One child, a $21-million medical bill: How a tiny number of patients poses a huge challenge for Medi-Cal

Somewhere in California, one child’s medical expenses in 2014 totaled $21 million — a bill covered entirely by Medi-Cal, the state’s version of Medicaid.

The child’s condition is not known. But the cost of care was mentioned in recent Twitter and Facebook posts by Jennifer Kent, head of the state Department of Health Care Services, which runs Medi-Cal.

Kent declined to provide additional details. But she said that in recent years, Medi-Cal has had at least one patient whose annual medical expenses have reached between $15 million and $21 million.

The massive bills speak to the breadth of services Medi-Cal provides, as well as the staggering costs of some of those services.

They also underscore the challenges policymakers are facing with possible cuts in the federal government’s contribution to Medicaid proposed in the House and Senate Obamacare repeal bills. For patients like these, there often isn’t anywhere to reduce costs, experts say.

“They are very expensive people with really expensive needs,” Kent said in an interview. “Your disease defines the treatment you require, and the costs are joined to that diagnosis.... That’s just the nature of the beast.”

Nearly $2 million a month in healthcare costs?

Medi-Cal, which is jointly funded by the federal and state governments, provides health coverage to 13.5 million Californians, or a third of state residents.

State data show that the most expensive 1% of patients in Medi-Cal account for 23% of the program’s spending. Ten percent of patients create 63% of total costs.

Some of those people may be addicted to drugs or have a mental health condition that contributes to their high healthcare expenses. They may overuse the emergency room because they don’t know how to navigate the healthcare system or find a primary care doctor.

Kent said the department does “rewarding” work trying to help the so-called high utilizers. The department might direct them to recovery programs or connect them with behavioral health treatment.

But those sorts of fixes can’t reduce healthcare costs for everyone, she said.

Medi-Cal patients incurring the absolute highest costs tend to have severe genetic disorders such as cystic fibrosis, hemophilia, Duchenne muscular dystrophy and sickle cell disease, Kent said.

Patients with hemophilia, a disease in which the blood doesn’t clot, can require costly infusions of blood clotting factors multiple times a day. A drug was recently approved for Duchenne muscular dystrophy that costs $89,000 a year.

“If someone requires $5 million worth of blood factor because of their hemophilia, then ... we can’t ‘manage’ that cost. There’s nothing that can be done, because that’s medically necessary,” Kent said.

This year, an insurer in Iowa disclosed that a child there with hemophilia had healthcare costs totaling $12 million.

Katie Verb, director of policy and government relations for the Hemophilia Federation of America, said that treatment for patients with severe hemophilia could reach $1 million annually but that $12 million — let alone $21 million — is unheard of. Mary Dwight, senior vice president of policy for the Cystic Fibrosis Foundation, said she was not aware of any cystic fibrosis patients whose yearly bills were in the tens of millions.

Katherine Hempstead, a health policy expert with the Robert Wood Johnson Foundation, said some sick patients could require teams of doctors, around-the-clock care or experimental drugs that could drive up costs further.

“I’m sure it’s just some unfortunate person that has a lot of medical needs and is very expensive to take care of,” she said.

She said people who have insurance through their jobs and become sick may have to stop working and spend their savings on medical care, and they could end up relying on safety net programs that support low-income Americans.

“Medicaid probably has more than their fair share of stuff like that,” she said.

The Senate Obamacare repeal bill

That’s why state officials say they’re concerned about the Senate healthcare bill.

GOP legislators unveiled a proposal last month that would dramatically scale back Medicaid, making funding 35% lower in two decades than under current law, according to an independent analysis by the Congressional Budget Office. A revised version of the bill released Thursday includes the same changes to Medicaid.

California officials estimate that the bill would leave Medi-Cal with $115 billion less through 2027 than it would receive otherwise.

Geoffrey Joyce, director of health policy at the USC Schaeffer Center for Health Policy and Economics, said the Medicaid cuts would likely mean pushing people out of the program or limiting their benefits. Provider rates are already low, and states are already barely making ends meet with the funding they currently have, he said.

“What do they have to do? They have to slash and burn,” he said.

The Senate bill would change the way Medicaid is funded, switching it from the current model in which the federal government reimburses states for its expenses, regardless of how large they are, to a fixed amount of money for each state.

Ed Haislmaier, healthcare policy expert at the conservative Heritage Foundation, said the change would give states an incentive to run their programs better and cut down on fraud and abuse that could be driving up costs. The bill would also give states flexibility to allow them to charge enrollees co-pays, which could discourage wasteful medical care such as frequent emergency room visits, he said.

“If you do a better job managing how people utilize services, you can certainly provide better care at a lower cost,” he said.

The half of Medi-Cal patients with the lowest annual expenses account for just 7% of Medi-Cal spending, state officials said.

Experts, however, said the changes to Medicaid in the Senate bill are so drastic they would likely put a squeeze on everyone in Medi-Cal, including the child whose costs totaled $21 million.

“There’s obviously room for improvement, but there’s still going to be just genuinely complex patients that are expensive,” Hempstead said.

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Twitter: @skarlamangla

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