Michigan health chief: Medicaid work rules will drive up uncompensated care, cost lives

July 19, 2019

The state's top health official predicted Thursday that Michigan's forthcoming work and employment-reporting requirements for low-income adults on Medicaid will lead to more uncompensated care for hospitals and lower life expectancies.

Robert Gordon, director of the Michigan Department of Health and Human Services, said his agency is trying to take proactive measures to educate the nearly 680,000 low-income adults in the Healthy Michigan program about the Legislature's work requirements that go into effect Jan. 1, 2020.

"It would be easy for me in my seat to say, 'This is not our fault, it is not our problem, just let the chips fall,'" Gordon said during an appearance at the Michigan Association of Health Plans' annual conference at the Grand Traverse Resort and Spa.

"We want to communicate exactly the opposite of that: It is our problem, it is all of our problems. We all know that without insurance, there will be more people in emergency rooms, there will be more uncompensated care costs. More importantly, there will be more people suffering and more people living less long than they should."

Gordon shared the stage Thursday at the MAHP conference with Anita Fox, director of the Department of Insurance and Financial Services, for a joint interview conducted by Crain's Senior Editor Chad Livengood.

Fox and Gordon addressed a range of topics and issues affecting the state's health insurers and medical providers, from multimillion-dollar information technology challenges at both state agencies to an ongoing study of creating a state-run reinsurance pool for high-risk, high-use medical users.

But the biggest looming issue facing the state's health insurance companies that operate Medicaid managed care plans for the state is the specter of tens of thousands of Healthy Michigan enrollees being thrown off the program next year for failing to meet the new work requirements.

Democratic Gov. Gretchen Whitmer has opposed the Republican-controlled Legislature's mandate requiring able-bodied Medicaid recipients ages 18-62 report at least 80 hours a month of work or job-training activities to the state in order to keep their taxpayer-funded health care.

The law provides exemptions for pregnant mothers, adults caring for children under age 6, people with disabilities, caretakers of disabled dependents and individuals with a medical condition that prevents them from working.

During his opening remarks, Gordon said the administration is "trying to stop something really bad from happening."

Gordon later said the department is "working day and night" on educating Medicaid recipients on why and how they will have to go about reporting their efforts to work at least 20 hours per week, find work or get retrained.

State officials have studied lessons learned from Arkansas' roll-out of Medicaid work requirements, which resulted in more than 18,000 low-income adults or 7 percent of the expanded population lost their insurance. At a 7 percent loss rate, that would amount to nearly 48,000 Medicaid recipients in Michigan.

"We're trying to make the process as smooth and reduced friction as possible," Gordon said. "What we know from other states is that people don't comply with these requirements, not because they're not working … because they don't know how."

Last month, the Senate passed a bipartisan two-bill package that would curtail some of the reporting requirements for Medicaid recipients.

A bill sponsored by Sen. Curtis Hertel Jr., D-East Lansing, would change the day for Medicaid recipients to report their work hours from the previous month from the 10th day of the month to the last day.

Senate Majority Leader Mike Shirkey, R-Clarklake, sponsored the second bill that would create an exemption for the monthly reporting requirement if DHHS has other data to confirm the individual is working, such as a pay stub from income-verification requirements.

"It is a credit to supporters of work requirements that they acknowledge this need that it will move us away from forcing somebody who's working, where we have their data, to also report," Gordon said. "We'll just be able to move them into the exemption pile."

Gordon said the department is developing "a simple process" for Medicaid recipients to report their working status by automated phone or online.

DHHS plans to mail every Medicaid recipient a letter explaining the mandate as well as sending them text messages, though Gordon said "these tools that we have are of limited effectiveness."

Whitmer has asked the Legislature for $10 million to fund a public education campaign about the work requirements. With less than six months to go before the work rules go into effect, the GOP-run Legislature has not yet approved the funding request.

But the state officials acknowledged even a public awareness campaign could have shortcomings.

"You can write all of the content in the world, you can put it up on websites, we can have apps and if it doesn't reach the right group of people in the right time ... it doesn't matter," Fox said.

Fox encouraged health insurers to educate Healthy Michigan enrollees on the work requirements.

Surprise billing

During the hourlong interview before about 400 attendees at MAHP's annual conference, Fox addressed the emerging issue of so-called "surprise" and balance billing practices by hospitals that send patients bills for out-of-network support services such as the anesthesiologist, the radiologist or an ambulance service.

The state insurance department wants to lower the rate of billing disputes it has to arbitrate between insurers, medical providers and health care consumers, Fox said.

One potential legislative solution insurance companies are advocating for is to set a fee schedule based on a percentage of Medicare rates for out-of-network providers who perform work at a hospital but are not part of a negotiated network with the insurer.

"It is a problem and it is going to be addressed one way or another," Fox said. "... If we can't come to an agreement about how to allocate it between us, let's have the Legislature do it so at least the results are clear."

This article was originally published in Crain's Detroit Business. Read more here.