Be afraid. Be very afraid.

A Massachusetts Taxpayers Foundation report on State and Local Finances concludes that tax revenues have been sinking like a stone (a $2.62 billion reduction in tax revenue from FY08-09), with a FY09 $4 billion budget gap that was mostly filled by using the rainy day fund, stimulus dollars and other one-time funding sources. Rainy day funds now stand at under $800 million, as FY10 continues the financial slide. We entered FY10 with a $4.8 billion structural deficit, filled by $2 billion in spending cuts, more use of stimulus dollars and further spending down of the rainy day fund, along with the increase in the sales tax. Even this is not enough. We’ve all been told to expect 9C cuts (the cuts governors are required to make if tax revenues don’t keep up with budget projections) later this month, due to continuing tax revenue declines.

But what is even more frightening is MTF projections on FY11. With even fewer rainy day and stimulus dollars available, MTF forecasts a $2.775 billion deficit.

So, coming into next spring’s state budget season, what can we expect? We’ll have arrived in gubernatorial election season, and with Massachusetts having joined New Hampshire with gubernatorial candidates all taking the “pledge” of no new taxes, we’ll have Mihos, Cahill and Baker all talking about how they’ll cut taxes and how they’ll find waste, fraud and abuse to make up the difference, positioning Gov. Patrick to also be against new taxes. The press releases will focus on how each candidate will solve the budget crisis without new revenue, with all calling one another on specifics of what they’ll cut to balance the budget.

What will it mean for health reform? Health care is the single largest part of the state budget. FY2010 sees the safety net system in deep trouble, with Boston Medical Center, Cambridge Health Alliance and many other Disproportionate Share Hospitals (hospitals that see a high percentage of poor patients) bleeding red ink, the Medicaid managed care HMOs in trouble and all spending whatever reserves they have to stay afloat. It is very doubtful that Congress will authorize another stimulus fund bailout, and how many one-time revenue sources still exist?

Whatever else health reform has done, it has proven that patients with insurance cards will not abandon their usual sources of care. Both the safety net hospitals and health centers have been booming with new patients, even as they lose money. The primary care system is saturated, and newly insured patients are having a great deal of difficulty finding primary care doctors to see them. If the state’s solution to health cost (the global payment system) is going to work, it needs comprehensive systems that work well treating the sick, and preventive and health maintenance systems that help the well stay that way. Dismantling the safety net will do neither.

The question for our prospective gubernatorial candidates is: what will you do to ensure that the systems of care used by those affected by health reform are not dismantled?

Sound familiar?

In the 90’s, the system that is now being called a “global payment system” was largely represented in what was called “capitated managed care.” It required a transference of power from hospitals and specialists to primary care providers, and required primary care systems to invest in lots of technology and support services to effectively manage care and cut down on cost while ensuring quality care.

The problem with this type of system was manifold. The primary care system has never been funded well enough to allow for such expensive support systems to be created. As a result, many primary care organizations that decided to sign on to the capitated insurance systems didn’t have the infrastructure to succeed and just flew blind. The two risk products that Codman Square Health Center signed on to eventually presented such high risk spread over only a few hundred patients that it became financially foolish to stay within that system. In one case, a patient covered by a capitated system who had experimental surgery wiped out the entire year’s funding for all patients in that insurance.

This form of managed care didn’t catch on and eventually disappeared. The only good thing that came out of it in the case of Codman Square Health Center was the decision to create a management services organization with the Dorchester House, now called DotWell, which has created a high quality IT/EHR (electronic health record) system and provides lots of support to both health centers as we tackle the many problems in the health care system.

The Globe article on the new proposed “global payment” system said that, to be successful, primary care doctors, specialists, hospitals and other parts of the system will have to form “accountable care organizations (ACOs)” and patients would choose primary care doctors to manage their care through these organizations, with insurance companies paying an annual capitation to cover it all.

What’s different this time that might make this effort successful? I’ll comment on the part of the system I know best – primary care, which is the core element of the new system. On the positive side, most health centers (though apparently not many private PCPs) have EHRs, which would make data collection much easier, though the state’s experience with GIC tiering has exposed lots of problems with using such data to make decisions on how providers are paid.

The bigger problem is that primary care providers are at the bottom of the medical totem pole. The American health care system has been pushing the creation of specialists for so long that in a recent survey only 2% of medical students said they were planning on going into primary care. In short, there are too few primary care doctors, and the number is in decline.

Beyond that fact, although primary care providers have been working to create aspects of a system that might work, such as helping to create the “medical home” concept, and experimenting with new ideas such as group holistic visits for patients with similar chronic diseases, the notion that health care’s powerful interests, such as hospitals and specialists, would willingly allow the kind of power transfer that would put the dollars in primary care hands is not credible.

Because primary care providers by and large do not exist in practices large enough for them to take on the huge risk anticipated in this system, it is the “accountable care organizations,” that would hold the contracts and therefore the power. Under capitated managed care, many hospital systems attempted to control the primary care system via purchase of them. Remember all the purchases of primary care groups in which the primary care doctors sold their interest in their practice for, in some cases, a lot of money, then went to work for the system that purchased it the next day?” In the proposed global payment system, I’d guess that ownership will not be necessary, and the most likely system would be to create vertically integrated systems, with control over the actions of the providers through the purse, a bit like creating multiple private single payer systems aligned to large institutions and controlled by payment agreements.

Though these payment agreements will not be difficult to develop once it’s clear that the money will be allocated via the ACOs, the big problem will continue to be the lack of primary care providers and their ability to exert control over the services that are delivered to patients. This is where the struggle will be, and unless the system reverses its direction to create fewer specialists and more primary care doctors, the goal of the global system will not be reachable. Other countries control costs by having the government decide what is covered and what is not, but in our state and country, it looks like our officials have decided to do this via managed care through primary care doctors.

I think it will take a lot longer than 5 years to create this system, if only because it will take a lot longer than that to change directions in how doctors are trained. We’ll know the state is serious when you see the average salaries of primary care doctors equal the average salaries of specialists, and when you see primary care organizations getting funded well enough to create the infrastructure to manage managed care.

Considering the fact that the health care system won’t even pay the cost of delivering care to the poor (BMC gets 64 cents on the dollar caring for the poor), I think we’ll be waiting quite a while for the new system to take effect.

Bill Walczak
CEO, Codman Square Health Center

The Boston Department of Health and Hospitals, under enlightened leadership from people like Lewis Pollock, encouraged communities to start their own health centers. In addition, a number of urban hospitals, through the encouragement of the Sackett Plan (named for previous Health and Hospitals Commissioner Andrew Sackett), worked with community groups to help them start health centers. Availability of federal funding also encouraged the formation of health centers. Eventually 28 health centers were created in Boston (26 remain). Because of these different methods of formation, three different types of health centers emerged, all providing similar medical services but with different funding models. These were: hospital owned/licensed health centers, which operate as departments of the hospitals that own them, but have community boards that help direct their missions; independently licensed health centers with community boards that direct them, and which typically receive substantial federal grants; and a hybrid model which can be called the Boston Medical Center (BMC) licensed but community owned health centers. The BMC centers are part of the original intent of the Sackett plan, and developed similarly to the other health centers, but with funding sources that filtered through BMC (and before BMC, through Boston City Hospital and the Department of Health and Hospitals).

Despite the differences in the origin and the funding sources of the various types of health centers, health centers developed similar systems for providing services and have similar cost structures. This means that most health centers, regardless of how funded, generally pay staff around the same amount of money, have similar management and medical care staffing, and productivity. The package for funding the health centers might differ, but most cost about the same (per visit) to operate. On the revenue side of the equation, reimbursement for services is generally lower than the cost of providing services and so health centers need a source of subsidy to balance their bottom lines. The three types of health centers receive their subsidy for operations from various places, and most have been able to break even over the years.

Health reform has had a big impact on health centers, but a huge impact on the BMC centers. Over the years, the uncompensated (free) care pool became the largest single source of subsidy for the BMC centers. So when Chapter 58 eliminated the system for free care pool reimbursement to BMC, it eliminated it for the BMC health centers too. This has created the current crisis for BMC and the BMC health centers. (Cambridge Health Alliance and its health centers have been harmed by the same dynamic.)

Why? Because the reimbursement for services in the new system brought about by Chapter 58 doesn’t cover the cost of service. While other hospitals can shift the cost to private payers, and other health centers have larger federal grants or hospital resources to sustain them, BMC (and Cambridge) don’t have sufficient private payers to shift cost to, and there is no permanent replacement planned for the free care subsidy (or it’s successor Section 122 funding) for BMC and the BMC centers.

The State EOHHS has acknowledged that the BMC centers’ problem is the unintended consequence of Chapter 58. And the Boston Globe has editorialized on the need to reverse the decisions which have resulted in such harm to safety net institutions such as BMC. The FMAP money available from the stimulus package has been a partial solution to the BMC and Cambridge problem, but the problem is still very real and looming – the walls come crashing down on October 1 if a solution isn’t found. And the stimulus money is time limited, so even if the gap is bridged, there still needs to be a solution to the long term problem.

So the question comes as to the state’s commitment to institutions that care for the residents who were given insurance through health reform. The people who led health reform knew that the dollars available for health reform were insufficient to pay for the plan. That’s why they claimed that cost control (remember the Health Care Quality and Cost Council?) was equally important for the success of health reform. I hope that “cost control” doesn’t mean slashing reimbursement below the reasonable cost of care and what is needed to sustain safety net providers, as this would cause many of those who were the beneficiaries of health reform to lose their access to care, surely not the intent of health reform.

Bill Walczak is CEO of the Codman Square Health Center, which is BMC licensed but community owned.

This brings us to our 1400 problem. 1400 is the number of patients (out of just over 20,000 seen annually) who don’t have insurance. Health reform has created an insurance system for most of our patients, and most of our patients who don’t qualify for insurance qualify for the Health Safety Net system, the system that replaced the so-called “free care pool.” Despite our best efforts to enroll previously uninsured patients into the new system, we seem to have hit a wall of sorts at about 1400 uninsured patients. Our analysis shows that if we were able to get these 1400 patients into an insurance system or into the Health Safety Net, we could find about $250,000 of that half million we need.

It isn’t easy. The first thing you need to know is that the number doesn’t represent a static group. In other words, some of the number are people who just don’t want to qualify or don’t qualify for the new system, but many others are a revolving door of people who are in insurance then out.

Also, Codman Square grows by about 300 new patients per month, and many of them are uninsured. On Friday, while I was talking to some of our insurance counselors (our fastest growing department), a “typical” new patient arrived in insurance services. Recently laid off from her job, she can’t afford to keep her insurance from her recent job through COBRA (which requires you to pay 100% of the cost of insurance). She is currently on medication and it has run out. One of our insurance counselors had her apply for Mass Health (the way in which eligibility for any of the products for the uninsured is determined). She was asked to bring in information (which could include paystubs, SSI, unemployment check, child support, size of family verification, etc.), and if she does it soon, we will get paid for the services we provided. If not, she will become another source of bad debt. In the meantime, of course we saw the patient.

Codman’s insurance counselors are pleased with the new system of verifying insurance. In addition to being able to apply for insurance through the “Virtual Gateway,” a program called NEHEN allows them to check some private insurances, which ensures that a bill will be sent to the proper insurance, a very big deal when you have a limited amount of time to submit a bill.

The biggest problem, according to the counselors, is a lack of follow up on the part of patients. One counselor said that half of the names on her uninsured list are patients who either don’t respond to eligibility letters sent them by Mass Health, or had insurance but have fallen off. Typically this happens when the state sends an eligibility or renewal letter in the mail, but the mail doesn’t get to the patient either because the patient has moved (many of our patients have different addresses every time they come in) and didn’t tell the state, or the envelope didn’t get to the right address (another problem in low income areas). In many cases, the patient will get the envelope but not open it. This could be because the patient thinks it’s just another bill (nearly all our patients are seriously in debt according to a survey done by the Access Project) or because there’s a language barrier and they don’t understand what they’re getting. Our counselors tell the patients to look for an envelope with purple lettering on it (Mass Health’s envelopes typically have purple lettering) and to bring the letter into the health center so they can be assisted with it. However, if they don’t open the envelope and provide information to the state, their application is terminated or they are removed from insurance.

Patients are also removed from coverage if they are required to pay premiums and fail to do so, and some (especially Caribbean immigrants) stay with relatives in the Caribbean during the winter and allow the insurance to expire.

Codman providers see the patients and Codman insurance counselors try to get the patient to provide the necessary information to allow them to get insured. Unfortunately, many do not and the Health Center’s response is to bill the patients who by and large don’t pay. One counselor told me of an uninsured diabetic patient who owes the Health Center more than $2000 but refuses to bring in information that would allow her to be insured. We continue to see the patient, of course, and continue to ask the patient for her information, and continue to plead for her to get it in, but the patient knows we will see her anyway. So we are a paper tiger – we have to depend on the good will of the patient to follow up and get insurance. “We do a lot of begging,” says one counselor.

Codman Square has just authorized the hiring of an additional counselor to chase after the 1400. We really can’t afford to do it, but we can’t afford not to either. We should bring in three dollars for every one we spend, and that looks good at times like this. We’re just thankful that the remaining 18,600 patients we have are more cooperative.

Bill Walczak
CEO, Codman Square Health Center

Health reform is a very big deal to Codman Square. The impact of it on our patients has a huge impact on our finances and therefore the level of services we’re able to provide to our community. And so we study the numbers that come out of our computers monthly to see trends. The numbers our computers give us monthly point in a number of directions.

Here are some items from our data:

• The number of uninsured is way down – from 49% of patients two years ago to 14% today. Much of that change happened during 2007 and up to March of this year. The overall number of uninsured has been stable since March, 2008. About 2/3 of the uninsured are covered by the Health Safety Net, formerly known as the Free Care Pool.
• Access to insurance seems to have translated into more use of health services. We’re seeing increased demand, about a 10% increase in visits, such that our waiting time for appointments has increased to 3-4 weeks for many services.
• Bad Debt is up over 50% from last year, which was up over the previous year.
• Patients having Commonwealth Care insurance fluctuate up and down, but overall the number is flat since January.

So what does it all mean? Most important, many more people have insurance, and the patients who have this new insurance certainly seem to appreciate it and are using it. But it is also true that it is, as has been pointed out, a “near” universal system. There is still a significant number of people who do not qualify for the new system, or are not participating.

The people who do not or are not qualifying for services are leading to more bad debt. At a health center directors’ meeting recently, many directors said that their bad debt is up. The main reason for this is that the old free care pool covered patients who qualified for it for six months prior to the time they qualified for free care. So, if a patient came in for services without insurance, qualifying for free care meant that they would be covered for the visit that day. In today’s system, insurance kicks in 30 or more days after all the patient’s forms are submitted. And a certain number of patients also seem to allow their insurance to lapse, so that we have to re-qualify them when they show up for the appointments after their insurance lapses. As a result, a safety net provider has to make a decision on whether to see a patient without insurance and not get paid, or turn away the patient until they get insurance or come up with money to cover the service. Health Centers do not turn away patients in need of care, and so they see the patients and do not get paid, which typically turns into bad debt.

The increase in patient demand is putting more pressure on an already overwrought primary care system. This, combined with information from a recent study that showed that only 2% of medical students plan on going into primary care, makes this situation untenable. The notion that new “minute clinics” will alleviate this crisis is foolish. The problem is supply of primary care providers. Creating new access points for a limited number of providers just re-arranges the chairs on this sinking vessel.

Finally, another issue the institutions on the front lines are currently grappling with is the state financial condition. We all know that EOHHS has sent a list of possible 9C cuts (emergency cuts to the budget that the governor can make under certain circumstances) to the governor, and we’ve all heard rumors about where these cuts may hit. The most frightening rumors have the governor cutting safety net programs like the Essential Community Provider fund and Section 122 funding. This would devastate some parts of the safety net system. We also are facing increasing cost from having to add insurance staff to help our patients navigate the various insurance systems, which used to be much simpler and required fewer staff with the old free care pool system. And we’re doing this at a time when the planned increase in reimbursement in Commonwealth Care is expected to be between one half of one percent and two percent. Yes, we may have some scary times ahead.

Bill Walczak
CEO, Codman Square Health Center

The democratic debate for the final two candidates comes down to whether you believe in an “individual mandate,” i.e., requiring individuals to purchase health insurance if they don’t have it through their employer, or if they’re self employed. Clinton’s plan calls for one; Obama’s doesn’t.

In our Massachusetts system, I’ve had a problem with the “individual mandate” in health reform since the legislature dropped a “business mandate” (i.e., requiring businesses to provide health insurance) provision before passing the law. This, combined with the state adopting a methodology for determining insurance rates that punishes you as you get older, can result in the state enforcing a rule that will cause bankruptcy or severe financial hardship for many residents.

My earlier blog entry detailed the effect of this rule on a 58 year old female working as a nurse’s aide in an organization that doesn’t provide health insurance. According to the law, the company employing her, in a worst case scenario, is fined $295. The nurse’s aide is forced to buy health insurance from the Connector, which would cost between 14% and 35% of her income, provided she doesn’t need to actually use the health care system, in which case it will cost more. If she requires hospitalization, it is likely she will have to declare bankruptcy if she chose the plan that costs 14% of her income, because she will be required to pay 20% of the hospitalization cost. If she chose the plan that cost 35% of her income, her remaining wages couldn’t possibly sustain her in Massachusetts.

We know that overwhelmingly the people who choose to purchase health insurance through Commonwealth Choice (the plan for those who do not qualify for subsidy, like the nurse’s aide), choose the cheaper plans. But many more have chosen to not buy into Commonwealth Choice. Chapter 58 anticipated this, and created fines to prompt people to buy into the system.

Everyone who reads the Commonhealth blog knows that this year, a person who refuses to participate will be fined $912 (3% of the nurse’s aide’s income). Perversely, the nurse’s aide will pay this fine, pay state taxes to support the health reform system, and not be eligible for reimbursed medical care.

For those in Commonwealth Care, which insures those who qualify for subsidized health insurance, the problem happens when the insured person either fails to pay a premium (in the case of those who have to pay something), or fails to re-enroll in the system when it “churns” them out (see Christina Severin’s blog on churning). Failure to pay or re-enroll will result in you getting tossed out of health insurance. In the case of the roughly 50,000 people who were put into Commonwealth Care last year without having to fill out forms (users of the Free Care Pool), they are being presented with the requirement to fill out forms they’ve never filled out before. If they don’t fill them out, they lose health insurance. All these people, like the people who don’t pay to join Commonwealth Choice, do not get covered in the event that they use medical services. (Please note: the previous free care system covered people up to 400% of poverty and paid for services retroactively, i.e., they could fill out forms after seeing a medical provider in a hospital or health center and have the service reimbursed, and it did this at a lower cost to the state.)

What happens to these people? They wind up paying out of pocket for basic services, going bankrupt if they need more extensive services, and services provided to them turn into bad debt in places like health centers.

At Codman Square, we’re seeing a rise in the numbers of patients covered by Commonwealth Care, and a rise in uninsured patients producing bad debt. It’s too early to say whether this will continue, or in fact what it means, but if it continues, we’re looking at the possibility of a cash loss of up to a million dollars in this fiscal year. Our mission at Codman Square Health Center, and the law for health centers receiving federal funding, is to provide services to everyone, regardless of ability to pay. I’m hoping that somehow things will work out, but I’m not optimistic.

Bill Walczak
CEO, Codman Square Health Center

Community rating has all but disappeared in the private insurance market, but what is still somewhat surprising to me is that the Commonwealth of Massachusetts also abandoned community rating in setting up the insurance system for Commonwealth Care and Commonwealth Choice insurance plans.

This decision allowed the governor to state last year that it was possible for an individual to get medical insurance for $170 per month. The fine print, however, was that this was the insurance premium for a 38 year old man, and the $170 doesn’t include the cost of deductibles and co-payments.

What it also doesn’t say is that the effort to keep the cost down for 38 year olds results in extremely high rates for those in riskier categories, meaning anyone over 38. Just how expensive, you ask?

A class from UMass Boston Nursing School recently visited me to discuss community health. One of the students happened to have with her a previous assignment, which was to find out what kind of insurance was available for an uninsured person in the new health care system. She used information for a 58 year old single female from Fall River, working as a nurse’s aide and making $32,000 per year, which is above the annual income that would qualify her for subsidized insurance. The options were eye opening.

The cheapest plan is from Neighborhood Health Plan. The premium is $4424.64 per year, or $368.72 a month. But you have to add the additional expenses to get a true picture. Co-payments for office visits are $25/visit, and $100 for an emergency room visit. If you need hospital care, you pay the first $2000 out of pocket, then 20% coinsurance after the deductible is met. Lab charges are subject to the deductible, meaning that you have to pay full charge for lab services until the deductible is met. Pharmaceuticals have a $100 deductible, after which you pay a $15 co-payment for generic drugs, and 50% of the cost of any other drug.

The price goes up from there to the “gold” plan of Blue Cross/Blue Shield. (For the record, all the companies have various plans, generally categorized as bronze, silver and gold.) In this plan, the premium is $11,212.20 per year, or $934.35 per month, but there is no deductible. You still have to pay a $10 co-payment for office visits and $50 for an emergency room visit, but there are no additional costs for hospital stays. And co-payments for pharmaceuticals are $10/$25/$45 depending on whether it’s generic or brand name.

There are 16 other insurances offered between the lowest tier and the highest. But of course they’re all unaffordable for the woman making $32,000 per year. The lowest cost plan is 13.8% of the woman’s gross income, unless she actually needs to use medical care. The “gold” tier is 35% of income. Try it yourself – it’s easy to do. Just go to the Connector website, and put in your information, then try some other ages and incomes.

I’m sure the Connector would point out that there are few Massachusetts residents who would be in this income/age category, and they might be right. But my point is that medical care costs a lot of money, and is unaffordable for lots of people in the non-subsidized category. And this somewhat theoretical example is based on 2007 prices, which are expected to rise, or, more accurately, be held to 5-7%. Jon Kingsdale, executive director of the Connector, has rightly pointed out that health reform is unsustainable with the kind of annual premium increases we have seen for the last few decades. My fear is that the premium increases will be tempered by increasing fees, deductibles, and co-payments, or cutting back on what is actually covered, an effort to further mask the actual cost of medical care by pushing more of it out of the insurance plan, taking more money out of the wallet in addition to the monthly check.

The reality is that medical care is already unaffordable, with few realistic plans to even keep the increase in cost to the rate of inflation, let alone reduce the price of care. The problem is that we celebrate the very reason for the dramatic increase in medical costs at the same time we bemoan its cost. Has any candidate for statewide office ever pointed out that their suggested solution to increasing employment in Massachusetts – expansion of life sciences – will dramatically increase the cost of medical care?

2008 will be the year in which our health reform law will have its sustainability tested. It won’t be sustainable if the cost can’t be made affordable for both the consumer and the taxpayer.

Bill Walczak
CEO, Codman Square Health Center

We knew that the second phase – covering individuals above 150% of poverty by having them purchase health insurance offered through the Connector – was going to be more difficult, but the difficulty would be the issue of whether people who are required to pay for insurance would actually buy it, and, more important, if those who don’t have health problems would actually buy health insurance, thereby subsidizing the cost of those who need medical care. The jury is still out on this.

We are now entering the third phase of health reform. And this may be the most difficult part (except maybe figuring how to pay for this very expensive system after it’s fully implemented). It involves the redeployment of a much smaller Free Care Pool, now called the Health Safety Net, but I’ll still call it the Pool for old time’s sake. This was the subject of much political lobbying, and the end result has winners and losers. First off, the losers…

Loser #1: The first loser group are the primary care practices and health centers of the safety net hospitals. The “Pool” reimbursement system (previously a complicated system that involved charges vs. cost with benefits for the systems that cared for the highest number of poor people) was changed to a Medicare-based system. Most people glaze over when you try to explain the difference between Medicare and Medicaid and other forms of insurance. For those who don’t know, Medicare is the government insurance mainly for old people, Medicaid is for very poor people. It should puzzle people that a Medicare reimbursement system was used for determine the reimbursement system for people who are most like Medicaid people, until you realize that the Medicare system financially rewards hospital-based services and expensive procedures very well, in comparison to Medicaid. So when the legislature adopted Medicare rates, they were giving a big financial kiss to the high cost procedures and expensive hospital stays, and dramatically lowering the reimbursement for primary care. This, of course, runs counter to any sensible health care system, which should promote low cost primary care services and not encourage hospitalization or expensive procedures. But that’s politics, I suppose. Did the legislature know this when they passed Chapter 58?

Loser #2: The second loser group is the people who need to be covered by the pool. No longer is the pool the payer of last resort, except for certain classes of people. The problem with the pool is that it will no longer cover people who are eligible for any other health insurance plan. So, as of this writing, if your employer offers you health insurance that will cost you $3,000 for yourself or $12,000 for your family, and you make a fast $30,000 a year, so you don’t take it, you’ll be ineligible for coverage by the pool. Or if you fail to take the state up on one of the Connector plans, or if you get cut off from Commonwealth Care because you fail to make your monthly payment, you are ineligible for Pool coverage. (I know some of you are saying that people can request waivers if their wages are insufficient to pay for these plans, but if the waivers are anything like the waivers for getting out of a plan you were assigned to that your own doctor was not part of (almost all were denied), then I say “good luck.”)

Which brings us back to Loser #1, who will now be required to decide whether to treat the patient who doesn’t qualify for the Pool but isn’t on any other plan. Will safety net providers turn away patients? That seems to be the desire of the regulators, who seem to want to make this part of the system a way to punish those who don’t buy in. I’d guess that the missions of the safety net providers will win out, and they’ll just take on lots more bad debt (especially after the Pool runs out of money from the higher reimbursements to hospitals). Which makes this part of “health reform” a financial disaster for those of us in the safety net hospital system. We’re getting lower reimbursement for those who qualify and we’re being forced into a health care Catch 22, in which the choice is to punish our patients or punish our bottom line.

I find it interesting that the state reduced the pool by 48% from FY07 to FY08, though planning a drop in utilization of the pool by only 26%. This leads to the question of where the other 22% is expected to go. Could it be bad debt?

The Winners? You got it, the non-safety net hospital system. They lobbied harder and they won. Which I guess gives us Loser #3 – Health Reform. I hope the state legislature changes its mind on this part of the system. Health reform was never supposed to punish the safety net or the people who rely on the safety net system. It is wrong to leave those who have nowhere to turn without a way to get care, and it is wrong to leave the safety net providers in the position of taking a financial beating for treating the poor. It wasn’t supposed to be this way.

Bill Walczak is the CEO at Codman Square Health Center

These different ways to pay for services are divided into two different terms that describe health care revenue – third party payments (generally the money that comes from insurance companies, unions and the government to pay for services), and first party payments (money out of the pockets of the recipients of care). In the recent past, many insurances would cover nearly all the cost of health care (minus a small copayment for a visit to a doctor). But health care payments are more and more made up of a combination of first and third party payments for services. So, you pay a $5 or $10 or $25 copayment when you get your prescription, a $10 or $25 or $50 copayment when you visit your doctor, and some are now paying copayments when admitted to the hospital. The hospital payments can also be in the form of “balance billing” payments that are due afterwards, based on what your insurance will pay for a service, and what they will allow the provider to bill you directly afterwards, after the insurance has paid its share.

These costs are often ignored in the reporting of health care expenditures, including coverage of Chapter 58. When State officials talk about keeping the cost of health care low, they are referring to the third party cost. So, when the announcement was made that 37 year olds could get insurance under Commonwealth Choice for $170 per month, they were referring only to the cost of health insurance. You had to read into the story to find out that The Connector lowered the initial cost of insurance by increasing the first party costs, which can be upwards to $2000 per year if you actually use health care services.

What happens if the formerly uninsured person decides to buy the health insurance provided by The Connector, but then fails to pay the copayments and deductibles? That’s one of the worries of the safety net providers, of which my organization is one. The great fear of the safety net is that we won’t get paid, that we’ll be forced to “eat” the loss of reimbursement when a patient fails to pay or turn away the patient. Since the safety net’s missions are to provide care no matter what the financial circumstances of the patient, the fear is that we’ll be faced with lots more bad debt, which is the term for when a patient fails to pay for a service for which s/he is required to pay.

Another fear of those of us in primary care, is what happens to those patients who are ineligible for Medicaid or Commonwealth Care or Choice? There will continue to be a free care pool, we have been told, but it will be much smaller. Will all services currently paid for continue to be paid out of the pool? What happens if we cannot get information required to allow for reimbursement from the pool? In this regard, the raid on the Michael Bianco Factory in New Bedford was a terrible message for immigrants that will affect the safety net system. If immigrants, legal and illegal, were previously reluctant to provide information needed to certify eligibility for care to providers of care, many are now terrified to do so. Our failure to collect information results in our failure to be reimbursed for the services we deliver. For citizens, what if the patient just doesn’t sign up for the new insurance? Will there be reimbursement for services, or are we expected to turn them away?

And for some primary care safety net providers, the rate of reimbursement will fall sharply as the state adopts Medicare reimbursement regulations instead of Medicaid. Why the state decided to adopt Medicare regulations, generally written for the elderly, instead of Medicaid regulations, written for people who closely resemble the uninsured, is a mystery that will result in lower reimbursement for some parts of the safety net.

The reality is that the safety net is full of holes. We deal with the most complex people and health issues, and this complexity generally leads to difficulty tracking down the information necessary for reimbursement. At the Codman Square Health Center, for example, the third of our patients who are uninsured results in over a million dollars in bad debt annually.

All of this is to say that there are many, many details that are still being worked out around Chapter 58, and safety net providers are hoping that we do not become victimized by a failure to carefully monitor the effect of Chapter 58 on the providers who care for the poor. The health of the safety net needs to be a major concern as Chapter 58 is implemented.

Post Script: After I completed this blog, I received in the mail a publication by The Access Project, entitled “The Illusion of Coverage: How Health Insurance Fails People When They Get Sick.” Among its findings: Underinsurance (into which they include insurances with $2000 in deductibles) results in poor access to care sometimes resulting in increased cost from lack of preventive care, increase in personal debt and bankruptcy, change in employment, access to credit, and psychological consequences. For more information, see http://www.accessproject.org.

Bill Walczak is the CEO at Codman Square Health Center

What’s amazing about the debate is that it’s still mostly a debate among health care professionals. I’ve asked many people, even people who work in health care, about the law, and overwhelmingly people tell you they don’t know much about the law, and many are astonished (still) that the law requires people to purchase health insurance. So I’d guess that the reality of Chapter 58 is still off in the future for many people who by law will be required to buy insurance.

That being said, the most important issue in the implementation of Chapter 58, indeed the issue that will make or break it, is the issue of affordability. It will be interesting to see how the Connector board deals with it, but in reality, no matter what they ultimately decide, it’ll be the uninsured who will determine whether the new Commonwealth Care and Commonwealth Choice plans are affordable. They’ll vote with their decision on whether they’ll buy it.

So when it’s finally put in front of them, will they buy it? My best guess is that people who need health insurance will buy it (whether they will make the monthly payments is another question), but most of those who don’t need it won’t. Certainly the first year’s penalty (loss of your personal exemption for next year’s taxes) isn’t going to convince people to buy it if they feel they don’t need it. So a major goal should be to get people to understand why they need this insurance. Then, there’s the issue of value. What are you getting for the money you’re putting out. Will it work like auto insurance, where you don’t really get much value, unless you’re in an accident, but most still purchase it? Or will people think that they never had to pay for this before, why should they now?

Another question is whether any price is affordable to the working poor or even working class. We know that virtually the entire working class, and all poor people, are in debt, many of them up to their ears. The cost of living is quite high in the Bay State, American culture promotes consumption beyond your means, and our credit card debt reports and subprime mortgage crisis both say the same thing – - most working class and working poor people are very seriously in debt, way beyond where they should be. And health care is not only very expensive, it’s one of the primary causes of personal bankruptcy. So where’s the money going to come from for this additional expense? Hopefully not from plastic money.

The Connector board has made some decisions that should be encouraging to working poor people who are deciding whether to purchase insurance – they kept pharmaceuticals and some pre-deductible primary care visits in the new insurances. Although the current issues are all about money, the real issue, when these issues are resolved, should be about creating a healthy Massachusetts that is able to avoid the hugely expensive system that kicks in when you’re not healthy. Managed care at its best is about caring for the whole person, not just about cutting the cost of health care.

My last point in this edition of the blog is another question: Whatever happened to community rating? When I started in health care, which is not that long ago, insurance was community rated, meaning that everyone pretty much paid the same for health insurance – we all shared a burden of making sure everyone could get covered for medical care. So if you were older and required more care, younger people subsidized you. With the ratings established in Commonwealth Choice, you’re on your own in your bracket, which is a 5 year period. So if you’re young, health insurance is relatively cheap, but God help you if you’re in (gulp) your 50s. The difference in insurance premiums is in the thousands of dollars.

The good news is that we’ll know the answers to most of these questions (except what happened to community rating) soon.

Bill Walczak, CEO, Codman Square Health Center