For many low-income people in the United States, health insurance is not enough to get medical coverage: Patients with Medicaid struggle to find a doctor willing to take out their health insurance.
And, in large part, this happens because Medicaid bills are tedious for doctors and care providers.
A recent study by researchers at the US Bureau of Economic Analysis, the University of Chicago, and the Federal Reserve Bank in San Francisco found that providers encounter more barriers to billing Medicaid than other insurers, and that these administrative hurdles explain the access issues of Medicaid patients as well as the program's payment rates.
Medicaid payment rates, the amount doctors receive for providing services, are on average lower than Medicare or private coverage. This has usually been used to explain why many doctors are reluctant to take Medicaid and why some Medicaid recipients still have difficulty accessing medical care.
"Previous work has highlighted the impact of pricing on physician acceptance of Medicaid patients … and care in general," the authors wrote, citing a litany of previous research. "We show that a reduction in administrative costs is just as significant."
Access for Medicaid patients is a well-documented problem. Various surveys show that providers accept Medicaid far less often than Medicare or private insurance companies. This adds to the other health challenges faced by lower-income people.
Usually, as the authors point out, the access problem is caused by the prices Medicaid paid. And Medicaid pays less than the other big insurers: According to its own information, the average initial application for Medicaid patients is $ 98, while Medicare averages $ 137 and private insurers $ 180.
But the problem goes even deeper, according to this new analysis. Not only does Medicaid pay out less, but doctors have more billing problems. About 19 percent of initial applications submitted to Medicaid are not paid in full. With Medicare and with private insurers, this proportion is significantly lower: 8 and 5 percent respectively.
Healthcare providers then have to invest time and money to resolve rejected or disputed claims. Trying to put this cost in dollars – they call it the "cost of incomplete payments" or CIP – these researchers find that Medicaid is more expensive to providers than Medicare or private insurers. The average CIP for a Medicaid visit is $ 16, more than the average of $ 10 for Medicare and private coverage.
And when you consider the inequality in initial claims, since Medicaid already pays much less than Medicare or private insurance, those incomplete payments devour 16 percent of the value of a Medicaid visit for doctors, well above the 7 percent for Medicare and 4 Percent for private coverage.
What does this administrative effort cost? Fewer providers are accepting Medicaid patients.
The authors approached the question from two angles, looking at individual physicians moving to another state (and hence a different Medicaid program) and companies operating medical offices in different states. In both cases they found an effect. For both measures, a decrease in administrative costs – the CIP metric – resulted in an equal probability of providers accepting Medicaid patients as an increase in reimbursement rates.
In other words, whether doctors were willing to admit Medicaid patients depended on whether they faced administrative hurdles in billing their treatment, as did the actual price Medicaid pays for the services they provide.
“Medical offices are corporations,” said Larry Levitt, executive vice president of the Kaiser Family Foundation, “and it's not surprising that they make investment decisions based not only on their salary but also on the expense of doing business with various insurers do."
The study has some limits, which the authors acknowledge. For one thing, they are not trying to determine whether Medicaid has valid reasons to reject the alleged claims (in which case Medicare and private insurers may be too lenient with the claims they have accepted).
And arguably the bigger problem with access to Medicaid is that many eligible individuals have no access to the program's insurance at all. Making it easier for providers to bill Medicaid does not help more people sign up for coverage, although an estimated 7.3 million uninsured are already eligible for Medicaid, and 4 million more if the 12 states have refused. to expand the program under the Affordable Care Act so decided.
Still, the study makes a strong case that solving access problems for Medicaid patients does not require increasing the program's payment rates, which is difficult to sell at a time of tight government budgets in the country with already the world's highest healthcare costs.
Instead, the researchers present this solution to the problem they have identified: "To improve access to care, regulators could implement or require simpler and cheaper management of payment processes without raising prices."
If we could just make it easier for doctors to get paid for what they do, it could make a huge difference to Medicaid patients.