House hears Gates’ plans

A state House committee’s new anti-poverty fact-finding tour stopped in Altoona last week to hear local doctor Zane Gates explain his plan for the state to divert Medicaid money to help the working poor.

House Majority Policy Committee Chairman Dave Reed left impressed with Gates’ plan to use money the federal government would allocate for Medicaid expansion to fund clinic-style centers for health in areas where not enough doctors take Medicaid patients – while subsidizing insurance for those patients.

“It’s an exciting potential option,” said Reed, a Republican representative from Indiana County, whose committee recently launched an initiative called Empowering Opportunities: Gateways Out of Poverty. “So the working poor can get insurance in a more cost-effective manner.”

The state has not yet decided whether to accept the federal Medicaid expansion funds, which would pay 100 percent of the costs for three years to extend Medicaid eligibility from 99 to 138 percent of federal poverty level, then at least 90 percent of the costs for subsequent years.

According to Gates, that expansion would work in big cities, where there are teaching hospitals with plenty of physician residents to serve Medicaid patients.

But it wouldn’t work in many other areas, including Altoona, where most doctors don’t want to take Medicaid patients – not because they’re uncaring – but because they lose lots of money, Gates said.

“You can’t run a business when it costs $60 to see someone and you only get $33,” Gates said.

Gates’ proposal would be separate from and in addition to the $2-million expansion of his clinic model in Pennsylvania, laid out in the recently enacted Community-Based Health Care Subsidy Act.

His new “centers for health” proposal would depend on partner hospitals, upfront payments and a limited insurance plan.

Partner hospitals would provide the facilities for the centers, which would be modeled on Gates’ experience with his Partnering for Health Services clinic in Altoona and a recently established similar clinic in Indiana County.

The hospitals would receive an up-front annual payment of $700,000 each from the Medicaid money to pay for the centers’ operations.

They would also receive a per-capita up-front payment of $40 to $50 a month from the Medicaid funds to provide routine imaging and lab services to center patients.

Paying up-front for the operational costs of the centers and for predictably necessary services relieves the centers of a vast amount of burdensome administrative work processing insurance claims, enabling them to focus on patient health, according to Gates.

It makes no sense to insure such primary care – tests like mammograms for example – through insurance claims, any more than it would make sense for auto policies to insure oil changes or brake pad replacements, according to Gates.

Freed of administrative work, caregivers can listen to “the old lady who needs [us] to talk to her,” Gates said.

The full focus on patient health – which includes an emphasis on illness prevention – benefits the partner hospitals by keeping center patients from making unnecessary emergency room visits.

Such visits are costly, inefficient and almost always uncompensated, officials at the presentation said.

Studies show Gates’ Partnering for Health Services saved Altoona Regional Health System $842,000 over four years in avoided admissions and emergency room visits, based on a comparison with two local doctor groups, according to Gates.

Gates’ proposed insurance plan would use traditional claims for unpredictable needs, including emergency room visits, inpatient care and outpatient surgery.

Center patients would pay between $36 and $80 a month, depending on income.

Medicaid subsidy money would cover the remainder of the premium costs.

The patients’ share of those premiums need to be high enough to generate revenue for the program, but not so high that people shy away from buying the coverage, according to Patrick Reilly, a Buffalo-based insurance broker, and Gates’ partner.

Patients who can afford it generally want to pay something, Gates said.

The cheapest government plan is managed Medicaid, which costs the government about $425 a month per patient, with “very limited benefits,” Gates said.

Gates’ suggested his program should be an option for anyone with income up to 300 percent of federal poverty.

The up-front payments and the insurance premiums and reimbursements must flow out of good-faith, cooperative and transparent negotiations between parties that traditionally keep their business interests confidential, so that each gets what it needs to make the program work, but no more, so costs are minimized, according to Gates.

Under Gates’ proposal, there would be no deductibles, co-pays or co-insurance, so as not to discourage patients from seeking the help they need.

Deductibles, co-pays and co-insurance reduce costs in the short term but inflate them in the long term, because patients sometimes avoid the care they need – especially routine and preventive care, whether they’re rich or poor, according to a study by the Rand Corporation, Gates said.

All regular clinic staff, including doctors, would be paid with Medicaid money or forgiveness of student loans.

There would be pharmacy, dental and vision components to the plan.

The insurance plan at Partnering currently requires individuals who can afford it to pay $99 a month, while small businesses who qualify pay $167 per person.

Clinics like Partnering would be subsumed into the new program, with patients getting the benefit of the proposed cheaper coverage, Gates said.

The program has the potential to set to rest one of the biggest concerns of lawmakers regarding the proposed expansion of Medicaid – that after the federal commitment to pay for it ends in two years, the state will be left “holding the bag” for the cost of the additional clients, Reed said.

The program can ease concerns, because it would be 30 to 50 percent cheaper than regular Medicaid, Gates said.

“With this system, patients see the doctor more, talk to their pharmacist more, [but] go to the emergency room less and are admitted to the hospital less,” said Neil Port, chairman of the UPMC Altoona Foundation for Life. “That seems to me to be a good model.”

Gates’ proposal should work because it started conceptually with patient care, rather than insurance payments, according to state Representative Jerry Stern.

“Zane has turned this upside down,” Stern said. “That’s why this is a recipe for success.”

Mirror Staff Writer William Kibler is at 949-7038.