HEALTH CARE/Joan Retsinas

A Manual for Cutting Medicaid

At last! A primer of cost-cutting wizardry, guaranteed to help governors who want to be misers without looking miserly! Prudent governors struggle to cut Medicaid, yet, at the same time, exude compassion. Too much cost-cutting, and governors are cruel. Too much compassion, and they are profligate. This primer gives step-by-step instructions.

The secret: stealth. Bury the cut deep in the minutiae of bureaucratic legalese, so that the victim won't know s/he is trapped until s/he is caught in a labyrinth of buck-passers.

Step one. Find the financial loophole in a costly mandate.

In 2000 Congress delivered states a costly mandate. Under the Breast and Cervical Cancer Prevention and Treatment Act, Congress required states to pay for treatment for uninsured women with breast or cervical cancer.

Previously, states had offered uninsured women free mammograms. But states did not have to open their coffers for treatment. Women who tested positive were left in limbo &endash; an early diagnosis, but no treatment. This law ended that limbo. States were supposed to use Medicaid money to pay for treatment.

Twenty-two states found the loophole. The law let states limit the "eligible" clinics and hospitals to those receiving money from a federal cancer detection program. Most clinics and hospitals do not receive money from that limited pot. Congress, though, allowed states to seize the exclusion.

Twenty-eight states -- from the vantage of this primer, the sap-states -- distributed the money to all clinics and hospitals that diagnosed the cancers. That "universal" policy certainly helped women, leaving them to grapple with the treatment, without grappling with the cost. That policy, though, upped states' Medicaid tab.

The savvy states separated the world of oncology into "pay" and "no-pay" zones. In the "pay" zone, an uninsured woman would get a mammogram, get the diagnosis, and receive treatment, at no charge. The state would pay. In the "no-pay" zone, an uninsured woman would get treatment, but also get a hundred-thousand dollar invoice.

Step Two: Mask the stratagem as a bureaucratic detail.

The point of restricting clinics is to save money. So don't advertise the distinction. Women know that they should look for an accredited hospital/clinic with a respected reputation, that they should seek out board-certified physicians. But uninsured women won't know that they should learn their facility's eligibility status. If they did, they would flock to the eligible ones.

Don't tell them. Indeed, make the distinction so obscure that most employees don't know the status of their facility. That way, compassionate employees won't notify uninsured women who come seeking a diagnostic test that they should take out the phone book and find an "eligible" provider.

Extend the veil of obscurity to the innards of state government, so that even if the patient starts phoning, the chances are that she won't reach anybody who can tell her definitively the eligibility status of a specific clinic or hospital. She could, of course, call the state's Department of Health, or its Medicaid office, or maybe its Office of Human Services. If she found the correct bureaucratic fiefdom, she could make more calls to identify the person who could answer her question. Maybe she'd get an answer. The odds favor the state.

Step Three: Trap the woman in the no-pay zone.

Rationally, if a woman discovered that the state wouldn't pay for her treatment at clinic x, she would switch to clinic y. Fortunately, the Medicaid fraud rules leave her no way out. Once a patient begins treatment with one clinic, she cannot switch to another, to get them to pick up the tab. When she first visits the "non-eligible" hospital whose staff might save her life, she is stepping into the "no-pay" zone. Retreat is almost impossible.

John Carryrou of the Wall Street Journal (Sept. 13) described this astoundingly effective act of governmental stealth. A Texas hairdresser went to the emergency room at a local "non-eligible" hospital, which diagnosed her with breast cancer, and referred her to an affiliated surgeon. Although a "Wellness Clinic," which would have paid for treatment, was half-mile away, she couldn't retrace her steps. A four-year saga through hospitals, nursing homes and state offices followed. Texas rescinded the "eligibility" restriction this year. For officials interested in the art of cutting Medicaid, this article is required.

Sometimes truisms are true: in the case of this loophole, the devil really is in the details.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email

From The Progressive Populist, November 1, 2007

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