A news service for the people of Michigan from the Mackinac Center for Public Policy

As of Oct. 1, Michigan doctors and medical facilities will be receiving less for treating children who are in the MiChild program, which is the State of Michigan's health care program for uninsured children of working families. According to the Michigan Department of Community Health (MDCH), 37,503 Michigan children are currently covered by MiChild.

“This came out of the blue and at a glance looks pretty benign. But actually it's very significant,” said Dr. Megan Edison, a pediatrician in Wyoming, Michigan. “Low reimbursement rates are really having a negative impact on those in the vulnerable portion of our population. That's why the whole thing with Medicaid expansion is wrong. And it's really too bad because there are things that could be done to improve care for these people.”

“The quality of care falls off with a lower reimbursement rate,” Edison added. “It affects the quality of the doctor and the doctor-patient relationship. Most private practices are no longer accepting new Medicaid patients. That means an increasing number of the people on programs like Medicaid, with low reimbursement rates, are going to end up being treated either in the emergency room or at regional clinics. That's not the same as having your own doctor with whom you develop a relationship.”

Sen. Bruce Caswell, R-Hillsdale, looked into the situation after being informed of it by Capitol Confidential.

“This is connected with the change we [the legislature and Governor] made to Blue Cross Blue Shield of Michigan (BCBS) earlier this year that allowed them to convert to a mutual health insurance company,” Caswell said. “As part of their societal responsibility, Blue Cross has been subsidizing the MiChild program. Now, apparently, that's coming to an end.”

“What's happening is that they (MDCH) are moving these kids to a Medicaid HMO (health maintenance organization),” Caswell continued. “The change will result in a lower reimbursement rate. Blue Cross will continue to do some subsidizing of the program, so the reimbursement rate will be somewhat higher than the Medicaid rate but lower than the Blue Cross rate.”

The legislation to which Caswell referred was a two-bill package, Senate Bills 61 and 62), which allowed BCBS to convert to a “mutual insurance company” and make it subject to the same regulations as regular health insurers. The measures were passed by the legislature this past winter and signed into law by Gov. Rick Snyder on March 18. Both bills were passed 92-18 by the House and unanimously by the Senate.

When asked to comment on the change to the MiChild reimbursement level, MDCH spokesperson Angela Minicuci focused on the fact that the reimbursement rate for those in the MiChild program will still be higher than the rate paid for children covered by Medicaid.

“We are currently in the process of transitioning children in the MIChild program from BCBS into the Medicaid Health Plans,” Minicuci said. “Beginning October 1, the Medicaid Health Plans will receive monthly capitation (rate) payments for these children which are significantly higher than they receive for similar children on Medicaid, though not as high as the BCBS rates. These rate payments will enable Health Plans to reimburse hospitals and other providers at amounts higher than Medicaid rates.”

Capitol Confidential asked Edison if – due to the impending approach of Obamacare – people should expect to see continuing reimbursement rate declines in government-provided health care coverage, such as the one taking place with MiChild.

“Absolutely,” Edison said. “Almost everything is very much in flux. If you are a doctor, from year to year you don't know if you are going to be paid at the same rate or whether it will be cut. And there doesn't seem to be anything we can do about it.”

“There was a court case in California over reimbursement rates, where the California Medical Association took it to court and it lost,” Edison continued. “Basically, the Obama administration has sent the signal that there are really no restrictions on how low reimbursements can get. Imagine if we did that with bridge cards . . . Imagine if the store didn't know what percentage of a purchase would be covered. No business could operate that way – but that's what we're doing with our health care system.”

BCBS was contacted and declined to comment.

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See also:

CapCon Medicaid Coverage

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