Gov. Mark R. Warner (D) issued an emergency order yesterday to increase Medicaid payments for obstetric care by 34 percent in an effort to keep obstetricians practicing in rural and urban areas of Virginia.
Under the first major increase to Medicaid rates in more than a decade, Medicaid will pay Virginia doctors $1,502 for a regular delivery and $1,702 for a Caesarean section, boosting the reimbursement rate from about 60 percent of what private insurers pay to 80 percent.
"Today's action represents an important first step in addressing the problems facing communities all over the state in maintaining access to quality obstetrical care," Warner said in a statement issued in conjunction with his news conference in the Shenandoah Valley city of Harrisonburg.
The increase is an attempt to stem what some doctors and lawmakers said is Virginia's experience with a nationwide problem: a critical shortage of obstetricians serving primarily low-income patients. Many obstetricians, especially those who work in rural or urban areas, say they have been forced out of business by rising insurance premiums and static Medicaid payments.
"We're delighted [with the payment increase], because this is a problem," said Ann Hughes, legislative director for the Medical Society of Virginia, the state's largest doctors group.
Medicaid, a state- and federally funded health care program for the poor, pays for about 40 percent of the 95,000 deliveries in the state each year. Virginia's reimbursement rates are low compared to other states, said Patrick W. Finnerty, director of the Virginia Department of Medical Assistance Services, which oversees the Medicaid program.
The state will pay $7.2 million of the $14.4 million annual cost of the increase.
A scarcity of obstetricians has been particularly pronounced in rural areas, which often struggle to recruit and keep doctors and where a higher percentage of patients are covered by Medicaid. In some rural parts of the state, Medicaid pays for the delivery of more than 60 percent of babies.
In the past 18 months, four hospitals in rural parts of Virginia stopped delivering babies, and at least one other is planning to do so by the end of the year, said Kevin Hall, a spokesman for Warner. With fewer doctors and hospitals to choose from, some laboring mothers have driven hundreds of miles to give birth, Hall said.
"It's just gotten to be untenable for these physicians," Finnerty said.
Malpractice insurers consider obstetrics one of riskiest specialties, and insurance premiums for doctors in the field are some of the highest. Obstetricians in Virginia pay an average of $65,000 a year in insurance premiums, Hughes said. That rate has increased 300 percent in the past two years, she said.
Michael Botticelli, chairman of the obstetrics unit at Rockingham Memorial Hospital in Harrisonburg, said four of the unit's 12 doctors were forced out of business by high overhead costs, soaring insurance premiums and stagnant Medicaid payments.
The situation was so dire that Rockingham had planned to begin turning away Medicaid patients, who account for about one-third of the 1,900 babies born at the hospital each year, starting Sept. 1. The reimbursement increase means Rockingham will continue to serve those patients, Botticelli said.
"There will no longer be the issue of access to care here, which is huge," Botticelli said. "It helps tremendously."
The increase was one recommendation of a task force on rural obstetric care appointed by Warner in the spring. The group, made up of lawmakers, health care officials and patient advocates, recommended a 45 percent increase.
Warner might raise the reimbursement rate again when the task force delivers its final report Oct. 1, Hall said. He said the General Assembly will also tackle access to health care in 2005.
Del. Albert C. Pollard Jr. (D-Lancaster), who serves on the task force, said that while the increase will help obstetricians, the state will also have to rein in insurance premiums to keep more obstetricians in business.
"This isn't a silver bullet solution," said Pollard. "This is one leg in the stool to rebuild the system."