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Provider Tax Could Raise Medicaid Payments in Michigan


 

Michigan physicians are divided over efforts by Gov. Jennifer Granholm (D) to pass a physician tax that would help increase payments to Medicaid providers in the state.

Under her proposal, a 2.28% gross receipts tax would be levied on all physicians in the state. The tax would raise $96 million, which would then be put into the Medicaid program and would increase the amount of matching funds the program receives from the federal government.

“In that scenario, the state keeps $40 million, and then the $56 million left would be paired with Medicaid matching dollars, so we can return $125 million to providers, bringing up to Medicare rates our physicians who've long complained that Medicaid [reimbursement] rates were too low,” said T.J. Bucholz, spokesman for the Michigan Department of Community Health in Lansing.

In the case of physicians who have at least 3.5% of their practice revenue coming from Medicaid, “they will get more back in terms of Medicaid reimbursement” than they paid into the system in taxes, he noted.

But the Michigan State Medical Society (MSMS) isn't buying it. “Inherent in that is an underlying current of a lot of trust, and for those of us who have paid attention to legislative and gubernatorial activities in the state over the last decade, a track record of trust is one that needs to be earned. People have a lot of questions about that,” said Gregory Forzley, M.D., a member of the society's board of directors.

For instance, “when they introduced the state lottery, it was going to benefit K-12 education programs and colleges in the state, but it appears they used the lottery money in place of other governmental funding,” said Dr. Forzley, a family physician in Grand Rapids. “So when they come with a similar-sounding proposal in a system already fraught with cutbacks and underfunding, most people say, 'I don't believe you when you say you are going to put safeguards in.'”

But Stephen DeSilva, M.D., president of Michigan Doctors Making a Difference, said that some of these problems could be overcome. For example, the law could be written so that “when the federal matching funds go away, the tax would automatically sunset,” he said.

Dr. DeSilva, an orthopedic surgeon, noted that similar tax assessments in the state have worked very well for hospitals, pharmacies, and nursing homes. “It would work well for physicians, but it's difficult to overcome the knee-jerk reaction to taxes as well as the paranoia about how the state will use the money.”

He acknowledged that his own 750-member practice group at Wayne State University in Detroit would have a lot to gain if the proposal became law, since 20% of the group's patients are on Medicaid. In Michigan, Medicaid pays $22 per work unit, and Medicare pays almost $38, “so you can see it's a big increase,” he said. “For our group, it would mean an extra $30 million to our bottom line.”

John M. Flack, M.D., director of the cardiovascular epidemiology and clinical applications program at Wayne State and a member of Dr. DeSilva's practice group, supports the tax but doesn't agree with Dr. DeSilva's revenue projection. “It will make our life tougher [at Wayne State] because it will open doors for patients [to medical offices] around the city; it will make it tougher to keep the patient population we have. That's sort of a dark lining in the clouds for us, but it's good for Medicaid participants to be able to have more options.”

And increased access is the main reason to support the program, Dr. DeSilva said. “Right now, they either go without or use the emergency room for primary care, because very few physicians are willing to see patients at that very low reimbursement rate,” he said. “If you look in the 50 states, there is a direct correlation between access to physician office practices and the ratio of Medicare to Medicaid reimbursement. In states where the ratio approaches [1:1], access is usually good, but as rates fall, access usually falls as well.”

Like Dr. DeSilva, Dr. Forzley said he thinks the Michigan Medicaid program needs fixing, but he doesn't think a physician tax is the way to do it. “We can get more creative,” he said. For example, “a long time ago, a lot of studies showed that if you provide people with transportation to their physician, they stay out of the hospital. It's worthy to look at those experiments out there and see how we can make a broader effort to touch rural and urban populations most effectively.”

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