Trendspotter: Pay Physicians the Same For Treating Everybody

May 5, 2010

The low level of Medicaid payments to healthcare providers threatens to derail a big chunk of the reform law’s expansion of insurance coverage.

The low level of Medicaid payments to healthcare providers threatens to derail a big chunk of the reform law’s expansion of insurance coverage. By requiring states to cover everyone (not just children and mothers) in households earning less than 133 percent of the federal poverty level, it’s estimated, the legislation would add about 15 million people to the Medicaid rolls.

Yet Medicaid pays so little in most states that many physicians will not take Medicaid patients. A recent study found that 28 percent of physicians don’t accept Medicaid patients, and 19 percent accept some. Only 40 percent will take every Medicaid patient who comes to them.

The reform law does raise primary-care physicians’ reimbursement for taking care of Medicaid patients to the level of Medicare fee schedule. But the federal government is committed to paying 100 percent of the difference between that level of reimbursement and the current level only in 2013 and 2014. And specialists and hospitals will not see any increase in reimbursement even during those years.

Medicaid’s inadequate payments have other ramifications. For one thing, it’s why more than half of primary-care doctors, nearly half of medical specialists, and three quarters of surgeons must be paid extra to be on call in the emergency room. And, with Medicaid paying hospitals only about 85 percent of what it costs to provide care, the health program for the poor is responsible for much of the cost shifting that is driving up private insurance premiums. That is likely to worsen when Medicaid enrollment increases.

David Nash, MD, founding dean of the Jefferson School of Population Health at Thomas Jefferson University in Philadelphia, makes some other astute points about Medicaid in an essay for MedPage Today. Nationwide, he notes, at least one child in four relies on Medicaid for coverage. Medicaid also pays for two in five births and fills in gaps in Medicare coverage for the elderly and disabled. In fact, without Medicaid, few people would be able to afford long-term care. And, due to the recession, the number of people enrolled in Medicaid has exploded.

Never have so many people depended on a government program that’s in such bad shape. Medicaid was devouring big chunks of state budgets even before the recession hit. Now, as state revenues tank, and the federal government struggles with its own budget deficit, the money to fund Medicaid appropriately just isn’t there. Making matters even worse, the extra federal stimulus money that has kept Medicaid afloat will expire at the end of this year, although there are legislative moves afoot to extend that deadline.

Federally qualified health centers, which have received enhanced federal funding under the Obama Administration, can plug in part of the gap, but there are still too few of them, staffed by too few providers, to cope with the coming tsunami of demand.

What’s wrong with this picture? Basically, it’s the mixed private-public system of healthcare financing that we’ve had for the past 45 years. The basic philosophy of American society is that everyone should take care of themselves. So people who are healthy and wealthy enough to afford insurance buy their own. Medicare covers the elderly, who tend to be less affluent and in worse health. The poor are stuck with Medicaid, which is better than nothing but may not help them when they really need it.

This is where the advocates of a single payer system have a good point: If everyone were in the same insurance system, then providers would get paid the same, regardless of who they were caring for. At a minimum, this would vastly simplify the administration of healthcare payments, saving providers a lot of time and effort and knocking out a big piece of health costs. But equally important, it would mainstream Medicaid patients, giving them access to the same quality of care that privately insured and Medicare patients receive.

Now, I realize I’m not likely to see a single payer system in my lifetime, and I don’t even favor a centralized government-run system. As readers of my book Rx For Health Care Reform know, I support a regional single payer system driven by competition among large primary care groups. But, however our system is finally restructured, it must pay physicians and hospitals as well for caring for the poor and elderly as it does for treating the privately insured.