Puerto Rico has a post-Maria Medicaid crisis -- and Congress and the White House refuse to do anything about it

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For years, the level of U.S. federal funding for Puerto Rico’s Medicaid program has not been anywhere near enough to provide the island’s needy with a level of medical care comparable to that of other American citizens.

The federal government guarantees the several states at least $1 in federal funds for every $1 the states spend on Medicaid. But Puerto Rico does not enjoy the same guarantees. Neither do Guam, American Samoa and the U.S. Virgin Islands. Instead, the U.S. funds the island’s Medicaid program with a block grant: $347.4 million in 2017 against an actual expenditure of $1.63 billion.

This lower funding persists despite the fact that Puerto Ricans are twice as likely to report fair to poor health when compared to other U.S. residents, according to the Henry J. Kaiser Family Foundation.

Low funding also means doctors are underpaid. Some physicians are paid only $10 a visit for Medicaid patients, which is less than what a hair stylist typically charges to cut and style hair.

The government of Puerto Rico has found itself obligated to finance its disproportionate share of the bargain out of general funds and the revenue from municipalities. This massive shortfall has contributed to the island’s $70 billion debt.

The poverty rate in Puerto Rico, 44%, is more than three times the rate in the 50 states.

The Trump administration has repeatedly proposed block grants to the states, which critics worry would result in reduced federal support for Medicaid, the nation’s basic healthcare plan for poor people.

Jorge Duany, a professor at Florida International University in Miami and author of the 2017 book “Puerto Rico: What Everyone Needs to Know,” said that the contentious relationship between Puerto Rico and the U.S. has created a system where Puerto Ricans are treated as second-class American citizens.

He said Washington’s domination of Puerto Rico militarily, politically and economically for much of its recent history extends to social services.

Unfair and Unequal

“The situation of Puerto Rico with healthcare is reflective of the general situation with the federal government, which is unfair treatment and unequal access of the same kind of benefits and funding that the people in the other 50 states have taken for granted,” Duany said.

This unequal funding has contributed to a chronically under-funded Medicaid system, where the needy, old, and disenfranchised in Puerto Rico do not enjoy the same access to health care as other Americans.

Twenty-one months after Hurricane Maria caused mass destruction on the island, the increasingly impoverished population is facing critical economic and health challenges.

The poverty rate in Puerto Rico, 44%, is more than three times the rate in the 50 states.

The federal government uses a formula known as the Federal Medical Assistance Percentage (FMAP) to allocate funds for Medicaid to the several states. It’s based on each state’s average income relative to the national average so that states with the lowest average personal incomes have a higher FMAPs.

Mississippi, for example, has the lowest per capita income of any state. In 2016 it received $2.87 in federal funds for every $1 it spent on its Medicaid program. Puerto Rico, which is much poorer, received only 55 cents.

Inadequate to Begin With

The Center on Budget and Policy Priorities, a nonprofit research and advocacy organization for poor people based in Washington, D.C., said absent a huge increase in money a fixed block grant can’t replace entitlement funding because the funding is inadequate to begin with. The center said current funding falls short of meeting the needs of those who need it most and “it ignores the federal commitment to help vulnerable individual families” in the 50 states.

Last year, Congress approved a total of $4.8 billion in special funding for the island. This included a $3.6 billion for Medicaid disaster relief with a 100 percent federal match for the Medicaid program and $1.2 billion to build a Medicaid data system and Medicaid Fraud Unit.

The funds, a temporary remedy to supplement Puerto Rico’s inadequate funding after the hurricane, run out on Sept. 30, 2019. This means that if Congress doesn’t act to address the inequities in the system, Puerto Rico will go back to the block grant funding, which is not sustainable at a time when the island continues to face its fiscal crisis and recovering from the massive destruction left by Hurricane Maria.

Health care advocates and Puerto Rico leaders have been raising the alarm in Washington, D.C.

On Feb. 26, Governor Ricardo Rosselló explained to members of the U.S. Senate Committee on Energy and Natural Resources the dangerous threat the Medicaid funding shortfall poses to the most vulnerable people on the island, if Congress doesn’t act soon.

“It is time for urgent action by Congress to fully fund Puerto Rico’s Medicaid program and put an end to territorial inequality once and for all,” he told the committee.

Rosselló noted that if Congress fails to act in a timely fashion more than 425,000 children will not have guaranteed access to their pediatricians, 305,000 of the elderly and disabled will have to get by without the care they need, 17,000 pregnant women will not be able to receive prenatal care and 12,000 newborns will enter this world without the assurance that they will survive their first year of life.

Health care advocates say the uncertainty regarding the funding is destroying an already vulnerable system and the current gridlock in Washington, D.C. is causing more anxiety.

Washington’s domination of Puerto Rico militarily, politically and economically for much of its recent history extends to social services.

“The whole health care system will collapse if we can’t obtain more funding after September,” said Víctor M. Ramos, president of the College of Physicians and Surgeons of Puerto Rico. A variety of health care advocates, local politicians and others are lobbying Congress for renewed funding. “Is not only Medicaid recipients but also any health care provider, and businesses will be hit hard as well.”

Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy, said the cap imposed by Congress has always been inadequate and comes at a great cost to the government and the health care system.

By giving block grants Congress in effect puts a cap on federal support for the health care of Puerto Rico, which provides funding far below what the health status of the island residents require to maintain a reasonably healthy population and minimize premature death and disability.

“The program and the health care system were under a lot of stress before the hurricane,” Park said. “Hospitals were closing floors and they were not investing in new technology and deferring maintenance weren’t keeping up the normal capital spending.

“The one thing that relieved some of the pressure was the Affordable Care Act and Puerto Rico’s draw from the money ($6.3 billion) to make the block grant from Medicaid more adequate, but it was a one-time pot of money.”

Different Treatment and Rules

Puerto Rico’s Medicaid program uses a managed care system by which insurance companies contract with health care providers to create a network, but the program doesn’t cover all the benefits required by the Medicaid program and provides less funding per enrollee than in the 50 states.

The funding approved by Congress in 2018 mandated that the island develop a Medicaid management information system and also create a Medicaid Fraud and Abuse Unit, under the U.S. Department of Justice oversight.

The island’s Medicaid program provides only 10 of Medicaid’s 17 mandatory benefits because of the lack of funding and infrastructure, according to a 2016 report from the Government Accountability Office, the investigative arm of the U.S. Congress.

The program covers dental services but doesn’t cover nursing homes, or non-emergency medical transportation, for example. Doctors and hospitals get lower reimbursement rates than in the 50 states even though medical facilities must meet federal standards of care.

Critics said the managed care program that provides health care services to Medicaid recipients has forced many limitations, and that in turn has prevented enrollees from having a choice of plans, access to some health care services, cheaper prescription drugs and providers.

Spending per enrollee in Puerto Rico is estimated at $2,144 for 2020 while the median state is expected to spend three times ($6,763) more per enrollee than Puerto Rico, according to CBPP data estimates.

Low payment rates have prompted many providers to leave the island in recent years, according to the Center on Budget and Policy Priorities.

Wendy Matos, a physician and executive director of the Medical Science School at the University of Puerto Rico, said the consolidation of providers by insurance companies’ managed care systems has hurt the health care system in Puerto Rico for decades.

“The insurance companies have put in place more barriers by reducing the number of specialists, specialized pharmacies and physical therapy,” Matos said.

On Dec. 13, 2018, the Medicaid and CHIP Payment and Access Commission or MACPAC held public meetings to address the problems of grossly inadequate health care in Puerto Rico.

Ángela Ávila Marrero, executive director of Puerto Rico Health Insurance Administration (ASES in Spanish) was among several health care officials from Puerto Rico who testified. ASES is a non-profit organization that administers and contracts with health care insurers on the island including those managing the Medicaid program.

Some physicians are paid only $10 a visit for Medicaid patients, which is less than what a hair stylist typically charges to cut and style hair.

Ávila Marrero painted a dire picture of Puerto Rico’s Medicaid program as it stands right now, and the challenges it faces if the funding structure doesn’t improve.

She said Puerto Rico has a large population enrolled in the Medicaid program yet the funding is among the lowest in the nation. “That’s the type of disparity that we are talking about,” Ávila Marrero said.

Inadequate funding has led to long delays in making payments to providers. In turn, that – has caused anxiety throughout the health care system for years prompting an alarming number of physicians and other health care workers to leave the island.

Between 2009 and 2014 the total number of physicians available in Puerto Rico dropped from 13,452 to 11,888. That’s an average of 472 physicians leaving per year, or more than nine per week, according to data presented during the public meeting.

Ramón Ruiz, a family physician, said he moved to Jacksonville, Fla. in 2016 because he could no longer afford to work under the cuts in services and mandates imposed by the health insurance companies managing Medicaid and Medicare.

“Unfortunately, it is a business, but it’s supposed to be an honest business,” he said. “How can I go to an old lady who is like my grandmother and tell her that her health insurance doesn’t want to cover this or that?”

Leaving for Florida was a difficult decision to make, Ruiz said. It was hard on his family – three children and a wife who is also a family doctor – and for the patients, he had known for a long time, in some cases two and three generations of the same family.

Orlando González Rivera is the president of Medicare and Mucho Más (a health insurance company) and former executive director of ASES during former Governor Sila Calderón’s administration. González Rivera joined Ávila Marrero in presenting a bleak picture of an island where people are sicker and poorer and how Hurricane María made it worse, but also of an outdated and under-funded health care system in desperate need of adequate funding.

“For example, to get an appointment with an endocrinologist, it could take up to two to three months. You are talking about diabetic patients,” González Rivera said.

To emphasize how problematic this is, the number of specialists dropped from 8,452 in 2009 to 6,713 in 2014. That means every fifth specialist left Puerto Rico during those years.

Witnesses also detailed a dire need for emergency physicians, neurosurgeons, and ear, nose and throat specialists among other specialties.

Ávila Marrero echoed the same sentiment noting that the island no longer has providers willing to accept any further reductions to their already-low rates.

“A doctor for a visit gets like $10 and when you go to do your hair [at a hair salon], you spend more than $50,” Ávila Marrero said. “That’s the disparity we are confronting.”

People Without Healthcare

Puerto Rico has its own definition of what constitutes poverty level and that, it turns out, is much lower than the federal level.

In order to qualify for Medicaid, a family of four in Puerto Rico must show a yearly income of under the amount set as the poverty level on the island, or $10,200. That’s $850 or less a month on an island where the cost of living is higher than in most of the continental U.S.

If Puerto Ricans were to qualify for Medicaid under federal poverty guidelines, they would do so as long as their income (for a family of four) did not exceed $25,750, or a little over $2,000 a month.

This means that a large number of Americans living in Puerto Rico can qualify for Medicaid if they leave the island and move to the 50 states even if their income more than doubles.

Puerto Rico government officials are well aware of the problem, but lack resources to address it.

Luz E. Cruz, Medicaid director for the government of Puerto Rico acknowledged that the federal cap on Medicaid funds gives Puerto Rico limited funds and if the poverty level was raised to the level in the 50 states, more people would qualify for the program.

“And that would mean that the matching portion from the government of Puerto Rico would be higher and that’s money that we don’t have right now,” she said during a brief telephone interview.

Gloria Amador Fernández, executive director of Salud Integral en la Montaña Inc., one of 20-federally funded community health centers in Puerto Rico, said the poverty level used by the government of Puerto Rico has pushed more people out of the system, resulting in lower Medicaid enrollment.

Federally funded community health centers are required to provide primary health care services to patients regardless of their ability to pay.

“Those patients are now uninsured and most of them are coming to our health centers because nobody else is giving them health care services if they can’t pay,” Amador Fernández said during the December meeting in Washington. “An unexpected increase of uninsured patients in Puerto Rico will translate in more patients into our system and we don’t have the total federal funding to cover them.”

Plan Vital Launches

Last November the government of Puerto Rico launched a new managed health care program known as the Vital plan. It was a restructuring of the old plan, called Mi Salud.

The new structure consolidated Mi Salud’s eight regions into a single island-wide system under which Medicaid enrollees can choose from five for-profit insurance companies and their managed care networks.

Austerity measures dictated by an unelected oversight board appointed to restructure the island’s debt for at least five years included deep spending cuts at government agencies, including realigning Medicaid enrollment, cutting visits to emergency rooms and replacing costly drugs with generic ones to cut costs, regardless of impact on public health, records show.

These cuts were made even though the number of people needing these services was rising and inadequate care, or lack of any care, increased need.

The ability to sustain the Medicaid program worries health care advocates who wonder how the proposed cuts will impact Puerto Ricans at a time when they rely disproportionally on Medicaid for health coverage.

Based on the U.S. poverty guidelines, more than 44 percent of the population of Puerto Rico lives in poverty, compared to the national U.S. average of about 12 percent.

About 71 percent of the 1.4 million Medicaid recipients in Puerto Rico are unemployed and 66 percent do not have a high school diploma, according to the data provided during the December meeting.

A 2018 Washington Post/Kaiser Family Foundation survey suggests many Puerto Ricans have even more health care needs after Hurricane Maria.

One in four of respondents said the storm brought physical and mental health challenges while 41 percent said they already had a chronic condition or a disability that got worse. And 26 percent reported problems getting needed care after the hurricane.

Health care advocates said building a health care system based on fair and equal funding to the rest of the nation is vital for Puerto Rico’s overall recovery.

Ávila Marrero, of ASES, said: “We have been confronting an underfunded system for more than 20 years and no matter what changes we can include or implement if we don’t have the right funding we would not accomplish that sustainability and continuity of the program.”

Professor Park, of Georgetown’s McCourt School of Public Policy, agreed.

“Puerto Rico can’t have a strong health care system without a strong Medicaid program,” Park said. “And you can’t have a strong Medicaid program in Puerto Rico without permanently fixing this inequitable treatment because Puerto Rico should have uncapped funding like all the states and the District of Columbia.”

This article was produced as a project for the Dennis A. Hunt Fund for Health Journalism, a program of the USC Annenberg Center for Health Journalism.