Pediatrician Lisa Swanson, M.D., doesn’t accept Medicaid patients for one simple reason: Reimbursement rates don’t cover her costs.
"If I accepted even 10% Medicaid, I would have to close my office," says Swanson, a solo practitioner in the Dallas suburb of Mesquite. "Pediatricians make very low margins. I am barely in business. … It breaks my heart I can’t treat Medicaid patients because I took care of them when I was a resident."
Spencer Berthelsen, M.D., chairman of the 300-physician Kelsey-Seybold Medical Group, Houston, says the group limits Medicaid patients to two types: First, if they were existing patients before they became Medicaid-eligible; second, if a Kelsey-Seybold physician on call treats a patient in a hospital emergency department.
The group doesn’t accept walk-in Medicaid patients because reimbursement rates are less than 50% of costs, Berthelsen says. Medicaid charges represent about 0.15%, or $500,000, of the group’s $340 million in gross annual charges.
"The Medicaid population has the real potential of having higher chronic illnesses. It is a very challenging socio-economic group," Berthelsen says.
Despite increases nationally in Medicaid rates from 1998 to 2003, a growing percentage of physicians are declining to accept Medicaid patients or are limiting the number, according to a study released in August by the Center for Studying Health System Change.
Doctors cited low reimbursement, excessive administrative paperwork and bureaucratic hassles as reasons they avoid or restrict Medicaid, the center found.
In the last half of 2004 and first half of 2005, 14.6% of physicians reported receiving no Medicaid revenue, an increase compared with 12.9% during the same periods in 1996 and 1997. Moreover, 21% of physicians reported accepting no new Medicaid patients, up from 19.4% from the same periods in 1996 and 1997.
"The few physicians I know who accept Medicaid have huge volumes of patients -- 80 patients per day -- and spend five minutes each with them," Swanson says. "They don’t have time for preventive care or education. You need to spend time with patients, especially children and their parents."
The center also found Medicaid patients are becoming concentrated in large medical groups, hospitals and community health centers. Solo practitioners like Swanson have the lowest Medicaid participation rates.
"I spend 15 to 30 minutes with each patient," says Swanson, who employs two nurse practitioners. "I can’t afford to do that under Medicaid. Most patients understand (her decision not to accept Medicaid). Pediatricians are of two mindsets. I am of the business mindset that you don’t take anything below your costs."
However, other physicians "harass us greatly because they believe it is our job as doctors to take care of all patients," Swanson says.
Doug Curran, M.D., a family medicine physician with Lakeland Medical Associates in Athens, Texas , says the 11-member group also limits its number of Medicaid patients based on available appointment slots, whether there’s an emergency and illness status. About 20% of the group’s patient mix is on Medicaid.
In 2003, Texas cut Medicaid rates 2.5%. As a result, less than 50% of Texas physicians participate in Medicaid, says Berthelsen, a member of the Texas Medical Association’s Council on Legislation. A recent association survey found that 38% of physicians accepted new Medicaid patients in 2006, down from 67% in 2000.
Curran, who also is president of the Texas Academy of Family Physicians, says the clinic loses $20 for every routine, moderate-complexity office visit.
"If we do additional ancillary work, that may help" stem financial losses, he says. "The bottom line is Medicaid is so inadequate that almost nobody can afford to do it."
Of the 30 to 40 patients Curran sees every 12-hour day, he reserves five to seven slots for Medicaid patients. "Every physician has a different mix. Once we hit our limits, we don’t see (any more) Medicaid patients that day," Curran says.
Uninsured illegal immigrants also are a problem for Texas physicians. For example, Curran conducted the interview with Modern Physician from 117-bed East Texas Medical Center, Athens , while waiting to deliver the baby of an illegal immigrant. "She will go on emergency Medicaid," Curran says.
Expensive and time-consuming regulations also stifle Medicaid participation. "One issue is translators," says Chip Cover, senior associate administrator with Nemours Children’s Clinic, a 130-physician pediatric group in Jacksonville, Fla. "Anyone who can’t speak (English) is eligible for that, and the doctor is required to pay for it."
Translators cost Nemours
$60 for a minimum of two hours. "We get paid $90 for a midlevel visit. Our costs exceed what we get for that visit," Cover says.
In Washington state, Medicaid pays doctors less than 50% of Medicare rates, and onerous regulations place groups at unnecessary financial risk, says David Fitzgerald, chief executive officer of Proliance Surgeons, a 135-physician group practice based in Seattle . "It is like giving everyone a $10 bill for coming to the office," he says.
In 2003, Proliance Surgeons stopped formally accepting Medicaid patients, but the surgeons continue to take Medicaid referrals on a case-by-case basis and write it off as charity care, Fitzgerald says.
"We gave over $1.5 million in charity care in 2005," Fitzgerald says. But "we continue to take heat from primary-care physicians when they need a specialist. They ask us why we don’t take Medicaid and ‘Could you please see this one patient for me?’ "
While rising numbers of physicians decline Medicaid, the number of Medicaid recipients has exploded by 39% to 44.4 million in 2004 from 32 million in 1999, according to the CMS.
As Medicaid moves to cost-cutting managed-care models, the CMS reports Medicaid spending growth has declined from 12% per year from 2000 to 2002, while growth dropped to 7.2% from 2002 to 2005. It is projected to drop to 4.6% in 2006.
State Medicaid spending is similarly dropping. Sixteen states are projecting to have lower Medicaid expenditures in 2006 than the prior year, including California, Florida, Georgia, Maryland, Michigan, New Hampshire, Nevada, South Carolina, South Dakota, Texas and Wisconsin.
In August, the Bush administration released its proposed 2007 budget that calls for the federal government to further curb Medicaid’s "excessive payments." The Bush plan faces huge opposition across the political spectrum in Congress.
But the Kaiser Commission on Medicaid shows most Medicaid recipients have a greater percentage of chronic diseases and are hospitalized more often than the general population.
"They are sicker. … Our biggest issue is compliance," says Nemours’ Cover. "We give them a prescription, and three weeks later they come back and haven’t filled it." About 40% of Nemours’ patients are on Medicaid, he says.
Physician groups such as Nemours say they do not treat Medicaid patients differently to lower costs. But experts say physicians with large Medicaid practices are increasingly using such care-management techniques as primary-care case management, registries and preventive-care education to keep costs down.
"We tend to use nurse practitioners more in the Medicaid population because we find the Medicaid patients need more intervention than seeing the doctor," Cover says.
Bob Kneeley, director of investor relations with Pediatrix Medical Group, says the group makes up for Medicaid losses by negotiating higher private-payer rates and by providing efficient and high-quality care.
Medicaid accounts for 27% of Pediatrix’s net revenue and 54% of its gross revenue. Pediatrix is an 875-member pediatric specialty group based in Sunrise, Fla. , that contracts with 240 hospitals in 32 states.
"Anything we have done to improve care and outcomes really is focused on all our patients," Kneeley says. "We have been able to identify best practices across our network, and that improves quality and holds costs down."
Jay Greene is a former Modern Healthcare reporter and now a freelance healthcare writer based in St. Paul, Minn. Contact Greene at [email protected]