Center for Studying Health System Change

Physicians Less Likely to Provide Charity Care and Treat Medicaid Patients

Access Slipping for Uninsured; State Budget Shortfalls May Create Medicaid Access Problems

News Releases
December 5, 2002

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ASHINGTON, D.C.—The proportion of physicians providing charity care and treating Medicaid patients declined between 1997 and 2001, according to a new national tracking study released today by the Center for Studying Health System Change (HSC).

The proportion of physicians providing charity care declined by nearly five percentage points, from 76.3 percent in 1997 to 71.5 percent in 2001. At the same time, the percentage of physicians whose practices treat any Medicaid patients declined from 87.1 percent to 85.4 percent.

"The decline in physicians providing charity care and treating Medicaid patients is a sign of the financial pressures facing physicians," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation. "With substantial pressure on payment rates from private insurers, physicians may place a lower priority on treating the uninsured and Medicaid patients."

The study also examined access to care for uninsured and Medicaid patients. The percentage of uninsured patients with a usual source of care—already far lower than for insured people—dropped more than four points from 68.6 percent in 1997 to 64.2 percent in 2001. At the same time, the proportion of uninsured people who saw a physician in the last year dropped from 51.5 percent to 46.6 percent.

Declines in access for Medicaid patients were smaller, with 90.6 percent reporting a usual source of care in 2001, down from 92.9 percent in 1997. During the same period, the proportion of Medicaid patients who saw a physician in the last year remained unchanged at about 83 percent.

The study’s findings are detailed in an HSC Tracking Report—Mounting Pressures: Physicians Serving Medicaid Patients and the Uninsured, 1997-2001. The study is based on results from HSC’s nationally representative Community Tracking Study Physician and Household Surveys, which involve about 12,000 physicians and 60,000 consumers, respectively.

Most physicians who treat charity care and Medicaid patients see relatively few of these patients. Among physicians providing any charity care in 2001, 70.2 percent spent less than 5 percent of their total practice time on charity care, while 29.8 percent spent 5 percent or more of their time on charity care.

Among physicians with any Medicaid revenue in 2001, more than half (53.1%) derived 10 percent or less of their total practice revenue from Medicaid, while about a quarter (25.6 %) derived more than 20 percent of their revenue from Medicaid.

Physicians also limited the number of new uninsured and Medicaid patients accepted into their practices to a much greater extent than they did other patients with higher reimbursements. In 2001, 16 percent of physicians were not accepting any new uninsured patients, and 20.9 percent were not accepting any new Medicaid patients. In contrast, 3.8 percent of physicians were not accepting any new Medicare patients, and 4.9 percent were not accepting any new privately insured patients.

Physicians heavily involved in managed care were more likely to have closed their practices to new Medicaid patients. Among physicians who received more than 75 percent of their practice revenue from managed care, the proportion accepting no new Medicaid patient increased from 20.7 percent in 1997 to 27.3 percent in 2001.

"Many states are considering freezing or cutting Medicaid payment rates to close budget shortfalls, and these reductions may decrease physicians’ willingness to treat Medicaid patients and threaten access to care," said Peter J. Cunningham, Ph.D., an HSC senior researcher and author of the study.

The study also found wide variation across communities in the proportion of physicians who had closed their practices to Medicaid patients. The variation is likely related in part to differences in Medicaid payment rates. The communities are Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

For example, in 2001, northern New Jersey had the highest proportion of practices closed to Medicaid patients (38.3%) and one of the lowest Medicaid payment rates for office visits. In contrast, Cleveland, Boston and Little Rock had higher Medicaid payment rates and much smaller proportions of practices closed to new Medicaid patients.

Some communities also saw significant changes in the percentage of physicians accepting no new Medicaid patients between 1997 and 2001. For example, in Cleveland, the proportion of physicians with practices closed to Medicaid patients decreased from 13.7 percent in 1997 to 8 percent in 2001. In Seattle, the opposite occurred, with the proportion of practices closed to new Medicaid patients increasing from 10.6 percent to 19.8 percent.

Yank D. Coble, Jr., M.D., president, American Medical Association
"Grappling with severe cuts in Medicare payments and skyrocketing liability insurance costs, physicians are feeling squeezed like never before. Most physicians still provide charity care and treat Medicaid patients, but if physician costs continue to increase while payments decline, physicians will have no choice but to limit the amount of free and discounted care they provide in order to sustain their practices."

Ron Pollack, executive director, Families USA
"As this new report demonstrates, the time for Congress to act about the uninsured is now. Since states are cutting back their Medicaid programs, there will be a significant increase in the number of uninsured Americans. And, since fewer physicians are willing to serve the uninsured, those uninsured people will have fewer opportunities to obtain needed care."

Joan Henneberry, director of health policy studies division, National Governors Association
"The concern about access to care for Medicaid clients and the uninsured is warranted, and the possibility that some states will respond to the current fiscal crisis by reducing Medicaid eligibility is real. Physicians should expect that the number of uninsured currently in their practice and new patients who need appointments is going to go up."

Karen Ignagni, president and CEO, American Association of Health Plans
"There is a strong track record among managed care plans that demonstrates their key role in improving access and quality for low-income citizens. Payment from government to physicians and health plans needs to more closely reflect the costs of providing services. We urge Congress to address the immediate needs in the Medicaid and Medicare programs and to focus on the underlying drivers of health care costs."

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.