Hawaii doctors who treat Medicaid patients to get significant pay raise

HONOLULU (HawaiiNewsNow) -Many Hawaii doctors will be getting a pay raise thanks to the state Legislature.

Experts say new rates for treating Medicaid patients will keep some doctors from leaving the business of medicine.

Hawaii has about 450,000 people on Medicaid, medical coverage for low-income residents. That’s a third of the population, and starting soon, the doctors who treat them will be paid considerably more, according to Hilton Raethel, CEO of the Healthcare Association of Hawaii.

“So, this will be a huge incentive for physicians to take Medicaid patients and will also make it more viable for their practices when and some of those many physicians are really struggling to practice,” Raethel said.

Doctors are paid less by Medicaid than any other insurance.

Legislation that will be approved this week would raise Medicaid rates to match Medicare reimbursements, which have been about 40% higher than Medicaid.

Dr. Scott Grosskreutz, a Hilo radiologist, has been calling for the state to improve the viability of medical practices, especially on the neighbor islands.

“So that’s wonderful news and mahalo to Governor Green and the Legislature for making this happen,” he said.

Grosskreutz said neighbor island doctors deal more with Medicaid patients, so higher reimbursements are crucial, but not the entire solution.

“You’re going from a case where you’re losing money to kind of breaking even,” Grosskreutz said.

For primary care doctors like Dr. Esther Smith of Kealakekua, the raise will be less dramatic because some Medicaid programs pay better than others. She said HMSA’s Medicaid plan now pays about $25 per patient per month while Medicare pays $32. Other health plans pay closer to the Medicare rate.

“I think it’s more likely that people who already take Medicaid will have a slightly less dire situation,” Smith said. “I think we’ll have some improvement. I don’t think it’ll be enough. That is really the short the short answer.”

Smith and Grosskreutz joined other doctors this year to ask lawmakers to exempt Medicaid, Medicare and federal Tri-Care from the Hawaii excise tax, which is collected on their entire income from government health care programs.

Smith said the excise tax, which she can’t collect from patients, adds up to $20,000 to $30,000 a year for her practice.

Lawmakers early in the session decided against any new excise tax exemptions.

Lawmakers set aside $30 million per year for the higher Medicaid reimbursements, which will be matched by $43 million in federal funds — for a total of $73 million a year going to local medical practices.

Raethel said lawmakers have also agreed to spend $10 million in 2024 and $20 million in 2025 to help medical professionals, including doctors, nurses and social workers to pay down educational loans.

“So, between the increased funding for Medicaid and the loan repayment, we’re in much better stead now than we have been in many years in terms of recruiting and retaining physicians, especially in our most underserved areas,” Raethel said.

The budget is scheduled for a final vote before the Legislature adjourns Thursday.

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