to put a medically fragile child to sleep for a surgery, for example, also could schedule another procedure during the operation. Doing both at once would prevent an extra surgery later, making the ordeal easier on the child and saving thousands of dollars in anesthesia costs.

"Paying physicians to coordinate care could eliminate unnecessary office visits and other costly procedures, so it would benefit patients and save the state money," says Tim Maglione, a senior director in the Ohio State Medical Association. "But doing all that work takes a lot of extra time, so doctors should get some financial incentives for it."

Mary Haller, an assistant deputy in the Ohio Department of Job and Family Services, says Medicaid pays different amounts for thousands of services, so not every doctor is paid less for preventing illness than treating it. Still, she agrees the system doesn't reward doctors for time spent on prevention.

"The market is set up to pay for diseases," she says. "It's set up for sickness care, not wellness care."

2. Create a pilot program to demonstrate whether — and how much — doctors can save by managing patients' care.

The Ohio Legislature voted this year to experiment with a program that would have allowed Medicaid to pay doctors to care for patients in ways that might save money in the long run.

"Why not pay a doctor's office for helping a family figure out the protocol for getting an asthma machine? Or pay us for helping parents handle stress and manage the day-to-day care of their child? Let us take a holistic approach," says Levin, who would have run the program.

Gov. Bob Taft vetoed the plan, however, because it would make the state pay doctors before long-term benefits could be measured. Administration officials also said the plan would require costly audits to make sure doctors billed properly.

"We would be worried about whether we were being charged the correct amount," says William Hayes, an assistant deputy director with the Department of Job and Family Services.

Still, Hayes agrees that doctors are on the right track. He notes that the state is starting a new program next year to pay extra money to hospitals and doctors who prevent health problems in disabled or elderly people with asthma, diabetes or chronic heart disease. The program doesn't include other conditions or medically fragile children, but Hayes says the state eventually could expand it and likely save tens of millions of tax dollars.

Kentucky created a similar program in 1997 to let doctors and hospitals manage the health care received by Medicaid-eligible residents in Louisville and 15 surrounding counties. It has saved Kentucky taxpayers more than $92 million since 1999, supporters say.

3. Offer special, high-risk health insurance to seriously ill people.

A bill in the Ohio Senate would create a high-risk insurance plan to help families pay for high-cost health care. For some people with serious diseases, it might be the first insurance they could afford. It also would be available to seriously ill people who have exhausted all their benefits from other insurance plans.

"You have a lot of people these days who, with technology, can live a lot longer and they run through their insurance," says Ronald Bachman, an analyst with Price Waterhouse Cooper.

People in 33 other states, including Kentucky and Indiana, can buy state-backed plans that cover treatment for serious conditions like cancer, heart disease, diabetes or hemophilia. Kentucky's plan has been operating since 2001 and covers more than 2,000 people.

Instead of a high-risk plan, Ohio currently makes insurance companies sell coverage to anyone, regardless of their illness, at no more than 2.5 times the normal rates. That means a family of four could pay anywhere from $1,300 to $4,000 a month, says Kirby Nielsen, a board member of the Ohio Association of Health Underwriters.

Nielsen says that's no deal. "If we leave people uninsured and floundering with these high premiums, then shame on us," he says.

While still expensive, a high-risk insurance plan would lower rates for some families because it would require private insurance companies to kick in funds, too. Nielsen estimates the change would cost most Ohioans about $1 more each month, after private insurance companies pass on their costs.

Business groups and others call it a tax on employers. "You're asking people who are already absorbing high health increases to absorb a little more," says William Fitzgibbon, director of the Ohio Chamber of Commerce's Small Business Council.

4. Do a better job challenging private insurers.

Some Medicaid patients have private insurance that is supposed to cover their medical care. But if their claims are denied, states often pick up the tab. Doctors and others say states could save millions by challenging private insurance companies that routinely deny claims.

"We think a lot of the money the state pays through Medicaid should be paid for by insurance companies, but it isn't," Levin says.

Ohio officials agree that Medicaid probably is paying claims that should be paid by private insurance, but the state lacks the manpower to check it out. "We don't have the time or energy to review insurance policies as much as it's needed," says Hayes, with Job and Family Services.

Dennis Evans, a Job and Family Services department spokesman, says the state does pursue cases where both Medicaid and private insurance paid the same claim. That happened 37,559 times last year, and Ohio recovered $24 million.

Kentucky says it saved $63 million last year when it denied nearly 240,000 claims that could have been paid by private insurers. "We've basically looked at any place where we can recover money," says Gil Lawson, spokesman for the Kentucky Cabinet for Health Services.

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Did You Know?
Ohio hasn't increased its payments to doctors seeing Medicaid patients in three years, but nursing homes get automatic increases every year. It's state law. Nursing home costs increased 31 percent in five years to $2.2 billion, making it the health care program's single biggest expense in 2001.