AAMC Reporter: January 2010

New Federal Commission Will Hold Sway on Medicaid

—By Scott Harris

A new government commission flying largely under the national radar could wield broad influence over Medicaid policy—not to mention its patients and providers.

The Medicaid and CHIP Payment and Access Commission (MACPAC), which is beginning its work this month, is based largely on the influential Medicare Payment Advisory Commission (MedPAC). MACPAC's 17 members will provide lawmakers with objective guidance on the complex, even arcane world of Medicaid policy.

"A lot of attention goes to ensuring that Medicare is an effective and efficient program. This is to ensure that Medicaid has a similar level of attention," said Judith Feder, a professor at Georgetown University's Public Policy Institute and a Medicare and Medicaid expert. "Having an entity for Medicaid that is effective, knowledgeable, well-staffed, and well-run could provide some useful analysis."

Medicaid has typically received less attention than Medicare in part due to Medicare's status as a national juggernaut that accounts for 13 percent of the federal budget. Because Medicaid programs are administered by each state and only partially funded by federal dollars, spending and benefits vary widely and account for a comparatively small portion of entitlement spending.

But the creation of MACPAC is a signal that lawmakers are ready to focus more closely on Medicaid, particularly its program costs and payment rates. As a result, MACPAC has captured the attention of teaching hospitals and other academic health care providers, industry experts said.

According to statistics from the American Hospital Association, about 58 percent of all Medicaid hospital discharges in 2007 came from teaching hospitals. AAMC data show that Medicaid patients account for 16 percent of the health care provided by academic physician groups—nearly double the rate for community physician groups.

"Teaching hospitals and academic physicians provide a significant amount of care to Medicaid patients," said Karen Fisher, J.D., senior director for health care affairs at the AAMC. "Therefore both they, and the AAMC, will be watching this new commission very closely."

MACPAC was established earlier this year through legislation that reauthorized the Children's Health Insurance Program (CHIP), a Medicaid-style program for children that would also be addressed through MACPAC. An $11 million authorization for MACPAC is included in current versions of House and Senate health care reform legislation.

Structurally speaking, MACPAC is closely modeled after MedPAC. Both commissions are overseen by the Government Accountability Office, and contain representation from health financing experts, physicians, health professionals, employers, third-party payors, consumers, and current and former program officials.

"The MACPAC legislation clearly borrowed quite a bit from the structure of MedPAC," said Robin Rudowitz, M.P.A., principal policy analyst for the Kaiser Commission on Medicaid and the Uninsured. "However, MACPAC is a little broader because it focuses on access issues in Medicaid and CHIP."

MACPAC is specifically tasked with examining and making recommendations on Medicaid payment policies, including state payment methodologies and processes for updating the reimbursement rates of hospitals and other facilities. While stressing that any guess is pure speculation, Feder said MACPAC could potentially address glaring inefficiencies such as dual Medicare and Medicaid eligibility, which leads to redundant and unnecessary payments.

"The bulk of Medicaid spending comes from people with disabilities and dual eligibilities," she said. "There is so much in health care reform legislation about the integration of delivering quality care, including by integrating certain Medicare and Medicaid payments."

According to William E. Golden, M.D., professor of medicine and public health with the University of Arkansas for Medical Sciences and the medical director for health policy with Arkansas Medicaid, the new commission could make an especially big impact if health care reform increases state Medicaid rolls.

"If reform happens, Medicaid will likely become the source of insurance for uninsured people, so there are going to be significant access issues," Golden said. "Academic medical centers provide a lot of this care, so there will be a natural interface between the two."

But this interface may bring problems. Since a federal body will be examining state programs, sweeping changes could occur that might help some programs while simultaneously harming others. Some Medicaid spending—such as the practice by certain states of using Medicaid to help fund graduate medical education—may come under scrutiny.

"You could see some standardization in programs that might not work to everybody's advantage," Golden said.

"Some local programs get favorable funding carve-outs from state Medicaid budgets. A national review panel might challenge some of those relationships. The benefits of a regional program are not always strictly economical."

Nevertheless, some believe that a close examination of Medicaid payments could ultimately lead to better health care delivery.

"We know that Medicaid does generally a good job providing access," said Rudowitz. "We also know Medicaid payment rates tend to be quite low, and physician willingness to participate is lower because of the lower payment rates. So shining a light on payment rates and the link between payment rates and access is going to have an impact."

However, because there are essentially 51 different Medicaid programs, there will need to be plenty of study before any recommendations are made.

"Part of what they need to do is try and gather data on what each state is doing," said Rudowitz. "Are there any areas where there might be some issues related to payment? The key part is to look at how payment policies affect the whole delivery system."

Either way, Golden said that academic medical centers, and all health care providers, would do well to follow MACPAC's activities.

"Some business-as-usual practices will be challenged," he said. "There will be opportunities for medical schools, but there will also be some trap doors. How it plays out is anyone's guess."

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