Medicaid cost shifting: The case of Denver Health

We all know about the increase in Medicaid patients resulting from Obamacare, and how this is exacerbating the shortage of providers who accept Medicaid. I see Medicaid patients in Denver, where there is a reason for the shortage that is often overlooked: managed care Medicaid.

The managed care concept peaked decades ago, a failed attempt to reduce health care spending by forcing patients to go to only one doctor or hospital system. This rationing resulted in predictably long lines. In much of the country today, managed care systems have been phased out in favor of newer “accountable care” initiatives. In Denver, however, most Medicaid patients are still placed into a managed care program run by Denver Health, forcing them to see only Denver Health providers.

This assignment happens via passive enrollment, where a client is mailed a letter stating that they are being put in Denver Health Medicaid. It says if they want out, they have three months to disenroll, otherwise they can get out during the two months before their birthday. Either way, the disenrollment will happen the month after their birthday. To get out, they must make a phone call, where the wait to talk to an agent is long, and the call often drops, especially if they try to find an interpreter. I know this because I often help patients make this call.

In reality, many Medicaid patients don’t have a reliable address to receive the letter, a reliable phone to call from, or the minutes to wait on hold. Most of my patients are illiterate in any language (I see refugees), and they can’t read the mail. Even my English speaking, educated patients cannot understand the game of “three months at first or two months before birthday.” Regardless, many of my patients live closer to other hospitals, and find it much easier to go to the ER next door, rather than take multiple buses to get to Denver Health.

These patients have no idea how they landed in managed care Medicaid, or what it means. They just know they are sick, or their child can’t return to school until they get shots, and that the wait for a primary care appointment at Denver Health is months. So I see them for free. Five percent of my visits are Denver Health Medicaid patients, and my office isn’t even in Denver.

That is to say:  Denver Health cuts costs by me seeing their managed care patients for free. Neighboring facilities like the Children’s Hospital lose thousands of dollars caring for Denver Health’s patients. This cost shifting has been going on for years, leaving Denver Health looking like a money saver. It isn’t enough that Denver Health already gets paid more than me for seeing the same patients, but Denver Health has a codified monopoly on indigent care in Denver.

It is easy for me to see someone for free if all they have is a cold or need a school physical. It gets much harder if they need any meds, labs, or specialty care, because those aren’t covered unless done within the Denver Health network.

There are a number of curious games that fuel this cost shifting. One is that the passive enrollment only happens after a new Medicaid patient has “regular Medicaid” for a couple months. By the time the passive enrollment takes effect, they have already formed a relationship with a PCP like myself, and they prefer to keep seeing me, rather than wait in line at Denver Health. This includes newborns, who have regular Medicaid when I do their two-month shots, but are passively enrolled by the time they arrive sick at three months. This bait-and-switch makes it more likely that other providers will shoulder the cost of the care that Denver Health is paid to provide.

Another game is that only Medicaid applications with a Denver address get passively enrolled. However, many patients don’t have a stable address when applying for Medicaid, so they use the address of their social service agency, most of which are in Denver. These patients then land in Denver Health Medicaid, even if they find an apartment outside of Denver. Passive enrollment also happens when patients move from another county to Denver; this is a problem for my patients, many of who live on the county line. The computers also passively enroll those who lose Medicaid, reapply, and are reinstated, even if they have no gap in coverage.

The horror stories from this are numerous. One Oromo refugee paid $833 for his child to get her teeth fixed at their family’s dental home, because she had been put in Denver Health Medicaid. A Nepali boy needed a child physical therapist for his clubfoot, but he couldn’t go to the Children’s Hospital, which has more appropriate providers. Same for a teen from Congo who needed a sleep study. A Somali man with cancer was suddenly put in Denver Health Medicaid, interrupting his chemo elsewhere. An elderly Ethiopian had great control of her diabetes until passively enrolled, then her numbers shot up because she couldn’t get an appointment, and her prescriptions from me were not covered. I have seen countless patients deteriorate while waiting for Denver Health appointments, while non-Denver Health providers would see them tomorrow if they could.

What is the purpose of having Medicaid if you can’t use it? I’m not talking about a shortage of doctors accepting Medicaid. There are doctors who could see these patients immediately, but are not allowed to. Denver has a scarcity of doctors in underserved medicine, by design.

This is not a trivial issue, but is an unpublicized one in Denver, and is a critical piece of finding more providers to see Medicaid patients. It is time to end the outdated, politically entrenched systems of Denver Health Managed Care Medicaid and passive enrollment, reopen the Denver indigent care marketplace, and allow the people to get the care promised to them by the Affordable Care Act.

P.J. Parmar is a family doctor at Ardas Family Medicine and blogs at P.J.! Parmar.

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  • ninguem

    Can you find Denver Health administrators? The really high-up ones.

    Usually Guidestar.org or one of those online services can help.

    Try to keep track of the free services you perform for them, and what it costs. Or what it would have cost if you billed for the service in question. Get a few other docs in the same boat.

    Write up a bill.

    Present the bill at some public event.

    With a couple of reporters, photographers, TV cameras.

    Not to get paid. Just for the publicity.

    I think you might have a very sympathetic story for the media.

    • LeoHolmMD

      It’s going to take direct action like that to help patients as they are systemically disenfranchised. Great idea.

  • Arby

    I realize there are creative ways to ration care or in other words abandon people to their fate, but this is a prime example of how something can be promoted as a good, caring but cost effective thing all involved are doing. Unless of course, you know what is really occurring.

    I am thankful that you shared this, and I hope you take ninguem’s suggestion to share it more openly. I ‘m now going to go work on reducing my blood pressure.

  • betsynicoletti

    I’m not aware of any evidence that “managed Medicaid” saves a state money in care. It does increase costs for healthcare providers who then have to pre-cert services or find a specialist for their patients that is allowed by the managed Medicaid program. Or, I guess in this case, it saves money by essentially denying services. And then in some states, the state allows multiple insurance companies to each run a managed Medicaid program. I’m sure it’s a no-risk contract for the company and will make them money, but it adds to provider costs.

  • pjp

    I have met with the DH administrators and they predictably are very defensive; they have a strong financial incentive to keep the status quo. Here is a discussion from years ago saying this doesn’t work: http://liberty.i2i.org/2007/10/24/its-official-medicaid-managed-care-does-not-save-money/ . Patients are literally dying while Denver Health looks like a money saver. More than half of Colorado’s Medicaid patients live in Denver County or an adjacent county, meaning this affects the majority of Medicaid patients in Colorado, and makes other reform efforts meaningless in comparison (like Accountable Care efforts). Really a shameful situation for Colorado.

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