Medicaid’s ‘Low and Slow’ Payments Squeeze Care Access for the Poor

Published November 18, 2014

Medicaid, the state/federal program that pays health care costs for low-income people, has historically paid less than the cost of treatment in many states. Further complicating matters for health care providers is that some states also delay payment.

This combination not only limits access to care for Medicaid beneficiaries but also has had a serious impact on providers, particularly those who serve communities with large Medicaid populations.

Illinois has a long history of delaying payment for Medicaid providers. At the end of 2013, Illinois had $2.77 billion in Medicaid bills awaiting payment. Although this year the number is down to $1.9 billion, it can sometimes take Illinois between 150 days to 270 days to reimburse providers after care is given.

“When Medicaid payments are both low and slow, it’s no mystery why doctors increasingly turn Medicaid enrollees away,” said Devon Herrick, a senior fellow and health care researcher with the National Center for Policy Analysis. “Depending on the state, Medicaid pays only 29 percent to 59 percent of the fees private insurers reimburse primary care doctors who treat Medicaid patients.”

Herrick also noted whereas low reimbursements are nothing new for Medicaid providers, delays in payment are a “relatively new trend, which needs to stop. Slow reimbursements make doctors even more reluctant to treat Medicaid patients than paltry payments.”

Perfect Storm of Problems

Physicians who treat Medicaid patients describe a number of problems that make them reluctant to see many enrollees in the low-income health plan.

Medicaid pays about 61 percent of what Medicare pays, nationally, for outpatient physician services, and the payment rate varies from state to state. In addition, doctors’ office staffs are forced to fill out increasingly complex paperwork, raising the costs of care for those patients.

Most physicians note Medicaid patients tend to require more time and attention than non-Medicaid patients. All of these factors create a conflict for doctors who want to provide health services for the poor but must maintain their practice’s financial viability.

Dr. Roger Stark, a health care policy analyst at the Washington Policy Center and a retired physician, says Medicaid reimburses doctors about 40 percent to 50 percent of what private insurance pays.

“The most recent statistics show that nationally 70 percent of primary care doctors are not taking new Medicaid patients, and 40 percent don’t see any Medicaid patients at all. Primary care doctors simply cannot pay their overhead expenses with the reimbursements from Medicaid,” Stark explained.

Low and Slow Nothing New

John Dunn, a physician, lawyer, and policy advisor for The Heartland Institute, says Medicaid has always been a slow and low-paying program since he started in medicine in 1972.

“There has never been a time when Medicaid was not the worst medical payment plan,” Dunn said.

He said there are few alternatives for the poor.

“You can go to a clinic in Wal-Mart, for instance, and there will be some midlevel practitioners with a few doctors supervising them,” he said.

A midlevel medical provider, such as a nurse practitioner, may be adequate in many cases, Dunn said, but he sees problems ahead for Medicaid patients who need a higher level of care.

“If you don’t have anything serious, then you don’t need to be seen by a doctor in the first place,” he said. “However, if you do have something, then you’re being seen by someone who is only capable of perfunctory treatment, which means that you’re being seen by the wrong end of the medical profession.”

Kenneth Artz ([email protected]) is a freelance reporter for The Heartland Institute.