Health care shake-ups on way

By ANDY MILLER
The Atlanta Journal-Constitution
Published on: 01/08/06

Each year, the surest bets in health care are that medical costs will rise, consumers will pay more for insurance, and the number of people without health coverage will rise.

2006 promises to continue those trends but also bring changes that will mean, in some ways, a fundamental rewrite of Georgia's health care system. Experts predict it will be the biggest year of change for the state's health industry and patients.

The new landscape includes renovations of government insurance programs Medicare and Medicaid, more cost-cutting by employers, scrutiny of state retiree health costs, and a potential turf battle between hospitals and general surgeons.

Perhaps Georgia's most sweeping change will come in April, when the state moves 1 million people covered by the Medicaid insurance program for the poor and disabled into HMOs. The overhaul also affects 200,000 children with PeachCare coverage.

The shift of 1.2 million Georgians into HMOs ''by itself is enormous,'' said consumer health advocate Linda Lowe.

But other new and revised programs will affect how hundreds of thousands more get health care in the state.

The whirlwind of 2006 started with last Sunday's debut of Medicare's biggest revision in its history: offering prescription drug coverage to its beneficiaries.

Many state employees and privately insured workers also face revisions in their health plans this year.

Bill Custer, a health insurance expert at Georgia State University, said the momentous changes of 2006 are a product of many years of health care cost inflation, coupled with a recent economic slowdown.

"Medical providers are feeling squeezed; employers, especially small employers, are feeling the pinch; and a higher percentage of our family budgets is going to health care,'' Custer said.

"As health care costs grow, there are fewer options,'' he said. "I think we'll see more years like this."

Reining in Medicaid

Gov. Sonny Perdue, who pushed the cost-cutting HMO initiative, has called Medicaid's annual spending increases ''unsustainable.''

Under the new Medicaid plan, HMOs will closely monitor patient care by connecting them with primary care doctors.

The switch will be good for patients if they get a regular medical home with a doctor, Lowe said.

But Lowe said she's concerned whether there will be enough doctors in the HMO networks, and whether Medicaid members will get accurate information and help during the transition.

Hospital groups say the state now is pressuring hospitals to join the HMO networks — or receive lower payments for medical services.

Meanwhile, Georgia officials may develop another sweeping proposal to alter the funding formula behind Medicaid, in exchange for more flexibility from federal restrictions in running the program. Medicaid's low-income patients could be required to pay more for doctors' visits and prescriptions, and see some benefits reduced. Other states such as Florida are moving ahead on similar reforms.

"There's a lot of experimentation going on,'' said Christopher Kane, a health care consultant with Tatum Partners in Atlanta. The orientation is, 'Let's try something.' "

Medicaid, jointly financed by the state and federal governments, devours more than 40 percent of new state revenue, and state officials point to that fact as an impetus for the program transformation.

Yet consumer advocate Lowe said much of the Medicaid cost increases come from growing enrollment in the program, and that its per-person medical costs are lower than with private insurance. "Medicaid is a tool for solving our health care issues — it's not a problem,'' Lowe said.

Nevertheless, the Medicaid revolution will test medical providers. "We've got more issues involving Medicaid than any year I've been around,'' said Joe Parker, president of the Georgia Hospital Association. "I don't remember a year like this, with all the significant changes coming.''

Medicaid restructuring and related funding issues will create cash-flow problems for rural hospitals, said Jimmy Lewis, CEO of HomeTown Health, an organization of rural hospitals in Georgia. "This will be a year of seismic changes, without a shadow of a doubt,'' Lewis said.

Troubled transitions

Many seniors will save hundreds of dollars by enrolling in the new Medicare drug benefit. But the change has created confusion for patients and instant bottlenecks at pharmacies.

"Some people are not getting their drugs,'' Buddy Harden, executive vice president of the Georgia Pharmacy Association, said during the benefit's chaotic first week.

Medicare's drug benefit, of course, has been launched across the nation. But another new year change affects about 300,000 Georgians. On Jan. 1, the medical network serving state employees, schoolteachers and retirees came under the control of Minnesota-based insurance giant UnitedHealthcare.

The new contract is expected to save the state $60 million annually. And the state emphasizes the United switch helped keep employee premiums at the same level.

The change in networks, though, created tension in weeks leading up to the rollout. Teachers complained their doctors or local hospitals weren't in the United preferred provider organization, or PPO. Peggy Nielson, a state Board of Education member who has tracked the transition closely, predicted that employees will experience ''a rolling crisis,'' driven especially by confusion over whether their longtime medical providers are in the network.

Barbara Haralson, a Gwinnett County teacher, said her family's physician of 14 years has declined to join the United network. But she and her family, members of the state PPO, have decided to keep seeing that doctor, even though they likely will pay hundreds of dollars more in out-of-pocket costs.

"He knows our family and our health problems,'' Haralson said. "We're very upset. I feel like we're being forced to change our doctor or pay more out of pocket.''

United said it has built a comprehensive network of doctors and that it's still adding physicians. Both the insurer and the state Department of Community Health, which oversees the State Health Bene­fit Plan, said the transition is going smoothly so far.

Increasing costs

Private employers, meanwhile, are raising their employees' out-of-pocket costs, including deductibles and co-pays, to rein in spending. A growing number of businesses have also introduced high-deductible policies or health savings accounts to shift more responsibility for medical decisions to their workers.

"These plans are a very attractive product to some small employers and workers who don't have access to large group plans,'' said Custer of Georgia State University. But they are not a silver bullet, Custer said, and their impact will be limited.

And both taxpayers and people with private insurance are picking up the tab for increasing numbers of uninsured getting care in hospital emergency rooms, the most expensive medical setting, he added.

Covering retirees

Lurking in the background this year is a financial wild card: the requirement that Georgia, along with other states and local governments, determine its long-term obligations to pay health benefits for retired public employees. The Governmental Accounting Standards Board, a nonprofit organization that writes accounting rules for the public sector, is requiring governments to publicly report that liability.

The state Department of Community Health says it's in the process of calculating Georgia's figure.

Maryland, for example, recently disclosed its retiree liability at $20 billion. States are scrambling to devise ways to meet this liability, including reducing retiree benefits.

Credit-rating agencies say they will watch how governments handle the liability. That's important for Georgia, one of a only a handful of states that carry the top "AAA" bond rating by all three major agencies.

That "AAA" rating allows Georgia to borrow at the lowest rates of interest.

Other changes

The Georgia General Assembly, meanwhile, may consider a major industry change with an expected bill to allow general surgeons to open ambulatory surgery centers without going through the state certificate-of-need process. The proposal would pit doctors against hospitals.

Now, only surgeons the state considers ''single specialty,'' such as orthopedic surgeons, can do so.

Such health care regulatory fights, though, may slip into next year.

With those and other government and private insurance changes looming, Lewis of HomeTown Health says 2006 may not be the last tumultuous year in Georgia health care.

"It may only be the start of bigger things,'' he said.

 

 

 

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