Physicians Serving Medicaid and Uninsured Patients 1997-2001 | HSC Tracking Report | HSChange

HSC Tracking Report No. 6 -- Results from the Community Tracking Study

December 2002 -- by Peter J. Cunningham

Overview

Between 1997 and 2001, the proportion of physicians providing any charity care fell from 76.3 percent to 71.5 percent, according to a study by the Center for Studying Health System Change (HSC). The share of physicians receiving revenue from Medicaid also declined modestly, from 87.1 percent in 1997 to 85.4 percent in 2001. While the small decrease in Medicaid participation did not appear to have had measurable negative effects on access to physicians among Medicaid beneficiaries, the more substantial decline in charity care was consistent with growing evidence of worsening access for uninsured individuals. Mounting budget pressures on state governments raised the possibility of Medicaid payment freezes or cuts that could further erode physician willingness to serve low-income populations.

Physician Participation in Medicaid and Charity Care

Low-income Americans -- particularly Medicaid enrollees and the uninsured -- have long struggled to find physicians willing to accept them. Low Medicaid reimbursement has served as a persistent barrier to physician participation, and constraints on payments from managed care and other sources have gradually reduced physicians' capacity to cross-subsidize free care for uninsured patients. These financial pressures accumulated at a time when Medicaid enrollment was expanding, the uninsured population was growing, and the need for physician services among these groups was increasing.

Despite these headwinds, a majority of physicians continued to participate in Medicaid and to provide at least some uncompensated care as of 2001. The proportion deriving income from Medicaid dipped only slightly over the four-year period examined. The decline in charity care provision was more pronounced, falling nearly five percentage points. These findings are drawn from the HSC Community Tracking Study Physician and Household Surveys, both nationally representative telephone surveys administered during rolling 12-month periods in 1996-97, 1998-99, and 2000-01.

Volume of Medicaid and Charity Care Patients

Most physicians who treated Medicaid patients or provided charity care saw relatively few such patients. Among physicians with any Medicaid revenue, more than half derived 10 percent or less of their total practice revenue from the program, and only about one-quarter received more than 20 percent of revenue from Medicaid. Between 1997 and 2001, the share of low-volume Medicaid providers decreased while the share of high-volume providers increased, indicating a growing concentration of Medicaid patients in fewer practices.

For charity care, the trend ran in the opposite direction. Not only were fewer physicians providing uncompensated care, but those who continued were devoting less practice time to it. The proportion of high-volume charity care providers declined from 33.5 percent to 29.8 percent between 1997 and 2001, while low-volume providers grew from 66.5 percent to 70.2 percent. As a result, access to physicians for uninsured individuals may have been deteriorating to a greater extent than for Medicaid enrollees.

Acceptance of New Medicaid and Uninsured Patients

In 2001, approximately one-fifth of physicians accepted no new Medicaid patients, and 16 percent accepted no new uninsured patients. By comparison, fewer than 5 percent turned away all new Medicare or privately insured patients. About half of physicians accepted all new Medicaid patients, and less than half (44 percent) accepted all new uninsured patients, compared with 71.1 percent accepting all new Medicare patients and 68.2 percent accepting all new privately insured patients. The proportion of physicians accepting no new Medicaid patients rose from 19.4 percent in 1997 to 20.9 percent in 2001. More physicians were also closing their practices to new privately insured and Medicare patients over the same period, suggesting that broader capacity pressures contributed to practice closures beyond Medicaid-specific factors.

Managed Care and Practice Closures to Medicaid

Physicians heavily involved in managed care were increasingly closing their practices to new Medicaid patients. Among those receiving more than 75 percent of their revenue from managed care, the proportion not accepting new Medicaid patients grew from 20.7 percent in 1997 to 27.3 percent in 2001. These physicians were also increasingly declining new Medicare patients. By contrast, physicians with less managed care involvement did not change their Medicaid acceptance rates. This pattern may be related to the exit of many health plans from Medicaid and Medicare managed care due to low payment rates, which left some provider networks no longer contracted to serve these populations.

Geographic Variation and Payment Rates

Prior research established that physicians in states with higher Medicaid fees are more likely to accept Medicaid patients. This relationship was partially confirmed across the 12 HSC study communities. Northern New Jersey, with the lowest Medicaid office visit fee ($16), had the highest rate of practices closed to Medicaid (38.3 percent). Cleveland, Boston, and Little Rock had higher fees and lower closure rates. However, Phoenix presented a notable exception: despite having some of the highest Medicaid fees ($45 for an office visit), it had a relatively high proportion of closed practices, likely reflecting severe capacity constraints driven by rapid population growth. Significant changes in Medicaid acceptance also occurred within communities -- Cleveland saw a substantial decrease in closed practices following a 25 percent increase in Ohio's Medicaid fees, while Seattle saw a significant increase as cost containment efforts drove health plans to withdraw from Medicaid managed care.

Impact on Access and Future Outlook

The decline in physician Medicaid participation through 2001 was modest, and evidence of reduced access to physicians among Medicaid beneficiaries remained limited. The proportion of Medicaid enrollees with a usual source of care decreased slightly, mirroring a national trend. Actual utilization of physician services by Medicaid enrollees did not change. The larger reductions in charity care, however, were consistent with evidence of declining access for uninsured individuals -- the percentage with a usual source of care fell from 68.6 to 64.2 percent, and the proportion seeing a physician dropped from 51.5 to 46.6 percent.

Continued financial pressures raised the prospect of further erosion in physician willingness to serve Medicaid patients and the uninsured. States facing serious budget shortfalls were considering reducing or freezing Medicaid physician payment to contain costs. Rising health care expenses and reductions in other provider payments could further constrain physicians' ability to cross-subsidize free care. Ongoing monitoring of physician involvement with Medicaid and charity care would be essential for tracking access trends.

For additional HSC research on physician participation in Medicaid, visit the HSC archives at hschange.com