Op-Ed: Insurance Policy Turns Blind Eye to Medicaid Realities

Cathleen Bennett | January 11, 2018 | Opinion
Penalizing hospitals for readmission of Medicaid patients ignores the ‘social determinants of health’ that uniquely shape these people’s lives

Cathy Bennett, president and CEO of the New Jersey Hospital Association
In healthcare policy, a one-size-fits-all approach seldom works. That’s because patients are unique individuals, and their histories, life experiences, family dynamics, and daily realities are all part of who they are.

The best healthcare recognizes that.

Unfortunately, the state’s largest health insurer is pushing a unilateral change to its Medicaid managed-care coverage that ignores the added challenges these vulnerable individuals face when it comes to their healthcare.

Horizon New Jersey Health announced last month that it will no longer pay hospitals in certain circumstances if a Medicaid beneficiary is released from a hospital stay and then needs to be readmitted to the hospital within 30 days. There are a few exclusions to this policy, such as maternity, sickle cell, and psychiatric cases. Originally set to be enforced January 1, Horizon agreed to delay enforcement until February 1.

Medicare vs. Medicaid

A 30-day readmissions policy isn’t a new idea; the Medicare program already has reduced payments to some hospitals that experience high rates of 30-day readmissions. But there is a big, big difference between the Medicare program that serves senior citizens and the Medicaid program that serves individuals and families who earn less than 138 percent of the federal poverty level. (That’s about $34,000 annually for a family of four.)

For all people, but especially for those on Medicaid, what happens outside the hospital can be more influential on their health than what happens during the inpatient stay. And these are the realities facing many Medicaid beneficiaries: Do they have a home to return to after their hospital stay? Does it have heat? Is there anyone there to help when they’re ill? Do they have healthy foods in their home? Is there even a grocery store in the neighborhood that sells healthy foods? Can they afford to buy their medication? Were they able to schedule a follow-up appointment with their doctor? Do they have a way to get to their follow-up appointments?

‘Social determinants of health’

We call these factors “social determinants of health.” They are an undeniable part of many New Jerseyans’ lives, and ignoring them in Horizon’s new 30-day readmissions policy won’t make them go away.

The issue is further complicated by the availability of physicians, especially specialists, in the Medicaid network. In a March 2015 report, New Jersey had the lowest rate in the nation of physicians accepting new Medicaid patients — just 38.7 percent of New Jersey physicians compared with a national average of 68.9 percent, according to the National Center for Health Statistics. A big part of the problem is New Jersey’s notoriously low rates paid to healthcare providers that care for Medicaid patients. Hospitals, on average, are paid just 70 percent of the actual costs of providing care. Payments to physicians are even lower. That’s the leading reason that so few physicians agree to care for Medicaid patients. (Hospitals, on the other hand, are required by state law to care for all patients, no matter their insurance or financial status.)

That makes Horizon’s newly announced policy that much more difficult to swallow. Hospitals are being told they may not be paid for additional hospital care within 30 days — and yet, the physician network that should help Medicaid patients avoid the hospital is full of gaps.

Taking care of a community — especially a vulnerable community — should be a partnership. The New Jersey Hospital Association has invited Horizon and four other Medicaid managed-care plans to join us in a collaborative effort we’re kicking off this month to reduce unnecessary hospital readmissions. We also appreciate that Horizon has agreed to a one-month delay in enforcing its new policy. But that delay does nothing to address the social determinants of health that frequently contribute to an individual’s return to the hospital. For hospitals — very often the centerpieces of their communities — society’s problems often land at their doors. We don’t shy away from that role, but we also believe that insurance companies, especially a nonprofit insurance company, should share the responsibility.