Study Shows N.M. Medicaid Managed Care Has Increased 'Safety-Net' Problems

A UNM Health Sciences Center Study has found that New Mexico safety-net institutions have buffered the negative impacts on patients of Medicaid managed care even as those institutions have come under economic and emotional stresses imposed by the system.

The study showed that rural mental health services and services to uninsured children have experienced significant declines with small, rural agencies that care for special populations - the mentally ill, homeless, disabled and HIV infected - among those hardest hit. Further, there is evidence that the reforms have done nothing to address the problems of the state's uninsured population.

The study, "Safety-Net Institutions Buffer the Impact of Medicaid Managed Care: A Multi-Method Assessment in a Rural State," slated to be published in the April issue of the American Journal of Public Health, used a variety of methods to assess changes in the state's Medicaid system after the transition to managed care, said Principal Investigator, Howard Waitzkin, M.D., Ph.D., professor and co-director of the Division of Community Medicine within the UNM School of Medicine Department of Family and Community Medicine.

Waitzkin said the study showed that a number of factors led to rural areas experiencing more adverse effects from the system change, which began in 1997.

Healthcare in many rural areas is provided largely through community-based clinics, he said. Historically, community health center providers have known their patients or their family members personally and often have expressed a view that every individual had a right to care, impendent of ability to pay providers. Because they had previously used Medicaid payments to cross-subsidize services for the uninsured, reimbursement and contracting delays became very stressful for these safety-net providers under Medicaid managed care.

Other increased regulatory requirements also led to financial and emotional stress. For example, one physician purchased for a patient an urgently needed medication that wasn't on the managed care organization (MCO) formulary. Other providers diverted time from patient care to argue for approvals of specialty care and to complete paperwork, by absorbing the additional workload and solving pharmacy and transportation crises. One community health center lost approximately 1500 clients because its primary care practitioners were not included on the Medicaid managed care list. Private practitioners who previously cared for Medicaid and uninsured patients predicted that would not be able to continue seeing uninsured patients because of reduced Medicaid payments.

The crisis in mental health care was particularly severe. Because New Mexico became one of the few states that did not "carve out" mental health services from Medicaid managed care, the contracting MCOs initiated strict cost control measures in collaboration with their behavioral health organization subcontractors. The study found the approved level of care was so limited that some providers ceased to give coverage because of potential liability issues. Ultimately, some 60 mental health operations ceased to exist in the wake of Medicaid managed care.

Most states have moved away from MCOs in rural areas because of such factors, Waitzkin said. "The safety net providers in New Mexico are more fragile now than before the advent of managed care in Medicaid," he said. "We believe it is important to take note of this at a policy level."

Further, there is evidence that the reforms have done nothing to address problems of care for the uninsured. "To some extent, the focus on Medicaid MCOs has diverted attention from this group, who continue to face major barriers to access," said Waitzkin. "Yet ultimately, the cost of caring for the uninsured will affect the resources that are available within the state to treat all patients."

Contact: Cindy Foster, 272-3322

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