WALLA WALLA — A perfect storm of Medicaid math and an unintended consequence of the health-care overhaul is set to cast its shadow over Walla Walla and the rest of Washington.
The broadening of a Medicaid-eligible population under health-care reform has collided with historically low Medicaid reimbursement rates in the state, said Debbie Dumont, contracts manager for Walla Walla County Department of Community Health.
Under that cloud, Serenity Point Counseling Services is getting paid less now for the care of more than half its clients. The private company, which has provided treatment for chemical dependency in Walla Walla since 2003, is contemplating a bleak financial future and possibly closing its doors.
“We’re looking at exit plans,” said founder and owner Pat Flores.
Not for lack of traffic. Walla Walla has its share of people needing help with addiction — alcohol, prescription pain killers and meth are most the prevalent.
Most recently, heroin is becoming the drug of choice for those who can’t lay hands on the prescription opiates.
Serenity Point saw 271 outpatient cases in 2013, within treatment courses lasting one to two years, Flores added.
But with the nation’s new health insurance system and expansion of Medicaid rolls, Serenity Point has experienced an income shortfall of about $28,000 in the past six months, $10,500 of that in January, according to Flores.
“It’s shocking for us,” he said. “The demand has stayed up there, we are still working at the same capacity.”
Washington health officials say 202,000 adults have signed up for Medicaid because of the Affordable Care Act. Medicaid pays 46 cents on every dollar charged for medical services. Those figures were last updated in 2006, despite a study in 2009 that recommended an increase.
“We have hummed along with those rates in place, making do,” Dumont said.
In more visual terms, she explained the disparity via the cost of checking for drug use: Each urine test kit costs Serenity Point $13, she said.
“But Medicaid rate is $8.67, so Pat loses almost $5 with every urine test,” Dumont said.
Before 2014, however, state dollars filled the gap for low-income patients who previously did not qualify for federal health care, paying at a rate of 68 cents per dollar. That funding covered people unable to provide for themselves and unable to work for a variety of reasons.
Serenity Point, the sole agency providing chemical dependency treatment to Medicaid patients here, received a mix of patient funding in the past — 60 percent at the higher-paid state rate, 35 percent at Medicaid levels and about 4 percent private pay.
The average cost of treatment is $4,260 per year. State money paid for group therapy at $31 an hour, while the federal rate is $19.28 per hour, Flores said.
Dumont said the combined funding, boosted with Walla Walla’s mental-health sales tax, made it possible to have local high-quality chemical dependency treatment without long waiting lists.
“Now we are one of many, many counties finding providers in critical situation,” she said. “Tri-Cities is not taking Walla Walla patients for the same reason. They are all facing the same struggle.”
Flores, who has been in the counseling profession since 1987, said he is doing all he can to stay open.
Outside cleaning services are gone and all 40-hour employees have been reduced to 32 hours per week. Portions of the Serenity Point office space will be surrendered to the landlord and urine drug screenings — perhaps the most important tool in determining if a client is following his or her program, he said — have ceased.
Staff cuts will have to come next if those measures don’t succeed, and that move is not easy to recover from, Flores said. “It’s hard to recruit to this area.”
Common wisdom is that more Medicaid clients will eventually compensate for lower reimbursement. That’s not something he can bring to investors, however, Flores said.
“We voted not to seek a loan or increase our line of credit,” he said. “We couldn’t come up with a good business plan — we can’t fill a sinkhole that’s fallen in front of us, not knowing how we could pay loaners back.”
Government experts predict providers will see a 15 percent increase in business over time, he added, “but how do you hang on until then?”
Sheila Hagar can be reached at email@example.com or 526-8322.