Hard to Swallow 

Who can stomach the bitter pill of Montana's Medical cuts?

Brooke Jaqueth learned about the new Medicaid rules on the last day of March, one day before they took effect. Right away she started making the grim calculations.

Cutting back on food would sustain her for a while, but not forever. She knew it would only be a matter of time before she would have to make a worse sacrifice: switching over to cheaper generic drugs, some of which have permanent, debilitating side effects.

“This Medicaid thing is just killing me. I can barely afford to live,” says Jaqueth, a Missoula woman with an array of physical and psychiatric disabilities. She has many prescriptions each month for drugs she cannot live without. Some keep the pain of her degenerative bone disease in check, others suppress the inner voices that tell her to hurt herself.

Under the old system of Medicaid—the state/federal safety net that helps pay for healthcare for the nation’s neediest, including the aged, disabled and poor families with children—payments were capped at a dollar amount, and Jaqueth paid about $12 a month for her prescriptions. Under the new system, Medicaid patients are responsible for five percent of the cost of their drugs. With all of Jaqueth’s monthly prescriptions, she is now responsible for upwards of $100 a month. Additionally, the cap for hospital visits was raised from $100 to $200, and the total yearly cap for all patients’ cost sharing was raised from $200 to $500.

“Even with my job I can’t afford these higher co-payments,” says Jaqueth, who works as a part-time peer advocate at the Summit Independent Living Center. “I don’t know what people are doing who don’t have a job.” The first set of Medicaid changes took effect in January, with more planned for July. They are part of the across-the-board cuts in state government that have affected every Montana agency. Hardest hit has been the Department of Public Health and Human Services (DPHHS), as have social service agencies in states across the country.

About $17 million have been cut from the Medicaid program budget for 2002 and 2003. Meanwhile, the number of people on Medicaid in the state has been rising steadily.

While budget cuts have always been a reality for state agencies, officials and health care providers say that these latest cost-cutting rule changes will have a particularly drastic effect on the most vulnerable segment of Montana’s population: the poorest of the poor with the most severe medical problems.

“It’s very difficult because you’re at the point now where there are no easy cuts,” says John Chappuis, deputy director of DPHHS. “There’s nothing that’s not going to affect the clients anymore. We’ve cut administrative, all our operations, we’ve done program transfers, too, but now we’re down to things that really do affect either providers or clients.”

Health care providers—from pharmacists to hospitals to surgical suppliers—are all feeling the strain and morale is down at DPHHS.

“I’ve been to numerous DPHHS meetings in the last month and four funerals, and the funerals were more uplifting,” says state Senator Mignon Waterman (D–Helena).

Along with Sen. John Cobb (R–Augusta), Waterman spearheaded an effort in February to call a special session of the Legislature to look at the cuts to the DPHHS budget. Legislators voted against a special session, and the governor’s office went ahead with its budget reductions. Governor Judy Martz’s administration has maintained that given the tight budget and increasingly needy population, the cuts were the best they could do. The legislators who pushed for a special session and some health care providers still maintain that an alternative plan could have been reached. Now with a narrow set of options, they are left to watch as the new rules take hold.

“The cuts are going to be horrible,” Waterman says. “They already are.”

April: the cruelest month
Pam Boothman is a Missoula woman with cerebral palsy who homeschools her 8-year-old son. Lately, the cost of his education has been compounded by increases in their rent and reductions in food stamp allotments. For a while, she was able to scrape by under the old Medicaid rules where her medication refills cost about $3 a month, but now her payments have increased significantly.

Rather than cut back on food or schooling materials for her son, Boothman has started spacing out her medication.

“It’s made it a little more difficult to move because I’m on a muscle relaxant,” she says. Cold weather makes her muscles tighten. When it is cool and windy she is supposed to take two or three doses of medication a day. “I’m trying to take it every other day because everything’s gone up and there’s no money left,” she says.

Boothman’s son is also on medication, for attention deficit hyperactivity disorder. As a minor, he is exempt from the co-pay requirements, but Boothman worries about his situation when he comes of age.

Although minors are exempt from the new cost-sharing rules, other services for those under 18 have been affected. Ginger LeBret says she had to take her son out of a group home because of the financial strain of the changes. Her 13-year-old son is emotionally disturbed, with several different disorders. Medicaid paid for him to live in a Billings group home until the first round of changes took effect in January. LeBret says she then received a bill for $900 a month, which she cannot afford.

Lebret, a single mother who also has an 11-year-old son with similar but less severe problems, recently moved to Missoula where better health care is available. She now cares for both of her sons fulltime at home with the help of AWARE, a local nonprofit social services organization.

One common complaint among Medicaid patients is that they were never given adequate notice of the new rules before they took effect. “They could have let us know they were gonna do this and we could have had some time to talk with them and let them know the choices we were being forced to make,” says Carol Ann Hovland, president of the Coalition of Montanans Concerned with Disabilities.

DPHHS spokesman Ken Pekoc says that health care providers were notified of the changes in advance according to the agency’s normal procedures. While it seems that some providers were notified and others were not, many patients say that the information never trickled down to them.

“They notified [providers] but didn’t bother to check with us at all,” says Hovland, who suffers from physical disabilities including serious nerve damage. “I actually didn’t get the first notice until the third of April. There was no warning so you couldn’t even put it in your budget.”

Public hearings were held before the April changes as part of the standard procedure, but some patients and providers complained they were poorly advertised.

“We found out that they had had hearings on it in January but they didn’t notify anybody so that we could go in and talk about it or tell anybody what we thought,” says Sheila James, a Missoula woman with cerebral palsy who is on Medicaid.

Hearings have been held over the last two weeks to get feedback on the proposed changes scheduled for July. This time around, James and Hovland have been attending them.

The numbers crunch

Under Medicaid, each state determines who is eligible and what health services are covered, and the federal government reimburses the state a percentage of its expenditure. Montana has shrunk its share of the Medicaid budget even as the number of Montanans who are eligible has increased, thus reducing its federal reimbursements. In February of this year there were 67,777 Montana residents on Medicaid, according to DPHHS figures. A year earlier, there were 65,271. Back in 1997 there were 62,678 Medicaid recipients in Montana.

“Cases are up, utilization of our services is up, so we have more people to serve than we can afford to serve,” Pekoc says. “And the state may not give us as much money as they intended to, so it’s a double whammy. If not as much tax money comes in as they projected then we might get even less. It could be absolutely horrible.”

The next round of budget cuts will depend on state tax revenues, and those figures will not be available for some time. In the meantime, last week every state agency submitted to the governor’s budget office plans to cut their budgets by either 3 percent or 10 percent. The state has also been looking at other more creative ways to trim costs. On April 9, Governor Martz sent a letter to U.S. Secretary of Health and Human Services Tommy Thompson asking that some federal regulations be waived to help Montana trim its Medicaid budget. The letter requested that the state be allowed to limit benefits packages to “able-bodied adults” and that hospitals be allowed to charge co-payments for emergency room services.

Some providers worry that this could lead to patients being denied emergency service because they are not carrying enough cash. In her letter, Martz wrote that it is meant to stop patients from abusing co-payment exempt emergency room visits for care they could seek from a regular doctor visit. Martz also suggested in the letter that forcing Medicaid patients to pay more will make them more responsible.

“These changes to Montana’s cost-sharing system approximately doubled the amounts Medicaid clients are expected to contribute for their own health care,” Martz wrote. “The Department anticipates that parents will necessarily become more involved in the decisions affecting their families’ health and hopes that increased participation in the costs of care will motivate parents to become better informed about the options available to treat medical needs.”

It’s the sort of logic that frustrates many Medicaid recipients. “We live at the bottom and we really manipulate our budgets to try to make it,” Hovland says. “It’s gonna be much harder on families with children.”

According to Maggie Bullock, a DPHHS administrator who deals with Medicaid issues, Secretary Thompson has not yet responded to the waiver request. She adds that the department is still discussing the plan and that there will be a lengthy review process.

Who’s feeling the pinch
Just as DPHHS finds itself squeezed between budget cuts from above and more people needing help from below, local service providers are in a similar bind. They see their clients struggling to get by while they themselves are faced with financial strains.

The situation has even affected how they interact with their clients. “In the past when all of the prescription co-pays were one or two dollars, if patients didn’t have the money to pay, some pharmacists were willing to work out arrangements to pay late, or even if they didn’t pay at all it wasn’t that big of a deal,” says Mel Wellman, manager of the Western Montana Clinic’s Missoula Clinic Pharmacy.

Now with the higher co-payments, she says, such leniency isn’t feasible.

“It’s harder to work out payment arrangements with patients because it’s a pretty significant amount of money,” Wellman says.

Employees of Harrington Surgical Supply have seen a similar change. They specialize in rehabilitation wheelchairs, which tend to be very expensive because of their motorized tilt and recline systems. Medicaid patients used to be able to obtain the wheelchairs, which can run from $6,000 to $25,000, for as low as 50 cents, says Robin Rennick, an insurance billing specialist for the company. Now, under the 5 percent cost-sharing rules, they are faced with a significant portion of the retail price.

“That’s really difficult to ask somebody who has no money to come up with $500 at one time,” Rennick says.

Maintaining quality services for Medicaid patients has also become more of a struggle, local health care professionals say, as less money is available for providers. In January Montana’s providers experienced a 2.6 percent across-the-board cut in state reimbursements for services they provide to Medicaid patients.

“It certainly has hurt,” says Merry Hutton, community services coordinator at St. Patrick Hospital. “The assumption by the state is, no matter how much we cut providers, they’re still going to see [Medicaid patients]. And to an extent that’s true. We still see them no matter how many cuts are imposed.”

There have been some rumblings among local health care providers that some doctors and institutions will stop taking Medicaid patients.

“Our agency operates our Medicaid program at somewhat of a loss,” says Nancy Heyer, executive director of Partners in Home Care. “We have had to, in years past, consider capping the number of Medicaid clients we would take.”

They decided not to, she says, and Partners continues to provide the same level of care to Medicaid patients while still compensating their employees with strong benefits. However, Heyer says, they are only able to do so because of generous charitable gifts from the Missoula community.

The Summit Independent Living Center, a Missoula-based nonprofit that does advocacy for people with disabilities, has been largely immune to the cuts because most of its funding comes from grants from the federal government. However, Summit’s clients have been some of the most severely affected individuals in the state.

“By definition they hit the people who are in the worst shape the hardest,” says Paul Peterson, who does Medicaid advocacy at Summit. “The people with the most prescriptions, the most visits to the doctor, the people with the most hospital visits and the most surgeries are going to have the most out-of-pocket [costs].”

Is there another way?

In February, a dozen state lawmakers sought a special session of the Legislature to address the $40 million the governor cut from state social services to address budget shortfalls. The Legislature does not meet in 2002, but in the past some sessions have been called in the off-year to address pressing matters. This year legislators claimed that such a large cut by the executive branch intruded on the Legislature’s purse string authority, and that the reductions were extreme and would have long-term implications.

“The delicate balance that the Legislature continuously strikes between paying Medicaid providers low rates while still providing health access to thousands of poor Montanans in order to have money for other government programs, such as education, as well as tax cuts for the taxpayer, is in serious jeopardy,” wrote Sen. Cobb in a letter to Secretary of State Bob Brown requesting the special session.

The special session would have addressed all of DPHHS services and looked for alternatives to the cuts. The goal for Medicaid, Cobb wrote, was “to partially fund and restore some of the present and future Medicaid cuts or alternatively to cut services in Medicaid programs to balance their budget for the rest of the biennium.”

Legislators voted 85-60 not to have a special session and Gov. Martz decided not to call one herself. All but two Democrats voted for the special session, while all but three Republicans voted against it. Republicans lawmakers claimed it would likely have led to tax increases.

“If we’re talking the kind of shortage we can cure with two, three, or four percent reductions, what’s their incentive to come in and make those reductions?” asks Curt Nichols, assistant director of the governor’s budget office. “It’s not a pleasant process, everybody doesn’t pat you on the back for it, so why would someone want to come in and do that job? On the other side they could raise taxes or steal trust funds if they have to. There’s no money! It’s like your checkbook. You can’t pay bills you don’t have money for, so there’s tough decisions.”

Nichols adds that the trimming process takes into account the specific needs and situations of different agencies, and that the budget director considers things like the growth in caseloads and the needs of vulnerable groups. However, in the end, he says, the law compels them to reach a certain figure for the balance of the general fund and they have to do their job.

Nichols does think that there is a point at which executive branch cuts are so big a special legislative session would be necessary, but he doesn’t think this year’s cuts have reached that threshold.

Proponents of the special session argued that the Legislature could have preserved vital Medicaid services by cuts in other areas and shifting some funding. However, looking at the state’s tax priorities should not be off-limits, Sen. Waterman says. She cites the millions of dollars in tax breaks for businesses that have “eroded a lot of tax bases” in the state.

“I know it’s not popular to talk about tax increases these days, but I think you reach a point where you have to balance basic human services for people who are in need with a raise in taxes,” Waterman says.

The administration suggests, though, that the services cannot be preserved without a raise in taxes, and that people will not be willing to see their taxes go up.

“There’s always this sort of irrational thing that goes on. People want all the services but don’t want to pay the taxes,” Nichols says.

Mary Caferro is a Helena-based organizer for the non-profit group Working for Equality and Economic Liberation, which has been doing advocacy work for Medicaid patients. She is also critical of Montana’s tax structure. “It’s not just that we have a poor economy, it’s that there have been decisions made to use money in the wrong way,” she says. “We have the money in our state to support the health care system. However, it’s not being spent on the most vulnerable population.”

Future options
The pressure imposed by the new rules has sparked a wave of activism among Medicaid recipients in western Montana. The Coalition of Montanans Concerned with Disabilities, which represents about 300 people across the state, has mounted a massive letter-writing campaign. Carol Ann Hovland and Brooke Jaqueth have both been busy contacting elected officials and DPHHS representatives. A rally was held in Helena and local organizations like Summit have been helping patients express their concerns.

There is also a bill coming before the U.S. Senate that would provide more federal money for Medicaid to assist the states. Although it has only been a short time since the changes took effect, in Montana the activism has been paying off. DPHHS has been inundated with feedback and they are taking it seriously, says Deputy Director Chappuis.

“In some cases there’s no doubt we’ve made mistakes and we’re going to try to rectify those,” he says. “Cost-sharing is something we’re going to look at again. It has been more difficult for most clients than we anticipated and more difficult for providers.”

Even if the cost-sharing system is changed, there are those who say that deeper, longer-term issues need to be resolved before the Medicaid program can be considered healthy and sustainable. There is a feeling among some patients and providers that the state needs to change its fundamental outlook on the Medicaid program.

Merry Hutton from St. Patrick Hospital points out that the Legislature has not addressed the discrepancy between the state’s Medicaid funding and the rate of medical inflation.

“Medicaid hasn’t kept up with medical inflation since 1985,” she says. “I think that just having a clearer understanding of where they really need to be at, I think that would be a good place to start. We have to fully fund our Medicaid, and we’re not.”

Paul Peterson at Summit used to serve on the state’s Medicaid Advisory Council. Listening to his peers there juggle the numbers without considering their effect on people was frustrating for him. He recalls one time when they celebrated the fact that only 4,000 Medicaid recipients would be faced with the maximum out-of-pocket payments.

“Four thousand people, that’s bigger than most towns in Montana!” Peterson says. “I just think that they lose touch with what they do. I’d like to see them actually have to go out and serve people. I’d like to see it be a state law that anyone in Medicaid, or Fish and Game, or whatever they do, anyone that’s in an office in Helena should spend one day working a caseload.”

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