The drug treatment quandary

Medicaid expansion change an example of unintended consequences


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Governing a state can be a complicated business. Often there are competing objectives and goals in setting public policy and unintended consequences of otherwise well-intentioned actions.

Recently, the issue of providing adequate Medicaid rates for drug abuse treatment facilities demonstrated this fact and threatened the provision of services.

What happened when the Legislature reauthorized Medicaid expansion in the recently concluded legislative session created an unintended consequence in a very complicated situation.

In the first Medicaid expansion two years ago, the additional people covered had their Medicaid coverage handled by insurance companies. Therefore, when they needed drug abuse treatment, the rates paid for their care were those negotiated by the insurance companies, in the range of $400 to $500 a day for inpatient services. The regular Medicaid population was provided services at a rate of about $150 a day.

Under the 2018 reauthorization of Medicaid expansion, all Medicaid patients are now going to be served by managed care organizations (MCOs), which administer Medicaid benefits generally, and the assumption is they will use the rates that they have used for the general population, the lower rate. As a result, the facilities serving both the expanded and regular Medicaid populations will receive the low rate, far below their average daily cost of providing the services, which is approximately $275 a day.

Formerly, the additional money provided for the Medicaid expansion population subsidized the rates being received for the regular Medicaid population and the facilities had sufficient funds to operate the over 300 inpatient beds in New Hampshire.

If not fixed, the result is a situation in which Medicaid recipients, who are the majority of those needing inpatient drug abuse services, either will not be served by the facilities or will cost the facilities such an amount of money that they will be forced to close or reduce the number of beds available. All this in the face of an admitted drug crisis which all parties want addressed.

On June 12, a consortium of providers held a news conference to highlight the danger facing the state if this unintended consequence is not fixed. They made the case forcefully that in a state facing an opioid crisis as severe as anywhere else, or worse, this situation will result in fewer services being available, more people dying, and the potential that facilities will have to “cherry-pick” those who get services, picking those with private insurance over those with Medicaid, a potentially life-and-death decision.

The news conference got a great deal of publicity. HHS Commissioner Jeffrey Meyers estimated that the amount of additional money needed to fill the gap between the rate that has been published, $162.60 a day, and the cost of providing services of $275 a day, is $10 million per year, given the present number of beds available.

In a budget the size of New Hampshire’s, $10 million, while not a trifling amount, is relatively tiny and, in a state with a budget surplus and HHS funds that will lapse and be returned to the state treasury at the end of the fiscal year, assumedly quite easy to find.

Other possible ways to solve the problem include the MCOs negotiating an acceptable rate, which would be more difficult.

At the press conference, Manchester Mayor Joyce Craig made it clear that the Medicaid expansion legislation also included a provision that required setting “adequate” rates to address the problems the opioid crisis presents. Since this was in the public policy passed by the Legislature, assumedly it intended that the rates be adequate to keep the services alive, and HHS should set them at the level required.

All branches of government, from Governor Sununu’s office to Commissioner Meyers to legislators informed of this issue, agree that they were not aware that this situation had been created when they passed Medicaid expansion, and all expressed the desire to fix the situation and keep the services alive.

The challenge is to make sure that the politicians and administrators back up their expressed intent with action so that this unintended situation gets an intentional solution.

Brad Cook, a shareholder in the Manchester law firm of Sheehan Phinney Bass & Green, heads its government relations and estate planning groups. He can be reached at bcook@sheehan.com.

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