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HSC Study Finds Fewer Doctors Accepting New Medicaid Patients

By Matthew Sedlar, CQ HealthBeat Deputy Editor

August 17, 2006 -- The number of physicians no longer accepting new Medicaid patients has grown over the last decade, even though the program saw modest increases in payment rates and enrollment, according to a report published on Thursday by the nonpartisan Center for Studying Health System Change (HSC).

The report, which examined data from HSC's nationwide Community Tracking Study Physician Survey, finds that one-fifth, or 21 percent, of physicians surveyed were not accepting new Medicaid patients in 2004 to 2005, compared with 19.4 percent in 1996 to 1997. That rate is six times the percentage of physicians not accepting new Medicare patients and five times the rate for private insurance.

According to the report, the findings contradict an upswing in Medicaid payment rates and enrollment over the past decade. Medicaid payments increased from 1998 to 2003—with the exception of some states in the early 2000s freezing or reducing payments because of budget pressures. Program enrollment increased 8 percent from 2000 to 2003, most likely due to eligibility expansions, higher costs in private insurance, and slow economic growth, the report adds.

However, 84 percent of physicians surveyed in 2004 to 2005 cited low Medicaid payment rates as a "moderate" or "very important" reason for no longer accepting new patients. Medicaid reimbursement on average in 2003 was 69 percent of Medicare reimbursement and even lower compared with private insurance, the report says. In addition, 70 percent of physicians blamed billing requirements and paperwork as reasons for no longer accepting patients.

The report also notes that Medicaid care is becoming largely concentrated among physicians who provide a large amount of their care to low-income beneficiaries—such as hospitals, academic medical centers, and community health centers. According to the report, the percentage of Medicaid revenue for physicians who derive 30 percent or more of their revenue from the program increased from 43.1 percent in 1996 to 1997 to 51 percent in 2004 to 2005. Part of this can be explained by small practices, which derive less revenue from Medicaid, becoming increasingly unwilling to accept new patients, as well as more physicians moving from small practices to larger group and institution-based practices, the report says.

"It isn't clear whether the increasing concentration is harmful to Medicaid patients' access to care, since many large Medicaid providers are in areas where enrollees tend to live, such as inner cities and medically underserved areas," said Peter J. Cunningham, co-author of the report and a senior fellow at HSC, in a statement. He added, "But, if large Medicaid providers face increased financial pressures and rising patient demand, quality of care and access to some services could be negatively affected."

Past American Medical Association President J. Edward Hill said on Thursday, "This unsettling data comes as little surprise given Medicaid's high administrative costs and low payment rates, while the overhead costs associated with practicing medicine continue to increase." He added, "This study also serves as a reminder that our nation's Medicare program is at risk of going the way of Medicaid. More Medicare cuts on top of existing inadequate Medicare reimbursement rates threaten to reduce patient access to care."

Under a proposed regulation for Medicare physician payments in 2007, doctors are scheduled to take a 5.1 percent cut on Jan. 1. Hill said, "If Congress does not stop next year's payment cut, 45 percent of physicians say they will be forced to decrease or stop taking new Medicare patients."

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