We had to switch doctors because our children are now covered by the Medicaid.
What exactly are the incentive structures that make doctors not want to take Medicaid?
I’m pretty sure the answer is that Medicaid pays less than private insurance companies do.
Got it in one. The federally subsidized programs (Medicare and Medicaid) pay substantially less than private insurance for the same services. Most doctors are happy to take them anyway because of the huge covered population whose bills always get paid, but especially in urban areas, docs who have plenty of other patients would prefer to see the more lucrative ones.
–Cliffy
It varies from state to state, but some docs get less paid less than 20% of their usual rates by Medicaid. If your practice has too many such patients in it, you won’t meet your overhead, much less be able to make your payment on your fancy new Kia Rio.
In all fairness it should also be noted that many refuse medicaid not because there are more lucrative choices in “customers” but because it is a net loss to take on medicaid patients. Many would like to take on more if they could afford to.
But it really depends what city and state you are in.
In my home city GPs have a hard enough time keeping their practice viable with privately insured patients and need to limit their charity care so that they can even keep their rent paid and doors open.
I don’t think that’s true in general. Doctors say it, and they might believe it, but if it were accurate, then nobody would ever take Medicaid, and most docs do. That’s not to say Medicaid rates are any good, and I’m sure that it’s true for some docs (esp. in the South, where states lowball the program). They’re not very good, but they’re good enough for most doctors, the evidence being that most doctors participate, at least in part.
Note BTW that Obamacare has substantially increased Medicaid reimbursement rates, and as of next year, it will substantially increase the Medicaid pool, so expect things to change in the enxt couple years.
–Cliffy
It vastly differs by region, the reimbursement ratio is not related to nor indexed to the doctors cost and the rates dispersed to the states were basically hard coded decades ago.
So in an area like Seattle where I live, which grew from a fairly poor state with low expenses to a point now where we are close to the costs of areas like San Francisco.
There are probably as many reasons for accepting or not accepting them as there are doctors but in general you do not become a GP these days if your primary motivator is income. Well assuming you are good at math and actually do the calculations.
It’s a little more complicated than that.
Doctors (I’m assuming that the doctor is running his/her own practice and is paying the salary of the other employees. The logic still works for other arrangements) have some fixed costs and some marginal costs that vary with the number of patients they see. They have to pay for rent, minimum staff, utilities, continuing education, medical equipment etc. before a single patient walks through the door.
Then there are costs that vary with an individual patient: the doctor’s time, additional nurses’ (beyond the minimum) time, single use equipment, laundry, etc.
Medicaid is generally expected to cover marginal costs a profit, but it may not cover the fixed costs.
If a doctor can pay his bills and make a bit of profit with, say, 70% of his capacity full of (high-paying) private insurance patients, then it’s to his advantage to take 30% Medicaid patients. Even though they’re not paying as much, they’re still covering extra costs they generate and providing a profit.
However, it’s also true that Medicaid doesn’t generally pay enough. Most doctors could not afford their practice if they took only Medicaid patients, because somebody has to pay for the lights and the receptionist and the rent, and you’re either not getting there, or you’re a very bare bones operation if Medicaid is enough for all that.
Are payment rates the same under Medicaid as under Medicare?
My nice “everybody loves to see me” insurance costs 20% of my income, and I have 2 pre-existings which are going to skyrocket in coverage (one drug down the line is $2500.00/WEEK). and I can’t wait to see what happens to my costs come 01/01/2014 (or 2014/01/01 for the non-'mercans).
I may also be looking at dialysis, which is one of those things hard-coded into Medicare eligibility:
- Over 65
- Disabled in condition a) or b)
- On kidney dialysis
Can’t wait to hear what the retail on that is…
I know people don’t believe this, but most doctors (not all, but most) are doctors because they really do want to help people. Many of them cut deals and take charity cases because they’re actually human beings under those white lab coats. Private practice doctors also have to be businessmen, and many of them find it quite stressful to reconcile the business decisions that need to be balanced with the medical decisions and their own sense of empathy and desire to help.
We take a few Medicaid patients as we can afford to, but we really do lose money on each one, and quite a bit of it. It costs my boss $60 for me to go visit a patient. That’s just my pay. That doesn’t include payroll taxes and insurance. That doesn’t include the salary of the nursing supervisor, the office manager or the boss himself. That doesn’t include the printing of the 50 pages of material I bring in with me, the file folders and staples and paper clips and pens. That doesn’t include medical supplies like gloves and stethescopes and thermometers and blood pressure cuffs. It doesn’t include rent of our office space, electric, water, heat, file cabinets, computers, internet, phone bills, repairs to the copier…
In 2010, Medicaid paid him $61.34 for a nursing visit. They pay less now, thanks to cuts, but I’m not sure of the actual number.
So yes, he loses money when I see a patient who has only Medicaid. But he still sends me out to one or two Medicaid only patients a month. Why? Because he cares about people, and can’t stand there in front of someone who is hurting and do nothing. We don’t advertise to Medicaid only patients, and don’t actively try to get them, because we couldn’t last as a business if we did so. But to say that we must be making money on them or we wouldn’t take them ignores that health care professionals are, by and large and sometimes to our own detriment, caring people.
And yeah, I’ve been known to cut my own pay for Medicaid patients if that’s what it takes to get them seen. Sometimes I end up paying more in gas and supplies than I make. But I do it because I, too, can’t stand there in front of a hurting person and not help.
No, Medicare pays much more. Thank goodness. We do almost all Medicare patients. Our Medicare patients’ payments essentially subsidize our Medicaid patients.
As someone who works directly with payment of claims, I can confirm that Medicaid < Medicare < Private Insurance. I don’t work on the provider end of things, but I believe virtually all providers lose money on Medicaid and they may or may not lose money on Medicare depending on the specialty, area of the country, how much overhead a particular office has, etc.
(I know this isn’t a debate, but that’s why you can’t just put everyone on Medicare or Medicaid and extrapolate the costs of doing so, the payment rates aren’t sustainable unless you have more lucrative commercial insurance and private pay clients to offset them. )
Speaking as a pediatrician whose site allows up to a certain percent of the practice to be Medicaid (far more than most in our area) and who has spent a fair amount of effort trying to get other sites to be willing to raise what percent they are willing to see …
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Many docs don’t get the fixed cost marginal cost concept. They do not comprehend that a poorer payment source using capacity that you have already paid for is better from a business perspective than having that capacity be unused. And these are docs who have the capacity – it isn’t that taking the Medicaid patients will mean that many fewer full fee for service patients being seen. You really can do well while doing good.
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Many have been frustrated in the past by the state’s kiting out payments. Sure they pay … eventually. But sometimes that is quite a while.
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Many docs perceive this population to over-represent as “no-shows” and “very lates” – each of which are killers to any busy/successful practice. Some of this is, IMHO, confirmation bias.
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The population also does seem to have an overrepresentation of people who are more challenging to take care of – equals more time invested for the lesser amount being paid.
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Many percieve the population as the institutionally poor and do not recognize that many in that population will have private insurance again in afew years and have friends (who they will recommend you to) with private coverage.
None of us could financially survive taking care of Medicaid patients alone, but few appreciate that a reasonable percent of a practice (that has any excess capacity at all) as Medicaid has a good business case to be made for it.
On edit: docs who kick out established ptients because they went on Medicaid are stupid idiots who should be kicked in the shin a truckload of angry toddlers.
I recall getting the occasional receipts from my doctor back when I was on medicaid, and he only got paid 50% of his regular fee ($150, fairly reasonable even for paying out of pocket) plus the standard co-pay ($15 for me).
I wonder if those losses could be counted on his taxes? I hope so.
My understanding, which may be out of date, is not only that government payments are lower, but that the claims process is frightfully complex. By not taking that form of payment, they have only standard insurance hassles to deal with.
Another consideration is the typical Medicaid demographic. At my previous job, our no-show rate for Medicaid patients was an order of magnitude higher than that for any other demographic. That can cause a lot of dead space in schedules, and some practices can’t take that hit, either.
I know of another organization, same line of work as my previous employer but this one a non-profit, that limits Medicaid patients to only a certain small percentage of spots in order to mitigate that hit on their business.
Not counted as losses because they aren’t. Actually pretty easy to deal with as far as claims go. Standard insurances are usually more complex.
Oh! Another issue – we primary care docs are not paid by Medicaid too badly right now honestly, but the pediatric specialists get virtually nothing. Really pathetic. Consequently very few take Medicaid patients. Now I can use the fact that over 80% of my referrals are private pay to strongarm most of 'em into taking mine (else they get none), and have won the argument within my multispecialty group that we owe this to our community, but some aren’t willing to have that conversation with their specialists, or don’t have enough patients to have enough leverage, and knowing that you won’t be able to easily find a specialist to refer to when you need to also puts many primary care docs off from stepping up to the plate.
I wish I could share some stuff I’ve run across when doing Medicaid claims. That it’s a totally different demographic that some providers would not want to deal with I totally understand.
Thank you on two points:
For having the compassion to consider your profession as being about more than money, and re-assuring me I won’t be screwing over my providers too much if I end up on Medicare.
Follow-up:
I Currently have a Standard, single-patient PPO policy from Blue Shield of CA - how much of a hit would an Internist take if I switch to Medicare, Orthopedic Surgeon? Nephrologist? (love it - the spell check doesn’t know “Nephrologist” - if yo blindly accept its suggestion, you end up talking about a “Phrenologist”.
What is the demographic(s) in play - medical disease.condition or financial?
Someone making $400/mo and needing a heart/lung transplant has to be a pain - esp. if they happen to be the best match for the only suite available.
That was the other one I was concerned about - it does not surprise me (thanks AMA!) that is it perfectly legal do dump a dying patient on the street (“elsewhere”) if they lose their nice, juicy insurance, but:
- How many private practice docs actually will?
- Are there political/social repercussions from doing so? If Ass X kicked out out one of your referrals, will you find another specialist for your next payment-assured referral?
Will his social calendar start to shrink?