October 12, 2001

GAO Identifies Link Between Medicaid Payments and Program Participation

A new General Accounting Office (GAO) study reports that low payment rates discourage physician participation in Medicaid and the State Children's Health Insurance Program (SCHIP). The study, "Medicaid and SCHIP" (GAO-01-883) was submitted to Democratic members of the House Energy and Commerce Committee. It cites a recent national survey conducted by the American Academy of Pediatrics (AAP) that identifies low reimbursements as one of the most important reasons why pediatricians limit their participation in Medicaid. About one-third of the nation's pediatricians do not accept Medicaid patients.

The GAO reviewed the extent of poor payment rates, finding that Medicaid fees for preventative pediatric services ranged from 29 to 61 percent of what Medicare would pay for similar services. Although SCHIP fees were often slightly higher than Medicaid's, they still fell below Medicare rates in many states.

While poor Medicaid reimbursement is a long-standing problem, the GAO found that states are slow to increase payments and assure provider participation. New York State recently increased physician fees for office visits for the first time in over 30 years - only after provider groups initiated lawsuits. Fees for office visits increased from $7 to $30.

The Department of Health and Human Services (HHS) criticized the GAO study for its small study sample. It also questioned the appropriateness of comparing Medicaid and Medicare physician fees. HHS expressed significant concern with the AAP's survey, calling it an important policy issue, which warrants further evaluation.

Upon release of the report, the AAMC, AAP, American Hospital Association, Families USA, and several other organizations sent a letter to HHS Secretary Tommy Thompson to praise the report for raising important access issues and presenting opportunities for system improvements. The potential improvements include simplified application and redetermination processes, adequate payment rates, and limiting cost-sharing requirements.

Information: Chris Mitchell, AAMC Office of Governmental Relations, 202-828-0526.