Update: In August 2014, the Joint Fiscal Committee approved the Shumlin administration’s proposed elimination of the Medicaid reimbursement rate increase as a means of balancing the State budget. What this means for future Medicaid reimbursement rates and the State’s efforts to transition to a universal health care system remains to be seen.
The troubled rollout of the Vermont Health Connect insurance exchange and the clamoring for details regarding the substance of and financing for Green Mountain Care (Vermont’s anticipated universal health care system) captured much of the health care spotlight during the 2014 Montpelier legislative session, so it is understandable if you missed the legislature’s adoption of a 1.6 percent increase in Medicaid reimbursement for health care providers.
The increase provides a modest, but much needed, boost to the reimbursement that practitioners receive for caring for the State’s most vulnerable populations and should encourage providers to treat Medicaid patients, while relieving some of the cost-shifting pressure that is endemic in our present health care system.
By way of background, the federal government and the states each fund a portion of the Medicaid program, which pays for the provision of medical services to certain low-income Americans. In 2014, for instance, the federal government pays a base percentage 55.11% of Vermont Medicaid costs; Vermont is responsible for the remaining amount. States must ensure that Medicaid payments “are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” 42 U.S.C. 1396a(a)(30)(A). Within these parameters, Vermont generally has discretion to set the Medicaid reimbursement rate for medical services provided to its residents, and providers who participate in the Medicaid program must accept such reimbursement rates as payment in full. Nevertheless, Medicaid reimbursement rates generally lag far behind Medicare and private payer reimbursement rates in Vermont, as in other states. Thus, it is common practice for providers to cost-shift the underpayment to the amounts charged to private insurers, who pass on the added expense to their customers through increased premiums.
Vermont’s Medicaid reimbursement increase, while modest, is important in that it signals that providing quality health care to low-income Vermonters is a statewide priority and it will relieve some pressure on the provider community to cost-shift to make up for lost revenue. This incremental increase also gives practitioners some assurance that the State will not leave them holding the short end of the stick if and when the State indeed adopts a single-payer model where the State is the sole source for provider reimbursement. Thus, the Medicaid reimbursement increase not only provides critical support for the provision of health care to vulnerable Vermonters, it also helps establish a level of trust between the State and health care professionals that will be required for any universal health care system to succeed.
