Rodney C. Osborn, M.D.
President – Illinois State Medical Society
Senate Public Health Committee Testimony
March 11, 2008 – 1:00 p.m.
Capitol Building – Room 400
Good afternoon Senator Garrett, Members of the Senate Public Health Committee. I am Dr. Rodney Osborn, current President of the Illinois State Medical Society and an anesthesiologist practicing in Peoria. ISMS represents 12,000 member physicians practicing in all medical specialties throughout the state.
It is an honor to speak before you on such a timely and critical piece of legislation, Senate Bill 2173, which is aimed at improving access to Illinois’ health care safety net programs, Medicaid and All Kids.
I’d like to quote a statistic that demonstrates doctors’ dedication to providing care for the less fortunate. The American Medical Association estimated that nationally in 2007, the average doctor provided approximately $58,000 annually in uncompensated care – about 7 and a half hours per week of “free” care to patients in need. This included both charity care and bad debt we were unable to collect for our services.
Historically, doctors have been a vital part of the safety net for many uninsured Illinoisans as well as for those depending on Medicaid and All Kids for their care. But several, steadily escalating pressures threaten our ability to provide the same level of charity care and Medicaid participation.
The cost of practicing medicine has risen by more than 30 percent over the last ten years. Except for a 5 percent increase in 1999 that was immediately rescinded the next year due to state budget reductions, Medicaid rates have remained largely stagnant.
In response to a more recent lawsuit, the court found that the Medicaid fee schedule was so low that it impeded access to care. In response, Medicaid increased reimbursements for 12 pediatric-related services in primary care. Unfortunately, these very selective reimbursement adjustments do not even begin to address the urgently needed rate increases for all specialty services, including general medicine.
In a 2003 study by the Kaiser Family Foundation, Illinois ranked 42nd among states in terms of Medicaid rates, when viewed as a percentage of Medicare. The Illinois Medicaid program reimburses physicians on average only 56 percent of what the federal Medicare program pays for the same care. In many cases, this reimbursement amounts to approximately one-third of the actual cost of providing care, meaning that Illinois physicians are actually subsidizing the state government program.
While Medicare reimbursements are higher than Medicaid, they, too, have not kept up with inflation. Even worse, they’re scheduled to decrease by more than 35 percent over the next several years, starting with 10.6 percent in July, unless Congress changes the payment formula.
Also adding to this problem is that many private payers base their reimbursement rates on Medicare, and therefore Medicare cuts could also lead to rate-cutting by private payers. Already, private payers aren’t keeping up with physician practice inflation and the increased premiums the companies are charging to cover increased health care costs aren’t going to increase physician reimbursement.
In the past, physicians have treated Medicaid patients by absorbing the losses themselves. Yet severely low Medicaid rates, the scheduled drop in Medicare rates, and the corresponding drop in private payer reimbursements would provide doctors limited, if any ability, to make up the difference. Each program must carry its own weight.
The sad fact is that Illinois physicians face very difficult choices due to inadequate Medicaid reimbursements. Whether these choices include limiting the number of Medicaid patients or dropping out of the Medicaid program altogether, many doctors are struggling with their desire to provide care for all versus the stark reality that they still need to pay office expenses like rent, staff salaries, medical liability insurance and medical equipment. Medical practices are small businesses that must survive economically, if doctors are to be available to provide care.
Members of the Committee: without increasing Medicaid rates, we’re risking patients’ access to care in Illinois. While as physicians, we’re strongly committed to serving those in need; we cannot continue to do so when our practice expenses increase far more rapidly than Medicaid reimbursement. We’re also very concerned that Medicaid expansion programs like All Kids and Family Care will be nothing more than an empty promise without Medicaid rate reform. These program expansions will grant coverage “in name only” if abysmal Medicaid reimbursement rates continue – because patients won’t be able to find participating doctors to care for them. We’ve heard reports that this is already starting to be a problem. Many legislators in this room today have heard from their constituents who cannot find physicians in their local communities willing to participate in these state-sponsored programs. Even though thousands of physicians may be “enrolled” in the Medicaid program, this does not mean that they are accepting patients on a regular basis. This problem cuts across all specialties and all areas of the state.
Before I close, I’d like to also point out that doctors aren’t the only ones concerned about insufficient Medicaid rates. Both the legislatively-appointed “Adequate Health Care Task Force” and the “Legislative Joint Task Force on Rural Health and Medically Underserved Areas” have recommended significant increases in physician reimbursement as a means to increase patient access to care and attract more physicians to Illinois.
Thank you Chairperson Garrett and Committee Members for giving me the opportunity to express our concerns. Illinois doctors are committed to helping Medicaid recipients. We want to see everyone covered by insurance and have access to the medical care resources they need. But in order to meet these goals, we must first keep the promises and obligations we’ve made in the current Medicaid program – something this state has not done for a very long time. I urge your support for Senate Bill 2173, as a significant step forward. I’d also especially like to thank the bill’s sponsor, Senator William Delgado, for introducing this much-needed legislation.
Thank you. Now I’d be happy to try and answer any questions the Committee members may have.