Point Of Crisis

According To New Mexico Health Care Advocates, Cuts In Medicaid Funding Not Only Place The Poor, The Young, The Elderly And The Disabled At Enormous Risk—They'Re Also Fiscally Irresponsible.

Joseph Crumb
16 min read
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If you can judge the nobility and worth of a society by the way it treats its most vulnerable citizens, then New Mexico, along with every other state in the union, is facing its greatest challenge in the looming Medicaid funding crisis.

Medicaid provides health services to the country's poorest citizens, pregnant women, children and the disabled, along with long-term nursing care for the elderly. As health care costs spiral upward, so does the price of Medicaid, which in New Mexico will total $2.6 billion—the total of the state’s investment and the federal match—for fiscal year 2006.

Last year, the state Legislature underfunded its Medicaid program by $40 million, causing the Human Services Department to “trim around the edges,” as one child welfare policy advocate put it. The effects have been devastating to some Medicaid recipients.

Before becoming disabled in 1992, Virginia Suarez of Santa Fe was once a marketing manager for Sam's Club. She suffers from diabetes with kidney disease, along with chronic headaches and depression. Her monthly tab for prescriptions is $3,000.

Because she's been disabled more than two years, Suarez is eligible for Medicare, the government health program for the elderly and those disabled people whose work record makes them eligible for Social Security. But while Medicare pays for hospitalizations and doctor appointments, it does not currently cover prescription drugs or dental care, so Suarez relied on Medicaid for her medicines.

That is until just before Thanksgiving last year when she went to get her prescriptions filled. “They wouldn't give them to me,” Suarez said. ” I never received any notice.”

Suarez lives in a loft in a warehouse managed by her boyfriend, and tries to stretch her monthly $877 Social Security check as best she can. Her doctor gives her free samples of her medicines when he has them, and her boyfriend helps pay for some, but the lack of consistency in managing her medications is causing her health to decline further. Suarez says she is “a step away” from having to go on dialysis.

Suarez was persuaded to testify at a recent Senate Finance Committee meeting, but the Medicaid hearing was delayed by several hours and she became too ill to stick out the wait.

Medicaid and Children

An unfortunate circumstance of childhood is that children can't really advocate for themselves. They depend on their parents and social service agencies to speak out for them. One such agency is the Human Needs Coordinating Council, whose co-director Kristen Sharp says restoring full Medicaid funding is one of her agency's top priorities.

Another child advocacy agency, part of the statewide “Medicaid Coalition,” is New Mexico Voices for Children, whose mission is to advocate for policy changes that improve children's lives, like increasing access to children's health care, says Executive Director Kay Monaco.

Last year's Medicaid shortfall made a big impact on disabled children, Monaco said. For example, under the department's Developmentally Disabled waiver program, disabled children and seriously disabled adults who need diapers had a cap imposed of 200 diapers per month. But disabled children who have no bowel or bladder control can need up to 300 per month. In order to get reimbursement for more than 200, recipients now need to go through an appeals process under which the additional reimbursement is determined on a case-by-case basis. Another cut involves reimbursement for a liquid nutritional supplement for children who cannot take solid food. Families who cannot afford the supplement now face the alternative of having their child hospitalized and placed on a feeding tube, Monaco said.

Still another cut required families to use mail-in formularies to fill their drug prescriptions. That meant that a pharmacist no longer supervised how medications interact with each other. It also meant unnecessary lapses in medication regimens. “Lots of people don't look that far ahead and so the prescriptions run out,” Monaco explained.

In addition to cuts in benefits, new policies have had the effect of reducing enrollment, said Kristen Sharp of the Human Needs Coordinating Council.

“Kids are falling off Medicaid, and this is in a state that has one of the highest uninsured children rates in the country and one of the highest child poverty rates,” said Sharp. “We're the last state that should be doing this.”

According to the Human Services Department (HSD), 425,000 people are on Medicaid in New Mexico. More than half, 270,000 as of October 2004, are children. Meanwhile, an estimated 52,000 children are eligible, but not receiving the benefits. The U.S. Census Bureau reports that another 414,000 New Mexicans, 21 percent of the state's population, are without any health insurance. In the U.S., only Texas has a higher rate of uninsured adult residents. According to the Census Bureau, approximately 76,000 children in New Mexico are without health insurance, making New Mexico the state with the highest percentage of uninsured kids.

In May 2004, HSD implemented “auto-closure,” a policy that closed 10,000 Medicaid cases because recipients had not completed their annual recertification. About 75 percent of those recipients are now re-enrolled, said Betina Gonzales-McCracken, HSD's communications director, adding that retroactive coverage is available for recipients who fall off the rolls but later recertify.

Those automatic closures, and a second policy change that requires any recipients not on fixed incomes to re-enroll every six months instead of annually, have caused a major drop in the Medicaid rolls. The new re-enrollment policy went into effect July 1.

Dr. Lynne Uhring, president of the New Mexico Pediatric Society, works at a pediatric clinic in the South Valley where about 80 percent of the children are on Medicaid. She said the theory behind the new six-month recertification policy was designed to make sure people who no longer qualify don't get Medicaid for an extra six months.

Supposedly, families were notified,” Uhring said, “But they were not.” Instead, families just showed up at the clinic with their sick children.

“You know, all we can tell them is that the computer says you're no longer eligible,” Uhring said. Moreover, children whose eligibility lapsed but was later reinstated ended up being reassigned to different doctors by the managed care computer systems. Uhring's clinic cannot be reimbursed for treating children if the computer has registered them with a different pediatrician. “That happened very rarely before July, but it happens every day now.” Uhring believes the managed care companies contracted to administer Medicaid through the state's Salud program have been overwhelmed by all the re-enrollments and the added paperwork.

“These kids are not getting their regular checkups and shots,” Uhring said. “They're having to go to the emergency room and get billed thousands of dollars if they're acutely ill. They're being disenrolled. I know our government, our governor, and our legislators did not intend for that to happen, but it happened.”

Emergency care services aren't free, said Uhring, someone has to pay for them—eventually, the taxpayers. “Families are just trying to take care of their kids and the Legislature is putting up barriers,” Uhring said.

Voices for Children Deputy Director Bill Jordan said, since July, there's been a steady drop in Medicaid enrollment of children. Thousands of children, he said, have lost their health coverage as a result of the automatic case closures and the new six-month re-enrollment policy.

“The governor's office will tell you, ’We are not changing eligibility.' That's true, but they are cutting the number of people covered by Medicaid,” Jordan said.

Jordan acknowledged that Medicaid advocacy groups have mostly given up hope on restoring the program cuts instituted as a result of last year's $40 million shortfall. But he wants to know why the Legislature won't fully fund Medicaid this year. Largely due to increased income in the gas and oil industry, there is approximately $600 million more in state revenue this year.

Jordan said, during the past year, HSD has also stopped most of their Medicaid outreach efforts to enroll children in need. “HSD at one time had some pretty aggressive outreach to identify the most vulnerable kids,” said Jordan. “The thinking was that if those kids can be identified, they'll be healthier, will perform better in school, and parents will be better educated about their children's needs.”

And while HSD is still doing some outreach among the Navajos and around the Mexican border, otherwise such efforts have ended.

“Now we have a policy of actively lowering the number of enrolled kids in Medicaid,” says Jordan.

Penny Wise, Pound Foolish

There are strong economic arguments to be made against Medicaid cuts. First and foremost is the Medicaid federal match. Until now, the federal government funded 75 percent of New Mexico's total Medicaid budget, one of the best matching rates in the country. In the current fiscal year, New Mexico is spending $478.4 million dollars on Medicaid, but the state receives three times that amount from Washington. So when the state cuts $40 million, it's actually multiplied by three. In a business sense, opponents of the cuts say, it doesn't make sense. Or, to put this number in a different perspective, Kristen Sharp said: “In a way we're getting health care at a 75 percent discount.”

Moreover, cutting benefits and eligibility can lead to even higher costs in the future. For instance, if Virginia Suarez has to go on dialysis because she can't get medication needed to treat her kidney disease, the long-term cost will be higher. Similarly, a child whose parents can't afford a liquid nutritional supplement may show up at the emergency room and have to be admitted to the hospital for a feeding tube. That, too, would cost the health care system more in the long run.

“Down the line, particularly when it comes to kids, preventing a disease is much more economically efficient than treating a disease,” said Dr. Larry Shandler, a former president of the New Mexico Pediatric Society.

Shandler gives the example of childhood obesity. If you can prevent obesity in children, you won't have to treat Type II Diabetes. And if you can cut back on the number of cases of Type II Diabetes, you won't have to treat the more expensive disease of kidney failure. “Anytime you can prevent something, or at least intervene early, you have the opportunity to get cost savings,” Shandler said.

Both Shandler and Sharp argue that cutting Medicaid provider reimbursements can undermine the state's entire health care system.

“Because there's such a high number of folks who use Medicaid to get health care, when you underfund Medicaid you sort of tear apart the fabric of the health care infrastructure,” Sharp said. Underfunding cuts two ways: It affects people directly either by cuts in benefits or loss of eligibility, and it also affects the providers.

In the current fiscal year, reimbursement rates to providers were cut by 1.5 percent, threatening the very viability of pediatric health care practices, Sharp said.

“I think we're at risk of pediatricians leaving the rural areas, because in some cases up to 75 percent of pediatricians' patients are on Medicaid,” Shandler said. Pediatricians may relocate their practices, and that means a loss of services not only to children on Medicaid, but to other children as well.

Two physicians in Carlsbad have already closed their practices, according to Shandler, who wrote to legislators last month in an effort to get the state's Medicaid program fully funded. Another physician in Silver City, where 75 percent of the children are on Medicaid, is considering closing up.

Urban providers are not immune from the threat posed by underfunding Medicaid, argues Shandler, whose own Santa Fe practice counts 40 percent of its children on Medicaid. In Albuquerque, UNM Children's Hospital relies on Medicaid dollars to support pediatric cardiologists, surgeons, and ear, nose and throat specialists. And those specialists could end up leaving their practices in New Mexico, Shandler said.

Roque Garcia is chief executive officer of Rio Grande Behavioral Health Care in Las Cruces. Rio Grande comprises 10 agencies across the southern part of the state, with a total of 1,500 employees. Rio Grande provides a full range of outpatient services including counseling, substance abuse treatment, psychiatric services and intensive home-based services for families. Among the clients are kids from 5 to 18 years old.

Garcia said that cuts to provider fees for behavioral health threaten the existence of some agencies. Legal agreements with the Salud managed care providers prohibit him from speaking specifically about fee reductions, but he readily acknowledges that Medicaid reimbursement fees are “very low” and do not pay for the full cost of providing the services.

And the cost of failing to provide behavioral health care?

“One way or another society ends up paying for it,” Garcia said. For example, he said taxpayers foot the bill for costs that later show up in the legal system, the penal system or for psychiatric hospitalizations that might have been avoided if a preventative system was well-funded and working effectively.

New Mexico Not Alone

The Medicaid funding crisis has the full attention of the nation's governors, who met late last month at a four-day conference in Washington, D.C. U.S. Health and Human Services Secretary Michael Leavitt urged the governors “to embrace President Bush's changes to reduce Medicaid costs now,” according to an Associated Press report.

Potential cuts nationwide to Medicaid, in the federal fiscal year that begins in October 2005, range from $40 to $60 billion.

New Mexico is already feeling the pinch of reduced federal Medicaid assistance, thanks to a slight improvement in the state's per capita income relative to other states, the key statistic on which the formula for the federal Medicaid match is based.

New Mexico's per capita income grew from $23,900 in 2001 to $25,500 in 2003, compared to the national average, which went from $30,500 in 2001 to $31,600 in 2003, a slower rate of growth, according to Matt Onstott, HSD's deputy director of medical assistance.

As a result, the percentage of New Mexico's Medicaid budget to be paid by Washington will drop from 75 to 72 percent—a net loss of $60 million in federal Medicaid dollars.

HSD officials stress that New Mexico is not cutting Medicaid at all. The projected total Medicaid budget in fiscal 2006 of $2.6 billion is 6.5 percent higher, and the state is spending $556.7 million, $78.4 million more than in the current fiscal year—an increase of 16 percent.

It's just not enough to satisfy the demand

The Medicaid Coalition wants the state to spend the $91.7 million more needed to keep benefits and eligibility at their current, albeit reduced, level.

More Cuts on the Horizon

Dr. Uhring said she saw a list of potential new cuts to Medicaid a couple of months ago and she described it as “absolutely terrifying.”

“It will make it so hard to take care of kids, and it will make it incredibly hard to care for special needs kids,” Uhring said. “There's a myth that there's a lot of misspent money in the system. I can tell you I don't see that in my little clinic. If Medicaid money is being misspent, I don't know where. I believe there are just more people who are eligible.”

No final decisions have been made on cuts that will be needed to accommodate the expected shortfall of $10 to $13.3 million, according to Gonzales-McCracken, but there are some proposals on the chopping block:

– A review of hospital care reimbursement rates could result in cuts;

– Higher co-pays are possible for Medicaid recipients who are not at the lowest eligible income levels;

– Non-emergency transportation benefits will be reviewed, with cutbacks possible;

– It may be more difficult to be eligible for home-based personal care assistance;

– Reduction of Medicaid provider rates again is possible.

Gonzales-McCracken said she believes the executive budget “is a responsible budget that covers the loss of federal funding at this time.” But it requires HSD to manage the complex Medicaid program at the same time that it maintains coverage for children, the disabled and the elderly.

“New Mexico is not alone,” said Gonzales-McCracken. “All states have had to make difficult decisions on Medicaid. It's one of the fastest growing parts of all states' budgets.”

HSD's Deputy Secretary Onstott added: “We recognize what the federal government is trying to do at this time. They're trying to shift Medicaid costs to the states.”

Second Thoughts in the Legislature

When a March 4 hearing on Medicaid funding before the Senate Finance Committee, scheduled for 1 p.m., was delayed because of extended debate on the the Senate floor, Medicaid recipients and advocates had to wait four hours to have their say.

About 5:30 p.m., the committee members began trickling into the chamber. They heard a presentation by Sen. Dede Feldman, of the Interim Health and Human Services Committee, who was requesting the committee approve an additional $12 million for Medicaid to keep the program fully funded at fiscal year 2005's reduced levels. Feldman told the committee that 7,000 elderly and disabled New Mexicans rely on Medicaid. She said new recertification rules have caused thousands to lose coverage. And she pointed out that New Mexico has 94,000 jobs in its health care sector, jobs that could be threatened by more provider cuts. Feldman added that underfunding the program by $12 million would amount to $48 million in Medicaid funds being lost because of the federal match. Finally, she told the committee, “HSD has been a good steward of the Medicaid program in the past.”

The committee only had time to hear testimony from a handful.

Santa Fe family physician Rita Dodge said that more than 50 percent of the children and pregnant women she treats are on Medicaid. Jose Rodriguez, executive director of Taos County ARC, an agency providing support services to disabled people and their families, told the committee his agency has not been able to offer health insurance to its own employees for the past two years. “Staff eventually become disenchanted,” Rodriguez said outside chambers a few minutes later.

Nannie Marie Sanchez, 29, who has Down Syndrome, was the most forceful. “On any given day some of us do not know where we are going to live or how we will get our medication,” Sanchez told the committee. Sanchez said she has thyroid medication and needs to take oxygen at night because of a sleep disorder. “What about us? Where do we fit in? Why do you make cuts to our services? If you make these cuts we will be in real trouble.”

Although the committee had apparently already agreed on the Medicaid allocation, Republican Sen. Joseph Carraro had second thoughts and tried to pass an amendment to add the $12 million needed.

“The role of government is to help those people who sometimes can't help themselves,” he said.

The amendment was defeated by a 5-3 vote.

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