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Medicaid Fee Bump Not Improving Outcomes

Trickle down theory has no place in handling health care for the low-income (Volume 10, Issue 22)

Can we improve health outcomes for the low-income if we give our physicians more money to treat them? Compared to Medicare and private insurance, Medicaid provides relatively little reimbursement for physician services. A 2017 study examined the downstream effects of a 2013 provision of the Affordable Care Act which increased physician reimbursement for Medicaid.

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The study found that increasing physician reimbursement for seeing Medicaid enrollees demonstrated a spike in health care service utilization and out-of-pocket expenditures. A 10% increase in the Medicaid-to-Medicare reimbursement ratio led to a 21% increase in outpatient visits, a 14.2% increase in emergency room visits, a 10.7% increase in prescription fills, and a 19.8% increase in out-of-pocket expenditures.

But does the Medicaid fee bump lead to better patient outcomes? Increasing the Medicaid-to-Medicare reimbursement ratio showed no effect on how often preventive services were used, including blood pressure checks, cholesterol checks, flu vaccines, and pap smears. On top of that, patients’ propensity to delay care due to cost did not change after the fee increase, and access to care for low-income Medicaid enrollees changed very minimally.

This study, which only focused on state fee-for-service Medicaid programs, would have benefited from including research and findings from Medicaid enrollees in managed care plans, which make up a sizable chunk of the population.

The result that patients were being seen more despite the finding that there was virtually no change in basic preventive care  such as cholesterol screenings and flu vaccines is, at best, suspicious. If this study shows anything, it is that trickle-down theory does not have a place in handling of health care for the low-income. Studies show that the Medicaid fee bump is helping Medicaid patients get office appointments more easily, but we still don’t know why this isn’t translating to better preventive care. I speculate that we’re seeing this because physicians may be seeing established patients more often than new patients. For now, however, while it may improve access, I am not convinced that the Medicaid fee bump is the best way to increase patient outcomes for the low-income.

This Policy Prescriptions® review is written by Jeremiah Lee as part of our collaboration with the Health Policy Journal Club at Baylor College of Medicine. Mr. Lee is a first year medical student.


OBJECTIVE: To evaluate the effect of Medicaid fee changes on health care access, utilization, and spending for Medicaid beneficiaries.

DATA SOURCE: We use the 2008 and 2012 waves of the Medical Expenditure Panel Survey linked to state-level Medicaid-to-Medicare primary care reimbursement ratios obtained through surveys conducted by the Urban Institute. We also incorporate data from the Current Population Survey and the Area Resource Files.

STUDY DESIGN: Using a control group made up of the low-income privately insured, we conduct a difference-in-differences analysis to assess the relationship between Medicaid fee changes and access to care, utilization of health care services, and out-of-pocket medical expenditures for Medicaid enrollees.

PRINCIPAL FINDINGS: We find that an increase in the Medicaid-to-Medicare payment ratio for primary care services results in an increase in outpatient physician visits, emergency department utilization, and prescription fills, but only minor improvements in access to care. In addition, we report an increase in total annual out-of-pocket expenditures and spending on prescription medications.

CONCLUSIONS: Compared to the low-income privately insured, increased primary care reimbursement for Medicaid beneficiaries leads to higher utilization and out-of-pocket spending for Medicaid enrollees.

PMID: 28419487

Callison, K and Nguyen, BT. Health Serv Rev. 2017 april 16; epub

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About Baylor MEERM 628

Health Policy Journal Club brings students together with multi-specialty faculty and members of health care teams across Houston to discuss recent evidence from the field of health services research. The studies selected for discussion always have implications for the practice of medicine and are useful for learning about various aspects of the American health care system. More Posts