Ten States Where Physicians May Face a Payment Disadvantage

November 20, 2013

An AMA report identifies the 10 states with the least competition among commercial payers.

As fee-for-service reimbursement continues to fall across the country, most physicians in small- to medium-sized private practices are struggling to stay afloat.

But while all physicians are facing reimbursement declines -  average commercial payer reimbursement for all new and established office visits fell nearly 10 percent between 2011 and 2012, according to Physicians Practice's2012 Fee Schedule Survey - physicians in certain states may be more at a disadvantage than others.

One reason: In states with little competition among health insurers, and especially in states where one insurer tends to dominate, it's likely harder for physician to negotiate higher reimbursement rates.

A recent AMA report identifies just how little competition there is among insurers in certain states. In fact, it found that in 15 states, a single payer had a majority share of the market.

“An absence of competition in health insurance markets places a particular strain on physicians in small practices who don't have the leverage to be equal negotiating partners with large health insurers,” AMA President Ardis Dee Hoven, an internal medicine physician and infectious disease specialist, said in a statement regarding the report's findings. “The new AMA report is intended to help researchers, lawmakers, policymakers and regulators identify markets where mergers and acquisitions among health insurers may cause competitive harm to patients, physicians and employers.”

So where does your state stand when it comes to competition among commercial payers? The 10 states with the least competition, according to the AMA, are:

1. Alabama
2. Hawaii
3. Michigan
4. Delaware
5. Alaska
6. South Carolina
7. North Dakota
8. Nebraska
9. Louisiana
10. Rhode Island 

The report also identified the 10 states that experienced the biggest drop in competition between 2010 and 2011. They are:

1. Louisiana
2. Idaho
3. Oklahoma
4. Iowa
5. Texas
6. Missouri
7. Nebraska
8. Kansas
9. Ohio
10. Arkansas

The state rankings were developed from the 2013 edition of the AMA's "Competition in Health Insurance: A Comprehensive Study of U.S. Markets" report. The report, which is based on 2011 data, examined state and metropolitan markets.

What do you think of the report's findings? Do they match up to what you are experiencing in your state?