California pays Medicaid doctors half as much as North Dakota

July 24, 2012

Avik Roy posted this map today, which looks at Medicaid's reimbursement rates for primary care doctors as a percent of payments to private carriers:

The takeaway seems to be that states that have maintained more expansive Medicaid programs — places like California and New York — tend to get there by paying doctors less to see patients. States who cover fewer people, meanwhile, look to reimburse providers at a higher rate.

The question I had, reading this post, was: What does this mean for Medicaid enrollees? It's a really common gripe from doctors, that they can't even break even on Medicaid patients. Are doctors in California, for example, less likely to accept Medicaid patients since they'll get paid less?

Surprisingly, the academic literature suggests that's not the case. There's surprisingly little connection between how much a state pays its Medicaid doctors and the rate at which they accept new patients. The Center for Studying Health Care Change looked for such a connection in a 2009. It found that 42 percent of primary care doctors were willing to accept new Medicaid patients, fewer than would take on new private patients.

But when they looked for variation by state, the researchers had trouble finding anything significant. "On average, there is no variation in Medicaid acceptance  rates among PCPs [primary care providers] depending on the overall level of PCP supply in the state," the study concludes. "This is unexpected given that low-PCP states have substantially higher Medicaid reimbursement for primary care on average compared to high-PCP states."

Factors other than reimbursement rates seemed to be better predictors of a physicians' willingness to accept Medicaid. Doctors who work for a fixed salary — and therefore are a bit insulated from reimbursement rates — tend to have significantly more Medicaid patients than those who work on a fee-for-service basis.

This all could help explain why Medicaid patients in California — a state tied for third-lowest reimbursement rate — actually tend to have a pretty positive experience with the program. A recent survey of 1,083 enrollees found the vast majority — 79 percent — said it was "easy" to find a primary care doctor who accepted their insurance.

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Brad Plumer · July 24, 2012