Michigan is not the only state to have considered provider taxes. Outgoing Washington Gov. Gary Locke (D) also proposed such a tax in January, but Christine Gregoire (D), the current governor, did not include it in her budget proposal, nor has the state legislature moved to implement it.
Physician concerns about taxing providers actually reflect issues revolving around Medicaid copayments, said Diana Ewert, senior manager for state government relations at the American Academy of Family Physicians. These are proposals in which “if you contract with the state to provide Medicaid services … they would require you to take the patient, whether or not the patient pays the copay, and the state will still deduct the copay on the other end because you should have collected it,” she explained. “That makes the losing proposition of taking Medicaid patients even more critical, which we believe will impact the safety net and result in less access.”
Ms. Ewert expressed concern regarding states enacting legislation such as provider taxes to increase federal Medicaid matching funds—a strategy known as intergovernmental transfers (IGTs)—for the coming fiscal year. She noted that the federally chartered commission on Medicaid will be looking at all financing mechanisms, including IGTs, in a preliminary report due to Congress on Sept. 1.
The goal is to cut $10 billion from Medicaid over the next 5 years.
“If states are depending upon IGTs to offset Medicaid costs and for some reason that doesn't come through, that may put states in an untenable situation,” she said.
In July, Health and Human Services Secretary Mike Leavitt announced that former Tennessee Gov. Don Sundquist (R) will chair the 13-member commission and former Maine Gov. Angus King (I) will serve as vice chair. In addition, the secretary was holding open two vacancies on the commission for current governors so that they could join after Sept. 1, when the commission begins focusing on longer-term changes.
Back in Michigan, both the state house of representatives and the state senate did not include the provider tax in their budget proposals, although it is still in the governor's budget proposal.
Dr. DeSilva is not very hopeful that the provider tax will become law this year, but he said his group would consider pushing for other ways to increase Medicaid reimbursement.
Without any fixes for the program, “we may be forced to limit access and reduce the number of Medicaid patients we're seeing,” he said of his own group. “We're not in the red yet, but we're having a hard time recruiting and retaining physicians.”