Physicians' decisions to limit Medicaid participation: determinants and policy implications

Although most primary care physicians participate in state Medicaid programs, they may accept all Medicaid patients, or they may choose to limit their participation. This decision allows physicians to adjust their Medicaid caseloads to a desired level, and it has important implications for the access of low-income patients to health care. Surveys of pediatricians in 1978 and 1983 indicate that the proportion of pediatricians limiting their Medicaid participation increased significantly from 26 percent to 35 percent (p less than .001). In addition, in both 1978 and 1983, limited participants saw significantly fewer Medicaid patients than full participants. This paper describes a number of strategies available to federal and state policymakers for fostering full Medicaid participation. Multivariate analyses indicate that increasing reimbursement levels is an important strategy for encouraging full Medicaid participation. In addition, full participants will increase their Medicaid caseloads in response to a variety of Medicaid policy incentives, while limited participants are found to respond to fewer policy incentives. The authors conclude that caution will be needed to ensure that health care cost-containment strategies such as capitation or selective contracting do not inadvertently discourage participation among both full and limited Medicaid participants.     

Decisions without consequences: cost control and access in state Medicaid programs.

States have implemented a number of strategies to provide services, pay providers, and control Medicaid spending. We test the effects of some differences in state Medicaid policies on program enrollees' access to and use of health care services. Logistic and OLS regression analyses of cross-sectional data indicate that these policies exert significant influences on enrollees' access to health services but have a weaker direct effect on their use of them. However, we find evidence that utilization is affected indirectly (through increased access) by state policy decisions. Somewhat surprisingly, Medicaid policies designed to contain costs by limiting utilization appear to affect neither access nor utilization. Medicaid enrollees have greater access to a private physician in states with higher physician reimbursement and additional Medicare insurance for their enrollees. Other nonpolicy variables with pronounced impacts on access to private office physicians include race and the availability of private insurance.     

HMOs for Medicaid: the road to financial independence is often poorly paved.

During the 1980s both the federal government and the private sector articulated policies to encourage the development and participation of health maintenance organizations (HMOs) in the Medicaid program. However, the policies, intended to save costs, limited the ability of new HMOs to achieve financial independence. New plans that emphasize Medicaid participation have few, if any, options on benefit design or in setting capitation rates. Relative to fee-for-service Medicaid programs, their costs to provide services may be quite high, as they have neither the buying power not the ability to impose discounts. As a consequence, plans must focus their financial planning efforts on targeting and attaining a stable enrollment base and on controlling the amount of services provided, tasks that are difficult for all HMOs. Achieving a stable enrollment base is particularly hard because Medicaid eligibles have few incentives to enroll and once enrolled often lose their Medicaid eligibility. Traditional HMOs control the amount of services provided through physician selection, financial incentives on physicians, and monitoring and utilization review. Lack of information and the difficulty inherent in attracting sufficient provider participation limit the first two strategies, so new plans often adopt organization structures that rely heavily on monitoring activities. Unfortunately, management information systems for HMOs are often the weakest link. We discuss the tasks and present data on financial planning, on putting financial plans into operation, and on monitoring progress toward financial independence for a set of ten demonstration projects sponsored by the Robert Wood Johnson Foundation.     

Medicaid reimbursement of teaching hospitals

This paper examines current Medicaid policies on the reimbursement of hospitals' medical education expenses. These policies are of interest because of the pressure on Medicaid programs to reduce expenditures. Data for the paper come mainly from two sources: a survey of Medicaid programs and a survey of teaching hospitals. Teaching hospitals receive a disproportionate share, nearly 70 percent in 1978, of Medicaid short-term hospital payments. Nevertheless, most Medicaid programs either have no explicit policies in this area or have not acted aggressively to limit reimbursement of hospitals' teaching expenses. Revenues from Medicaid are most important to public teaching hospitals. Thus, across-the-board reductions in Medicaid's reimbursement of teaching expenses would most severely affect public institutions, many of which already face cuts in their local government appropriations. Savings to Medicaid would also be short-lived, since teaching hospitals would have the incentive to reduce teaching program size and substitute reimbursable personnel (nurses and staff physicians) for residents.     

Nurse practitioner challenges to the orthodox structure of health care delivery: regulation and restraints on trade

Until recently, physicians have been the primary health care providers in the United States. In response to the rising health care costs and public demand of the past decade, allied health care providers have challenged this orthodox structure of health care delivery. Among these allied health care providers are nurse practitioners, who have attempted to expand traditional roles of the registered nurse. This article focuses on the legal issues raised by several major obstacles to the expansion of nurse practitioner services: licensing restrictions, third party reimbursement policies, and denial of access to medical facilities and physician back-up services. The successful judicial challenges to discriminatory practices against other allied health care providers will be explored as a solution to the nurse practitioners' dilemma.     

The Department of Health and Human Services issues proposed regulations on physician incentive payments by hospitals

Hospitals tempted to operate their own physician incentive plans are reminded that, under OBRA 1986, they are precluded from paying physician incentives of any kind to reduce or limit Medicare or Medicaid covered services. In light of the proposed regulations and the guidance of the preamble, hospitals should review their incentive plans to determine whether physicians providing direct patient care are receiving prohibited payments. Further, supervising physicians who are receiving incentives for certain hospital departments may not influence direct care over patients served by those departments, even through other physicians. Some risk may also exist if incentives are based on a formula that considers patients of the supervising physician's medical group. Finally, it may be useful to develop a utilization and quality of care review program specifically designed to assure that patient undertreatment does not occur as a result of any supervising physician incentive program.     

Public sector primary care and Medicaid: trading accessibility for mainstreaming

Facilities operated by public and nonprofit agencies have become increasingly important sources of primary care for Medicaid patients. These facilities are particularly important sources of care in segregated, competitive urban areas, where they are more geographically accessible than many private physicians and expand the availability of care to Medicaid patients rather than substituting for care provided by private physicians. In rural areas, in contrast, the availability of care from public facilities appears to reduce the level of care Medicaid patients receive from private physicians in the counties where these facilities are located. These findings suggest that policymakers can expand urban Medicaid patients' access to care by spending on public care, but at the cost of increasing the segregation of Medicaid patients into a two-tier system of care.     

Medicaid and access to child health care in Chicago.

In this article we examine how increasing the reimbursement of physicians and expanding Medicaid eligibility affect access to care for children in Cook County, Illinois, which overlies Chicago. Using Medicaid claims and other data at the zip-code level, we compare the places where Medicaid children live with the places where all the physicians who treat children and those who accept Medicaid patients have their practices. Our findings suggest that the recent changes in legislation are unlikely to benefit extremely poor children, who are more likely to live in depressed inner-city areas, where there are few physicians. "Near-poor" children whose homes are dispersed throughout the county, who are now eligible for Medicaid as a result of the recent changes, are likely to see improvements in their access to care. Further changes in policy, aimed at enhancing the capacity of institutions providing care, could improve access for the children of the inner city.     

Medicaid Program; Medicaid eligibility quality control, progressive reductions in federal financial participation for FYs 1982-84, payment for physician billing for clinical laboratory services, and utilization control of skilled nursing facility services: removal of obsolete requirements--HCFA. Final rule

This final rule removes several obsolete sections of the Medicaid regulations that specify rules and procedures for disallowing Federal financial participation for erroneous medical assistance payments due to eligibility and beneficiary liability errors as detected through the Medicaid eligibility quality control program for assessment periods from 1980 through June 1990. The Medicaid regulations that contain the rules and procedures for the progressive reductions in Federal financial participation in medical assistance expenditures made to the States for fiscal years 1982 through 1984 are removed to reflect the repeal of the statutory bases for the reductions. The Medicaid regulations that provide for physician billing for clinical laboratory services that a physician bills or pays for but did not personally perform or supervise are removed to reflect the statutory repeal of this provision. In addition, the rule removes obsolete regulations that prescribe requirements concerning utilization control of Medicaid services furnished in skilled nursing facilities. This rule is part of the Department's initiate to reinvent health care regulations and eliminate obsolete requirements.     

The ethics of managed care: a dose of realism

This article examines the ethics of medical practice under managed care from a pragmatic perspective that gives physicians more useful guidance than existing ethical statements. The article begins by stating the authors' starting premises and framework for constructing a realistic set of ethical principles: namely, that bedside rationing in some form is permissible; that medical ethics derive from physicians' role as healers; that actual agreements usually trump hypothetical ones; that ethical statements are primarily aspirational, not regulatory; and that preserving patient trust is the primary objective. The authors then articulate the following concrete ethical guides: financial incentives should influence physicians to maximize the health of the group of patients under their care; physicians should not enter into incentive arrangements that they would be embarrassed to describe accurately to their patients or that are not in common use in the market; physicians should treat each patient impartially, without regard to source of payment, and in a manner consistent with the physician's own treatment style; if physicians depart from this ideal, they must tell their patients honestly; and it is desirable, although not mandatory, to differentiate medical treatment recommendations from insurance coverage decisions by clearly assigning authority over these different roles and by having physicians to advocate for recommended treatment that is not covered.     

The national residency exchange: a proposal to restore primary care in an age of microspecialization

Healthcare deficiencies in the United States have long been perpetuated by a shortage of primary care providers. A core purpose of the Patient Protection and Affordable Care Act (PPACA) is to provide health insurance for America's approximately fifty million uninsured. Implementation of universal health insurance, however, does not mean sufficient healthcare access for all, since the supply of physicians does not and will not meet demand. For reasons reviewed in this Article, the current physician shortage mainly impacts primary care providers. This shortage is particularly troubling because increased provision of primary care relative to specialty care has been associated with improvement in health outcomes, disease prevention, cost effectiveness, and coordination of care. This Article highlights provisions in the PPACA that impact primary care physicians. Finally, this Article proposes the creation of a universal primary care loan repayment program and a national residency exchange designed to alleviate the U.S. primary care crisis by facilitating optimal distribution of resident physicians in each medical specialty based on community need.     

Medicaid program; limitations on provider-related donations and health care-related taxes; limitations on payments to disproportionate share hospitals--HCFA. Final rule

This final rule clarifies HCFA's policies concerning provider related donations and health care related taxes. In addition, this final rule revises regulations with regard to disproportionate share hospital spending limitations. This final rule amends an interim final rule that was published in the Federal Register on November 24, 1992. The interim final rule established in Medicaid regulations limitations on Federal financial participation (FFP) in State medical assistance expenditures when States receive funds from provider-related donations and revenues generated by certain health care-related taxes. The interim final rule also added provisions that establish limits on the aggregate amount of payments a State may make to disproportionate share hospitals for which FFP is available. The provisions of the interim final rule were required by the Medicaid Voluntary Contribution and Provider Specific Tax Amendments of 1991.     

Interest groups and state Medicaid drug programs

A simultaneous equations model is estimated to analyze the interaction between state Medicaid pharmaceutical drug reimbursement rates, drug recipients per capita, and expenditures per drug recipient. Interest groups are shown to have a strong positive impact on pharmacy reimbursement rates, which, in turn, have an impact on pharmacy participation rates and drug utilization and expenditure patterns. Finally, a strong inverse relationship exists between expenditures per recipient and program size. The results verify the existence of substantial variation in state Medicaid programs and point to potentially growing disparities as a result of current policies.     

Expanding health insurance coverage: who will pay?

Recent discussions on extending health insurance to the more than thirty million uninsured Americans have focused on two strategies: expanding the Medicaid program and mandating that employers sponsor coverage for their employees. This analysis, using a microsimulation model of the U.S. health care financing system, suggests that these two options would result in very different distributions of financial burden. Employer-sponsored coverage is financed in a highly regressive fashion, in contrast to the Medicaid program, which is proportional to income. Furthermore, the burden of paying for health care under Medicaid varies little among generations, whereas the cost of employer-sponsored care is lowest in households headed by persons over sixty-five years old. Low health status populations do not pay disproportionately higher taxes or premiums to finance either the Medicaid program or employer-sponsored coverage. Their incomes, however, are more effectively protected by Medicaid, because it offers more comprehensive benefits.     

Patient confidentiality statutes in Medicare & Medicaid fraud investigations

The Medicare and Medicaid programs have been burdened with health care providers' fraudulent and abusive practices since their implementation in 1965. To help states discover and prevent Medicare and Medicaid fraud, Congress has enacted statutes permitting access to patients' medical records in investigations of fraud. The majority of states have enacted physician-patient and psychotherapist-patient privilege statutes to protect confidential information from disclosure. Thus, the state's need for patient information conflicts with the patient's right of privacy. This Note discusses several court decisions that have wrestled with the tension between these two policies. The courts, after balancing the state interest in eliminating fraud against the patient's privacy interest, have often allowed disclosure of patient medical records. Although some courts have attempted to limit the extent of the information disclosed, few have set forth explicit standards to protect patient records from unwarranted disclosure of confidential information. This Note suggests guidelines for courts, legislatures and health care providers to uniformly limit the extent of this disclosure.     

Is it lawful to use Medicaid to pay for circumcision?

Since 1965, tens of millions of boys have been circumcised under the Medicaid program, most at birth, at a cost to the United States Federal Government, the States and taxpayers of billions of dollars. Although 18 States have ended coverage since 1982, the United States Government and 32 States continue to pay for non-therapeutic circumcision, even though no medical association in the world recommends it. Many cite American medical association policy that the procedure has potential medical benefits as well as disadvantages, and that the circumcision decision should be left to parents. This article shows that Medicaid coverage of circumcision is not a policy issue because it is prohibited by federal and State law. As American medical associations concede, non-therapeutic circumcision is unnecessary, elective, cosmetic surgery on healthy boys, usually performed for cultural, personal or religious reasons. The fundamental principle of Medicaid law is that Medicaid only covers necessary medical treatments after the diagnosis of a current medical condition. Physicians and hospitals face severe penalties for charging Medicaid for circumcisions. Medicaid officials and the Federal and State Governments are also required to end coverage. It is unlawful to circumcise and to allow the circumcision of healthy boys at the expense of the government and taxpayers.     

Medicaid rationing in Oregon: political wolf in a philosopher's sheepskin

Although the details of the proposal have shifted since it was first described, the Oregon Medicaid waiver has had one consistent feature: it will reduce benefits to AFDC mothers and children who are currently covered by Medicaid in that state, in the hopes of increasing coverage for other individuals who are now uninsured. Because of the adverse consequences for the AFDC population, there should be strong evidence supporting the purported benefits of the proposal before proceeding with the waiver. One of the most intriguing aspects of the waiver proposal is the claim that the money currently being spent on AFDC beneficiaries could be redistributed to expand coverage to a substantial number of the uninsured. The concept is that far more people could receive the most valuable services if those now being served gave up their coverage of the least valuable services. Other purported benefits of the waiver include enhanced citizen participation in decisionmaking, cost-savings, and improved payment levels and delivery arrangements. Remarkably, this analysis of the proposal reveals that the waiver is likely to achieve none of its stated objectives, and instead will have adverse consequences not identified by its proponents. What the proposal would do is to insulate politicians from visible responsibility for limiting benefits for AFDC children and adults. Finally, the proposal undermines 25 years of Medicaid as an entitlement program. As such, it would establish as a social ethic the principle that the poor can be relegated to inadequate care. Such an extreme measure is not justified by the fiscal situation in Oregon, which is not extraordinarily poor or overtaxed, and does not have a particularly generous or unusually expensive Medicaid program.     

Adoption of retrospective Medicare maximization billing practices by state Medicaid home care programs

Home care services funded by Medicare and Medicaid grew rapidly throughout most of the 1990s. During this period some state Medicaid programs transferred costs for home care claims to the Medicare program to reduce their liability and increase beneficiary access to Medicare coverage. This article reports the findings of the first national study of these Medicare maximization billing practices for home care services. Primary data were collected to determine which states conduct retrospective Medicare billing practices and the amounts recovered from Medicare. Our analysis indicates that seven states recovered as much as dollar 265 million from Medicare in state and federal dollars during the 1990s. Ratios of recovered expenditures-to-costs incurred for retrospective billing practices conducted in Connecticut, New York, and Massachusetts are between 5:1 and 7:1. While retrospective billing practices may aid states in reducing Medicaid outlays and potentially help dual Medicare beneficiaries gain coverage for their home care claims, they increase Medicare expenditures for home care at a time of concern for the long-term financial viability of Medicare and illustrate the need for reforming our national long-term care financing policy.     

The prospects for prepaid long-term care: the Arizona Medicaid experiment

Arizona is adding long-term care to its prepaid, capitated alternative to Medicaid. This article discusses the potential for this major cost-control experiment. Experience suggests that those able to quality for long-term care will fare better than the poor did in the previous system. However, limiting eligibility will be the primary means of controlling costs; significant price competition is not likely to develop. The bidding process will serve more to transfer risk to contract providers than to improve program efficiency. Potential cost savings will be more than offset by an increased identification of need.