Level of Physician Payment and Access in Medicaid

By October 4, 2019 Commentary

Researchers in a paper carried by the National Bureau of Economic Research assessed the effect of physician reimbursement on access for Medicaid patients and the effect of that access on other outcomes.  (NBER Paper)   Medicaid historically has paid providers about two-thirds of Medicare rates and even less in comparison to commercial payments.  As a result, a large percent of doctors won’t see new Medicaid patients or even continue to care for existing ones.  In addition, the Medicaid program is very difficult to work with from an administrative perspective.  The health reform law, which significantly expanded Medicaid eligibility, also required an increase in Medicaid reimbursement to Medicare levels for certain primary care services, funded initially by the federal government.  This resulted in an average increase of 60%, although due to variability in the states in pre-existing reimbursement levels, there was a wide range.  The researchers used this change in reimbursement to identify effects on access and other outcomes.  Their primary finding is that increasing Medicaid rates by $10 results in a 13% drop in the number of doctors who won’t see new adult Medicaid patients and a 25% drop in parents who say they can’t find a physician for their Medicaid-covered children.  This suggests that a $45 increase on average in payments would eliminate child access issues and most of the adult ones.  They found little evidence for an offset of increasing access issues for the commercially insured, suggesting that physicians have extra capacity if the reimbursement is adequate.  The increases in payment also led to a greater likelihood of a physician visit and to greater self-reported good health status.  And for children it led to a significant decline in chronic absenteeism from school.

The federal increased payment mandate expired after a couple of years and most states understandably returned to their prior reimbursement, since Medicaid is already a budget killer for them.  This created more changes to analyze, and the authors found that access then declined in those states to prior levels, along with a negative change in the other outcomes studied.  Of course, the researchers don’t look at what the cost to the taxpayers would be for raising and maintaining reimbursement at the levels needed to ensure good access to care.  It is tens of billions of dollars a year, just for physician payments.  Now keep the results of this paper in mind when studying Medicare for All proposals, which would dramatically reduce physician and other provider reimbursement on commercial patients, leading to a substantial, likely 30% to 40% reduction in their incomes and revenue.  Do you really think that won’t have an impact on access and on who decides to work in health care?  And do you think it won’t ultimately impact quality?  You only believe that if you are a delusional ideologue, which is apparently the case with almost all of one party’s presidential candidates.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

More posts by Kevin Roche

Leave a Reply