Medicaid Provider Rate Cut Being Implemented Oct.1

NC Medicaid has announced their proposed State Plan Amendments to save over $200 million from medical services and goods over the next two years.  In order to achieve $76 million of this savings this year, NC Medicaid will make a 9% cut to all but 89 specific codes  used by physicians and other providers caring for Medicaid patients.  The changes took effect October 1, 2009.

The Medicaid codes that have been protected will continue to be paid at 95% of Medicare.  The other codes will be slashed to an average of 86.5% of Medicare rates.  Hospitals that are not owned by the State of North Carolina will also be impacted with a 6% cut to their DRG. 

The decision to go in this direction is in part out of necessity and in part an attempt to protect the already fragile Medicaid provider network.  A vast number of billable services and providers are exempt due to legislative authority or federal funding stream before the targeted savings could even be discussed.  The savings has to be made up with only nine months remaining in the budget year.  This combination of exemptions and reduced timing has increased a 3% average impact to a nearly 5% average impact on the provider reimbursement rates.

NCMS and other physician groups have met with numerous state officials and offered complete accessibility to physicians for a dialogue about the proposed cuts.  This level of cut to the provider rate services was not discussed in advance.  NC Medicaid is providing just a one day notice of a cut that has the potential to end services for the most needy of our population.  View the news release here

According to the Department of Health and Human Services (DHHS) almost 2 million recipients receive needed health and medical services through this program.  While some physicians may be able to choose whether to serve the Medicaid population, other physicians carry a disproportionate share of indigent patients within their medical practice.  This impact is most often felt in the rural areas of North Carolina.  Physician offices in those areas are dependent upon these rates to provide adequate staff and up-to-date technology and services to their patients.  When cuts like those announced by DHHS today, physician offices with a majority of Medicaid patients will be faced with closing their doors and sending those patients to the local emergency department or to other providers in the more urban areas.  Either way, patient care for the poor will be damaged.

 The NCMS strongly opposes this cut.   NCMS needs you to carefully analyze the codes that are attached and provide us with the real life stories of how physicians and your patients will be impacted.  We need to hear from you directly in order to accurately portray this impact.  Please direct your comments to Chip Baggett at [email protected]


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  • Adele Evans, MD, FAAP

    I practice at a tertiary care facility; I practice in pediatric otolaryngology. My patients are children, who are not responsible but suffer the consequences of their parents’ and the governments’ decisions regarding healthcare. Most of the problems for which I provide care impact the long-term productivity of my patients through their speech and language skills acquisition, hearing and processing in the classroom, etc. Additionally, many have working parents but multiple congenital impairments that overwhelm private insurances. There is no way for us to expand the reach of our care to positively impact our society if we are at the mercy of an system that doesn’t cover the basic costs of the care that is indicated. As an academic institution, we will never stop seeing Medicaid patients. As the economic crisis peaks, more of our patients will qualify for Medicaid. But our means by which to access important services, such as authorization for surgical intervention or coverage for hearing aids, will absolutely be jeopardized. I don’t know to help my patients, but I echo all calls to action and to open dialogue.

  • Robert Wein, MD

    After much discussion our group has decided to continue accepting Medicaid Ob and Gyn patients for now. The precertification of ultrasounds and the necessity to check all Medicaid cards on line to see what medicaid program an individual is on (to see what services are “covered”) will require more front office time and effort. I am still very unhappy that medicaid has decided to penalize the providers who voluntarily have decided to accept medicaid patients.

  • Frank Frenduto, MD

    I have read the comments below. I have been in the Durham area for 11 years. We have always taken Medicaid patients for OB care. With this cut we will have to consider stopping this practice secondary to not being able to cover our expenses with this population.

  • Heston LaMar, MD

    The article quote “sending those patients to the local ED” is such a poor thing for the health of these patients and our emergency care system.

    Medicaid patients are already by far the largest users of the ED of any population (nationally 82 visits per year per 100 Medicaid patients!). EMTALA mandates that the ED evaluate everyone and thus that financial strain is the reason there are less EDs today than 10 years ago. Hospitals and EDs cannot bear unlimited federally-mandated care with dwindling state level reimbursements that didn’t even cover the costs before these new cuts.

    Also, lawmakers need to realize that residency-trained EM physicians are NOT trained in preventative and maintenance healthcare. We are trained to diagnose or rule-out the emergencies and move on to the next patient in line. We may treat many non-emergencies along the way, but the ED is no substitute for good primary care and thus harms patients when they have to use it as so.

  • Robert Wein, MD

    Henry–I agree with you. It was my idea for our practice to start accepting Medicaid about 15 years ago–“because it is the right thing to do”. BUT, this sudden rate cut is a “tax” on providers who provide services for medicaid patients. In our case (a large OB practice) the extra burden of precertification of ultrasounds is also especially timeconsuming. If medicaid is short on money, then let them get more funds and pass the “tax” onto everyone. As of this morning, our practice has stopped accepting new medicaid Ob and Gyn patients.

  • Sherry Rowe

    It seems as if Medicaid expects providers to pay out of pocket for Medicaid. Providers have to pay to participate in a program that their tax dollars pay for, then pay every 3 years to continue, pay staff to verify eligibility daily, etc. Medicaid requests pre-certs for OB ultrasounds 15 days in advance, this will put patient’s and their babies at risk. I was at a Medicaid seminar and was told Medicaid doesn’t even have a login to the out-sourced vendor for pre authorizations. How is that possible?!?
    One of the only things a patient was responsbile for was to bring an updated card, per Medicaid, they don’t even have this minimal responsiblity.
    Our practice has already had patient’s with Emergency Medicaid present their card to other providers or other services just because the card states the date issued, not the covered dates.
    Medicaid has opened pandora’s box!!!

  • R T Barowsky, MD

    Medicaid patients typically have the highest no show rate of all groups of patients we see. This impacts our ability to provide timely care for all of our patients. Now I’m expected to accept less and continue to deal with a high no show rate or just significantly restrict access to my office for all Medicaid patients.

  • Linda Jones CMA

    I do not understand why the government cannot comprehend that physicians have to factor in reimbursement verses cost in making decisions on patient (insurance) mix. We cannot run a practice in the negative. This cut will negatively impact most physician practices and there is no way that it will not unfortunately hurt those most in need.

  • Henry A. Fleishman,M.D.

    I will continue to see Medicaid patients because it is the “right thing to do.” However, the state of NC should require female patients of childbearing age to take mandatory Birth control. Patients on medicaid should have to go to mandatory classes on how to live healthier lives,, smoking cessation, weight loss.etc.
    Also, The state of NC should give physicians who care for Medicaid patient a rebate on their liability insurance premiums.

  • My staff already spends a disproportionate amount of time and energy dealing with Medicaid patients. They are as a group less compliant and require more monitoring, higher no-shows for appointments, etc. Many practices already do not accept Medicaid patients. This reduction in reimbursement will necessitate further restriction in the number of Medicaid referrals accepted to my practice. I am considering resigning my Medicaid provider status.

  • This is written in response to Dr. Wright’s post asking about the procedure for releasing patients from a medical practice. The NC Medical Board has issued a position statement that contains specific guidance for licensees who need to release patients from their practice. Please visit:

    Alternatively, visit the NC Medical Board website at, click on the Professional Resources tab, then click on Position Statements. Near the bottom of the list is a position statement entitled The Physician Patient Relationship. Guidance on releasing patients is at the end of that document. I hope this is helpful. Steve

  • Jeff Wright, MD

    Clearly, many of us will stop seeing Medicaid patients. My concern is how rapidly this cessation can be implemented ethically. Does NCMS have some guidance regarding how much warning we need to give to our health departments, etc., who refer us Medicaid patients? Is two weeks appropriate? A month? Just because we are being treated unfairly does not mean we can abandon our professional ethics on this issue.

  • The state gets a 3:1 federal match for Medicaid spending. This is much higher than usual and was increased by Obama to encourage states NOT to balance their budget with Medicaid cuts. Apparently NC did not get the memo. If $200 million in state funds are “saved”, then $600 million in Federal Funds are “lost”. By spending $200 million, the state would have an opportunity to tax $200 $600 = $800 million in income. And since money spent in the state circulates several times, NC could have taxed that $800 million several times and more than made up the “savings”. How can this be a good thing for Medicaid patients, doctors, or Tax Payers???

  • Michael March, MD

    I sympathize, Dr. Wein. I agree that Medicaid recipients cost my office and I in time, resources and risk more than my average patient.

    However, I render care to patients receiving welfare coverage funded by productive Americans(Medicaid)as a form of charity. I count on a loss. I manage to make overhead and payroll with my still-barely-adequate private-payer remunerations.
    The punch line is that HR 3200 and the Baucus bill would make these reduced Medicaid payments look exhorbitant. And the govt will be the ONLY GAME IN TOWN if and when the socialists have their way. That is when being a physician will become impossible, except for those who enter college with a silver spoon in their mouth.
    (aside: I saw a patient on Medicaid today who spoke cheerfully of spending $600-$700 on new baby items. That is half way there for Medicaid global OB reimbursement!! I have other and more egregious anecdotes).

  • The Medicaid population remains the most non-compliant overall of my patient population. They require more monitoring for prescriptive drug diversion and as a group are discharged from my practice more often for such violations. My clinic spends more time and resources in comparison to my other patient populations for the already low reimbursement. This cut in reimbursement is in opposition to the direction that it should be going for the resources spent on their care. This will force me to reduce the number of Medicaid patients I see and direct the energy of my staff in a different direction.



  • David Schutzer, MD

    I am an Ob and have already stopped taking new Medicaid patients. I will have to limit the number of existing Medicaid patients that I care for since reimbursement does not cover my expenses for these patients. I am afraid that in Cumberland County (where I practice) these cuts will result in significantly reduced access for Medicaid patients who will then end up in our already over crowded emergency department. This would then result in increases in preterm birth and neonatal morbidity which in the end will increase cost to the State.

  • Edward Lewis, MD

    These cuts will certainly end our ability to care for Medicaid patients. Our practice is currently the only multidiciplinary pain practice in western NC taking Medicaid patients.The need for this pain management care is imperitive for this most difficult pain population. I fear that without adequate expert care from such a clinic these patients will only get treatment from the less qualified/experienced – I suspect that opioid use and misuse in this population, already epidemic in some areas, will become significantly worse.

  • Quoc-Anh Thai, M.D.

    The current Medicaid reimbursements are already meager and already represent a loss to my practice. Therefore, further cuts will make it unsustainable. So, we will not be able to see Medicaid patients starting on October 1, 2009. Unfortunately, that means that Northeastern NC and the Outer Banks will no longer have access to neurosurgery care.

  • Kerry Willis

    I realize that this is a significant impact for many practices with high medicaid populations. These cuts were mandated by the legislature with advice to preserve access to primary care services. What alternative does DHHS have?

  • Quoc-Anh Thai, M.D.

    Medicaid reimbursements currently already represents a loss to my neurosurgery practice. So, this abrupt cut is not sustainable. Unfortunately, we will have to stop seeing Medicaid patients effective October 1.

  • Marcy Powell, MD

    We already get reimbursed very poorly for the care of Medicaid obstetric patients even though they are at higher risks for complications of pregnancy. We get reimbursed a global fee and it does not take into account the amount of time and overhead it takes to care for an obstetric patient including but not limited to office visits for routine care, problem visits, the time in the hospital often times including several days of intense care during an induction of labor, and malpractice insurance. Less reimbursement means we will likely need to reduce the amount of Medicaid patients our practice accepts. This in turn means even more limited access to prenatal care. This then turns around into poor pregnancy outcomes and finally, more expense on the system to pay for a child with prematurity or developmental problems. This in the long run will actually cost the system more in my opinion.

  • Robert Wein, MD

    Very likely that my Ob practice will cut back significantly on Medicaid OB. Most Medicaid Ob patients are higher risk, require more time and effort, and more office and hospital visits and the current reimbursement is much less than the average from other payors.