“We have the health crisis and the financial crisis. It’s a perfect storm.” Elliot Pacheco, pharmacy owner

The financially strapped healthcare system has only helped fuel the exodus of tens of thousands of mostly younger, healthier Puerto Ricans to the mainland seeking relatively better opportunities. They have left behind an older, poorer population. Today, nearly two-thirds of Puerto Ricans qualify for Medicaid or Medicare, compared with one-third of people on the mainland.

In 2011, the Affordable Care Act infused $6.4 billion into Puerto Rico’s anemic healthcare system. The funding was intended to help sustain the program until 2019, but Puerto Rico burned through it faster than expected.

When that money runs out as soon as next year, the island risks falling off a “Medicaid cliff.” The debt crisis has cut off the island’s access to bond markets, so Puerto Rico cannot borrow to help cover its $2.8 billion annual Medicaid budget.

“This has been building for years. Now, we have the health crisis and the financial crisis. It’s the perfect storm,” said Elliot Pacheco, owner of a community pharmacy in Cayey.

ALARMING SCENARIO

The implications are ominous. As many as 900,000 people – more than a quarter of the island’s population -- could lose insurance coverage, according to an August letter from U.S. Treasury Secretary Jacob Lew and Health and Human Services Secretary Sylvia Burwell to Senate Finance Chairman Orrin Hatch, urging Congress to address Puerto Rico’s funding crisis. Hatch heads a bipartisan congressional task force that is to release by year’s end its recommendations for long-term fixes to Puerto Rico’s economic woes.

Health officials warn that hospitals, where emergency rooms are required by law to treat everyone regardless of ability to pay, may shutter as patients flood in for routine care, like prescriptions for insulin refills.

This all comes as the mosquito-borne Zika virus gains ground in Puerto Rico. As of October, more than 2,000 pregnant women were diagnosed, according Puerto Rico’s Health Department. The federal Centers for Disease Control and Prevention said in July that the island is “in the midst of a Zika epidemic,” and that hundreds of babies could be born with microcephaly, the devastating neurological defect linked to the infection.

“As U.S. citizens, Puerto Ricans living and working in the island deserve the same access to health care as those on the mainland,” said Ricardo Rivera, head of the Puerto Rico Health Insurance Administration. “These hardships will only worsen if the U.S. government fails to extend equitable health care funding to Puerto Rico.”

As it stands, the half a million diabetics in Puerto Rico are competing for the attention of fewer than 60 endocrinologists. The wait to see an oncologist can be three months. With 90 obstetricians on the island who deliver babies, some hospitals rely on emergency room doctors to handle labor and delivery.

“Before the government ran into all these debts, we could provide adequate care here,” said Dr Joaquin Vargas, president of Puerto Rico’s Independent Physicians Association, who runs a clinic in Bayamon. “Now, patients just get on a plane.”

That’s the option Carmen Miriam Vazquez is weighing. The 64-year-old was diagnosed with diabetes last year. Her doctor gave her a prescription to control her blood sugar and recommended that she consult a specialist. When Vazquez called to make an appointment with the endocrinologist, she was told the wait was seven months.

“I’m trying to decide if I should go to the states,” said Vazquez, whose son lives in Florida. “It might be better for me.”

Better, say many local officials and medical professionals, because of the U.S. government’s unusual treatment of the island.

The 50 states share the cost of Medicaid with the federal government, which covers 75 percent of the bill in low-income states such as Mississippi. In the 1960s, Washington capped its share paid to dependent territories. Puerto Rico gets about $335 million a year under the cap, or only about 12 percent of its annual Medicaid bill.

In Washington, the reason typically offered to explain the difference in the way Puerto Rico is treated is that islanders don’t pay federal income taxes -- a major source of funding for the Medicaid dollars sent to states.

But the Government Accountability Office, the investigative arm of Congress, found in 2014 that if Puerto Rico became a state, Washington would probably pay billions of dollars more for public programs than it would collect in taxes from islanders. The federal share of Puerto Rico’s Medicaid program would jump from about 12 percent to 83 percent, costing upwards of $2.1 billion a year.

Instead, Puerto Rico was left to cover most of the bill itself, and it did so with a heavy reliance on borrowing. Jose Laborde, a University of Puerto Rico economics professor, estimates that healthcare funding accounts for roughly $25 billion, or more than one-third, of the island’s total outstanding debt.

“All of this goes back to Puerto Rico’s status. It’s treated like a state, yet it’s a second-class state for Medicaid. It’s a foreign country for some tax laws,” said Jeffrey Farrow, a Washington-based policy adviser specializing in Puerto Rico. “It’s the mixture of these policies, and that doesn’t work.”

Former Governor Luis Fortuno, who ran on a fiscally conservative agenda, said that shortly after taking office in 2009, he begrudgingly issued $500 million in bonds specifically to cover a Medicaid shortfall.

Video: Is there a doctor in the house?

“You try not to incur debt, and if you do, you want it for the purpose that will generate new economic activity and create jobs,” said Fortuno, who was governor until 2013. “None of this generates new economic activity or creates jobs.”

When asked about Puerto Rico’s treatment relative to the states, the Centers for Medicare & Medicaid Services (CMS) emailed Reuters a White House “Roadmap for Congressional Action” on the island’s economic crisis. It recommends, among other things, that Congress “reform Puerto Rico’s Medicaid program to increase access to coverage, raise the standard of care and prevent Medicaid’s unstable financing from worsening Puerto Rico’s fiscal crisis.”

Puerto Rico’s healthcare system is treated differently in other ways. The reimbursement rate for Medicare is 40 percent lower than in the states, even though islanders pay the same payroll taxes and premiums that fund much of the program.

Islanders do not automatically receive Medicare outpatient coverage, unlike mainland residents. So roughly 75 percent of Puerto Rico’s elderly choose privately managed Medicare Advantage plans (compared to 31 percent nationally) to get the coverage.

CMS last November found it overpaid Medicare Advantage plans nationally to the tune of $14.1 billion in 2013, mostly for diagnoses that it said weren’t supported by medical records. But in Puerto Rico, CMS has historically paid Advantage plans less per patient than it has in the states. That difference has been based partly on the assumption that Puerto Ricans spend comparatively less than mainlanders on healthcare because they earn less.

NEW MATH

A 2012 formula change to Medicare Advantage rates widened the disparity: Puerto Rico’s dropped to 43 percent below the national average.

Doctors complain that insurers have compensated for the reductions by trimming costs in ways that make it hard for many to continue practicing. For one thing, Advantage plans shed roughly one in nine physicians in their networks, in effect preventing those doctors from seeing patients covered by the plans, according to the College of Physicians.

Internist Gwendolyn Casanova said she lost 40 percent of her practice -- about $60,000 a year of billed work -- after Advantage plan MMM terminated her contract. “That’s why I decided to go,” said Casanova, who moved to Florida in January with her husband, also a physician. She now works at a Department of Veterans Affairs hospital.

MMM President Orlando Gonzalez said the plan’s network was dynamic and that “every given month we are excluding and including new providers to make sure our members have the access they need.”

Doctors also complain that insurers more regularly refuse to authorize procedures or to pay claims submitted after a procedure.

“We don’t have time to convince insurance companies case-by-case why it should be done.” Humberto Guzman, pediatric orthopedic surgeon

“I got word that two [recent] scoliosis surgeries were not authorized. I’m not getting paid,” said Dr Humberto Guzman, one of nine pediatric orthopedic surgeons on the island.

Patients wait three months for an appointment with Guzman, and several weeks for surgery. During that time, if a child’s broken bone begins to heal misaligned, he must refracture it.

“This is not the way it should be,” Guzman said. “We don’t have time to convince insurance companies case-by-case why it should be done.”

Since 2012, CMS has fined several Medicare Advantage plans in Puerto Rico for denying coverage and related compliance violations.

Among them, MMM was fined $75,000 for failing to authorize CMS-approved prescriptions and not responding in time to expedited coverage requests in cases where delays could have put patients at serious risk.

Triple-S, a Blue Cross Blue Shield licensee, was fined $350,000 for inappropriately rejecting claims for “critical” drugs that exceeded $500 and for CMS-approved prescription refills.

Triple-S blamed the issues on a pharmacy benefits manager that has since been replaced. MMM said it had taken corrective action to comply.

Insurance executives said they are forced to provide quality care more efficiently as reimbursements decline and costs rise. Doctors’ pay is under pressure, they said, because of simple economics: Many of the health costs they cover – the use of medical equipment, diagnostic tools and prescription drugs – differ little from costs in the states and are relatively fixed, while labor costs are more flexible.

“The system has kept compensation repressed in order to survive,” said MCS Advantage Inc President Roberto Pando Cintron. “It’s the only element that may be influenced.”

His company was hit with a $652,650 fine from CMS in June after the agency uncovered “systemic” problems, including inappropriately denied coverage. MCS said it quickly addressed the audit’s findings and made necessary adjustments.

Many doctors are skeptical that Puerto Rico’s government can effectively police insurers because of close ties with the industry.

In August, Governor Alejandro Garcia Padilla vetoed a bill that, among other things, would have prohibited insurers from dropping doctors from their networks without cause. The governor’s brother, Luis Garcia Padilla, is a vice president at MMM. The island’s insurance commissioner, Angela Weyne-Roig, worked for decades in the insurance industry, including at MMM and PMC Medicare Choice, another Advantage plan.

MMM and PMC, both owned by New Jersey-based insurer InnovaCare Inc, are defendants in a whistleblower lawsuit brought in 2011 by a former executive of an affiliated plan in Puerto Rico alleging that they knowingly overbilled CMS by $1 billion over four years. The case remains in litigation.

MMM said the allegations in the lawsuit are false. MMM President Gonzalez said the plan’s ties to Insurance Commissioner Weyne-Roig and the governor’s brother “are incidental to our day-to-day operations.”

Weyne-Roig said she only handles contract disputes between insurers and providers and that CMS deals with the rest. She abstains from matters involving MMM and PMC.

LOWER PAY

Doctors do generally make much less on the island. Pediatricians, for example, earn $67,000 a year on average, compared to $183,000 nationally, according to the U.S. Bureau of Labor Statistics. The average salary for an obstetrician/gynecologist is $222,000 nationally, but only $101,000 in Puerto Rico. An anesthesiologist earns $258,000 nationally, but just $77,500 in Puerto Rico.

Dr Luis Rodriguez, a general practitioner, said that in Puerto Rico, he worked 60 hours a week, including nights and weekends. He moved to Florida in 2014 and now works an 8-to-5 shift as a doctor in a county jail – and makes nearly three times what he earned in Puerto Rico.

“I’m not planning to go back soon,” he said.

Advertisements for bilingual doctors and nurses dot the island’s Sunday classifieds and radio broadcasts, offering high-paying jobs in Texas, Florida and New York.

Domingo Cruz Vivaldi, head of San Jorge Children’s Hospital in San Juan, regularly advertises for doctors, but “no one answers. Absolutely no one answers.”

He ticks through the recent staff losses. One pediatrician moved to Tampa, Florida, and another to a rural area of that state. A third one didn’t announce he was leaving. “He just left and called two weeks later from somewhere in Florida.” One of the hospital’s two pediatric pulmonologists recently relocated to Orlando.

“I had a lady from the states come in with her son. We asked her what she was doing in Puerto Rico,” Cruz Vivaldi said. “She was a recruiter, interviewing physicians.”

The average age of pediatricians at Cruz Vivaldi’s children’s hospital is 60. He recently closed a 25-bed wing of the hospital, a sixth of capacity. He has cut staff hours, slashed overtime and vacation benefits, and reduced the number of sick days.

In the emergency room where Karen Garcia sought treatment for her son after his seizure, the doctor prescribed Keppra, an anti-epileptic medication. It made him aggressive, a known side effect. His pediatrician switched him to Dilantin, another common anti-epilepsy drug.

Dilantin, too, can have severe side effects, and it requires regular testing because it can be toxic at high levels in the bloodstream. Garcia said Luis’s pediatrician lowered the boy’s dosage in July after an overdose.

Garcia continues to call the pediatric neurologist’s office to beg for an appointment. Each time, the response is the same: The doctor is booked through next summer and won’t schedule appointments beyond that.

————— By Robin Respaut Graphics: Christine Chan Video: Lily Jamali Photo editing: Claudia Daut Edited by John Blanton