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Equal Pay for Equal Work? Not for Medicaid Doctors

Sept. 5, 2007

Equal Pay for Equal Work? Not for Medicaid Doctors

New Public Citizen Report Analyzes the Great Divide Between Medicare and Medicaid Payments to Doctors in 10 States and the District of Columbia

WASHINGTON, D.C. – Doctors in New York, New Jersey, Rhode Island, Pennsylvania and the District of Columbia who treat Medicaid patients are paid far less than doctors in many other states who provide identical services to the same patient group, according to a new Public Citizen report. Compared with their colleagues in other states, doctors in those five jurisdictions also earn much less under Medicaid than under Medicare.

The bottom line: Patients in states with low Medicaid reimbursement rates may have more difficulty finding care because doctors have a financial disincentive to treat Medicaid patients and may even limit the number of Medicaid cases they accept. This reality is particularly harsh in those five jurisdictions, which account for more than 13.5 percent of all Medicaid beneficiaries.

In the report, available here, Public Citizen exposes the disparity among what Medicaid pays doctors for services in 10 states and the District of Columbia, as well as the disparity between Medicaid and Medicare reimbursement rates within those jurisdictions. The organization selected these jurisdictions for its analysis of reimbursement disparity between Medicaid and Medicare by identifying the states designated in a 2003 study as the five worst and six best (two were tied.) Public Citizen then obtained 2007 Medicaid and Medicare reimbursement rates for 11 primary care procedures in those states.

The results reveal stark evidence of the great divide in doctor reimbursement. Except for Alaska and Wyoming, which pay physicians more under Medicaid than under Medicare, Medicaid fees tend to be lower than Medicare fees throughout the nation. But some states pay at or near parity (including Arizona, Arkansas, Delaware and North Carolina), and their average fees were used to compare fees in the low-paying states.

In New York, doctors are paid $20 for an hour-long consultation with a Medicaid patient, while in higher-paying states, doctors receive an average of $157.92 for the same service – a difference of greater than sevenfold. The difference within a state between Medicaid and Medicare fees is just as dramatic. For this hour-long consultation, a physician in New York could earn $196.47 from Medicare, almost 10 times more than from Medicaid. Similarly, for a 15-minute visit,  physicians treating Medicaid patients in New Jersey earn $20.60, less than half what their counterparts receive in the higher-paying states ($49.20) and less than a third what they would earn if they were treating a Medicare patient ($65.65).

Under Medicaid, doctors in Pennsylvania and Rhode Island earn a miserly 31 cents for every dollar paid to their colleagues in the higher-paying states for an hour-long consultation with a new or established patient. Again, the differences within each of these states are significant when Medicaid and Medicare fees are compared; in these same two states, the fee for the same service is 3.7 times higher under Medicare.

“Fee differences between Medicare and Medicaid in New York, New Jersey, Rhode Island, Pennsylvania and the District of Columbia consign Medicaid reimbursement to second-class status in those states and its beneficiaries to lower-tier care,” said Dr. Sidney Wolfe, director of the Health Research Group at Public Citizen. “As long as Medicaid fee schedules shortchange providers, the program and its clientele will be considered less worthy, and access to care will be restricted for the poorest, neediest Americans.”

Even the reimbursement amount for an electrocardiogram, which is usually performed by a technician under a physician’s supervision, varies considerably. In Washington, D.C., this procedure earns a fee of $16 under Medicaid and $29.29 under Medicare, a 1.8-fold difference. “Geography may not be destiny, but in the Medicaid program, it can affect providers’ incomes,” said Annette Ramirez de Arellano, co-author of Public Citizen’s study. “Price discrimination not only has been allowed but actually enshrined in the fee schedule that governs Medicaid, one of our major health programs.”

Medicare, which mainly treats people 65 and over, and Medicaid, which treats primarily the poor, have historically been worlds apart in terms of physician reimbursements. Medicare fees are established nationally, with justifiable geographic adjustments among states, while Medicaid fees vary widely from state to state.

This dollar gap has influenced the amount and type of care available to these groups. Physicians may cap the number of Medicaid patients they see because it isn’t financially viable to see more, and they need to reach their target incomes.