Patients, doctors say Puerto Rico’s health system in critical condition

With Medicaid facing a $200 million budget shortfall, providers are not getting properly reimbursed

For many doctors and hospitals in Puerto Rico, it’s the island’s ailing health care system that’s in need of urgent care. So when Hillary Clinton makes her first campaign stop in Puerto Rico on Friday afternoon, it’s no surprise that a roundtable discussion with health care industry and patient representatives is on the agenda.

General practitioner Miguel Sosa, 64, said he employs about 30 doctors in seven offices in Puerto Rico, and a majority of his patients are enrolled in Medicaid. With that program facing a $200 million and growing budget shortfall on the island, Sosa says, he has submitted $200,000 in invoices over the past six months that have gone unpaid or been only partly paid.

“It’s a problem because I need to pay to a doctor, to the nurse, to the rent, lights, telephone, all that. And I need to take a credit line in the bank, and I pay interest for that,” he said while standing in an examination room, a stethoscope around the collar of his white guayabera.

Puerto Rico’s economic crisis came to a public head in June when Gov. Alejandro García Padilla announced that the island’s $73 billion debt was unpayable. For years, the U.S. territory has been borrowing to pay its bills — including funds to sustain Medicaid, in which nearly half its 3.5 million residents are enrolled.

And with the health care industry the largest employment sector after the government — accounting for 20 percent of Puerto Rico’s GDP — its financial woes are pushing an already crumbling economy closer toward collapse.

As a result, thousands of doctors have left the island over the past five years in search of better earnings on the mainland. At the same time, Puerto Rico’s population is rapidly aging. Waiting rooms and emergency rooms are overcrowded, health advocates say, and nurses and doctors — particularly specialists — are in short supply.

“I was trying to find a pediatric neurologist for my son, and I called my insurance. They only had one, and she was full until December. I called in May,” said Astrid Perez, a teacher who was seeing Sosa for an annual checkup before the new school year. “I had to go to another doctor, and I had to pay full price.” 

If the situation sounds dire, experts say it’s about to get worse.

James P. O’Drobinak, the CEO of Medical Card System and president of the Puerto Rico Medicare Coalition for Fairness, wrote in an April opinion piece for Morning Consult that 2016 will be a “catastrophic year” for the health care system in Puerto Rico.

Hemorrhaging funds

Two-thirds of Puerto Rico’s residents are enrolled in Medicare or Medicaid programs, the latter of which is known locally as Mi Salud (My Health). Both programs face major looming budget cuts. 

More than 75 percent of Puerto Rico’s eligible seniors — about 250,000 individuals — are enrolled in Medicare Advantage, a private alternative for Medicare beneficiaries. In January that program will see an 11 percent reduction in premiums — a loss of about $300 million per year. 

The cuts are intended to bring reimbursements for Medicare Advantage services in line with traditional Medicare rates in Puerto Rico.

“Puerto Rico has a significantly higher share of their Medicare beneficiaries in Medicare Advantage, so that’s why there’s a lot of concern about those,” said Edwin Park, the vice president for health policy at the Center on Budget and Policy Priorities, a nonpartisan research institute. But Medicare Advantage payments in Puerto Rico, he said, far exceeded traditional Medicare costs.

Medicaid is an even bigger concern. With nearly 1.7 million residents enrolled, Medicaid in Puerto Rico costs $2.5 billion per year. Less than $400 million is paid by the federal government and the rest by the territory.

In comparison, Mississippi, which is the poorest U.S. state but is still wealthier than Puerto Rico, receives roughly $3.6 billion — more than 70 percent of its Medicaid costs — from Washington.

As a U.S. territory, Puerto Rico is excluded from the federal health exchange and, since it does not pay federal income tax, is not eligible for the federal subsidies that would make a statelike exchange for Puerto Rico more affordable.

To compensate for the disparity in funding, Puerto Rico received additional one-time federal grants of $5.4 billion and $925 million in Medicaid funding in 2011 through the Affordable Care Act. That was expected to last through September 2019, for an additional $800 million per year, bringing the total coverage to $1.2 billion — still under half the cost. However, that money may run out as early as the end of next year, with critical consequences.

“We will have to drop a million people if we want to provide the same benefits and be in compliance with ACA,” said Ricardo Rivera, the executive director of the Puerto Rico Health Insurance Administration. “We’ll have to go from 1.6 million people to 600,000 people.”

‘I will not rest until every physician, every hospital gets paid.’

Ricardo Rivera

Puerto Rico Health Insurance Administration

‘Treat me as Mississippi’

The disparity in the federal formula for calculating fee-for-service rates in Puerto dates to 1968, when Congress capped the amount of Medicaid funding in U.S. territories.

“Certainly Puerto Rico has a long-standing issue that a disproportionate share of its residents are low income, but Puerto Rico and the other territories are treated differently in terms of how they receive federal funding,” said Park.

In the states, the federal government covers 50 to 74 percent of states’ Medicaid costs, depending on need, with the poorest states like Mississippi, South Carolina and West Virginia at the high end. Puerto Rico, however, gets a fixed pot of money, irrespective of need. For fiscal year 2015, that was $373 million — just 15 percent.

“An arbitrary amount of federal funding not actually related to need creates significant problems,” Park continued. “The program is underfunded, and as a result, people aren’t able to get coverage or can get coverage but can’t afford services because co-payments are too high or services cut back.”

But bringing Puerto Rico’s health care financing structure more in line with the states’ would increase costs for the federal government.

“What we have told the Department of Health of the United States is, ‘Listen. Let's forget about fair treatment. Treat me as you treat the worst jurisdiction that you have," said Rivera. "In the case of Medicare, treat me as the U.S. In the case of Medicaid, treat me as Mississippi.’ That’s all we ask.” 

In the spring, shortly before Padilla’s announcement about the public debt, doctors, hospitals, health care advocates, unions and insurance companies formed the Puerto Rico Healthcare Crisis Coalition to lobby Barack Obama’s administration and Congress for what they see as more equitable funding for health care in Puerto Rico. In the spring they funded a poster campaign to increase awareness in Washington.

The chairman of the coalition is Dennis Rivera, a former head of New York’s health care workers union 1199SEIU.

“Puerto Rico is shortchanged,” he said. As a result of the Medicaid cap, he added, roughly a quarter of Puerto Rico’s tax revenues go toward health care payments.

Some have argued that failing to fix Puerto Rico’s federal funding formula will cost Washington more in the long run, since Puerto Rico residents can easily resettle with family members on the mainland, where health care is much pricier.

But Park questions that theory.

“There’s always been arguments about whether people will migrate based on taxes or the amount of benefits provided in various safety net programs, and a lot of literature shows that generally isn’t the case.”

For Ricardo Rivera, who oversees reimbursement payments as the head of the health insurance administration, the burden of not being able to pay hospitals and physicians weighs heavily. But it’s also what gets him out of bed each morning.

“I will not rest until every physician, every hospital gets paid. And if I have to do it little by little and it will take me one year or one year and a half, we will find a way to do it,” he said. “We will not rest until the physicians and the hospitals get paid for the work that they have done.”

In the meantime, despite the uncertainty of receiving the $200,000 owed him, Sosa refuses to turn away his patients.

“[I] don’t have the heart to not give service,” he said.

Jonathan Betz contributed to this report.

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