Tuesday, January 25, 2005

Medicaid crisis in Washington

Dr. Bob, of the excellent blog The Doctor Is In, and I have had our occasional differences, but yesterday he posted something that was right on target, a description of the crisis in access to health care for the poor in Washington brought on by low Medicaid reimbursements. He's right. Medicare reimbursements usually barely cover the cost of providing service or, at best, slightly more, and Medicaid reimbursements usually run between 60-75% of Medicare reimbursement for the same services (depending upon the region of the U.S.). That means that doctors who accept Medicaid patients usually lose money on them. Many still accept them, but it is more a matter of charity and a feeling of obligation. Those who do accept them cannot allow them to become too large a percentage of their patients, or their practice will no longer be financially viable. One advantage of being in academics (as I am) is that I'm shielded somewhat from these forces, mainly by state subsidies to our medical school and hospital. Given the budget crunch facing our state currently, those subsidies are bound to decrease soon, and we will likely be in the same boat our private practice colleagues have been in for a while.

I'd like to add just one thing. In medicine, market forces, for the most part, do not determine charges. In effect, the government determines our rates of reimbursement. Most HMO's, insurance companies, and third-party payors start their negotiations over reimbursement rates for doctors, medical practices, and hospitals at the Medicare rate. Usually, the contracts end up being somewhere around 100-130% of Medicare (although occasionally, particularly hard-nosed insurance companies have managed to negotiate rates below Medicare reimbursement). In addition, Medicare rates are not even keeping up with inflation, and for some procedures they are even being cut. However, expenses keep going up, and malpractice insurance premiums keep going up; but, unlike other professions, doctors have a very hard time raising their rates to cover their increased costs. That may mean that, soon, the crisis in access to care for Medicare patients could spread to those of us who think ourselves safely insured.

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