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Medicaid Physician Payments

Many states reimburse physicians participating in Medicaid at rates far less than those paid by Medicare for the same set of services. A new analysis reveals that fees rose by 15% from 2003 to 2008 but failed to increase as much as general inflation.

The latest analysis of Medicaid physician fee rates was based on results obtained in surveys by the Urban Institute. The current study compares to prior examinations of this same topic covering the time periods 1993 – 1998 and 1999-2003. When broken down by service type, Medicaid expenses can be divided into primary care, emergency care, obstetric care, hospital care, surgery, radiology, laboratory, and other services. Primary care visits for established patients, representing nearly one-quarter of visit types, are reimbursed on average about $38. An emergency department visit – 8 percent of Medicaid services – is reimbursed about $44. For cataract surgery – which represents less than 2 percent of services – Medicaid pays over $700.

In the 5 years from 2003 through 2008, most states increased the amount of money paid for primary care, obstetric care, and other Medicaid services by an average of 20 percent, 9 percent, and 9 percent, respectively. Two states, Minnesota and New York, did not increase their overall physician fees during this time period.

Because each state can determine its own Medicaid fee schedule, significant variation arises in reimbursements to physicians in different locales. One way to benchmark a state’s generosity is by reporting the Medicaid fees as a percentage of the Medicare fee schedule. A value less that one means that Medicaid pays less than Medicare; a value greater than one means that Medicaid pays more that Medicare for a particular state. The average ratio has improved from 0.69 to 0.72 in the past 5 years.

Several states (Oklahoma, Idaho, Montana, Nebraska, New Mexico, and North Dakota) increased their Medicaid fees from 2003 levels that were below Medicare rates so that by 2008, Medicaid paid the same or more as Medicare in those states.  Some states may have pursued these policy changes in order to encourage physicians to accept new or additional Medicaid patients into their practices.

These researchers are careful to note prior research which appears divided on the significance of Medicaid-to-Medicare fee rations in terms of access to physician services.


Much research has looked into the effects of Medicaid fees (especially as they compare to Medicare fees) on physician participation in the Medicaid program. While the pre-existing data may appear split, a common sense approach would suggest that states that have higher Medicaid reimbursements could be expected to have health care providers that are more likely to participate in Medicaid. A noted physician participation in Medicaid increased from 80% to 90% in low versus high paying states.

While this study does not seek to answer the question of whether Medicaid fees improve provider participation, it does demonstrate that states are increasing provider payments (albeit at a rate nullified by the effects of general inflation). Hopefully, researchers will go back and look at provider participation in states – such as Oklahoma – that dramatically increased their Medicaid fee schedules. Until such time, policy makers should continue to increase Medicaid fees to at least be on par with Medicare in order to encourage better physician participation and promote greater access to care for patients.

Zuckerman, et al. Health Affairs. 2009. 28 (3): w510-w519.

by Cedric K. Dark, MD, MPH

Cedric Dark, MD, MPH, FACEP
About Cedric Dark, MD, MPH, FACEP

Cedric Dark, MD, MPH, FACEP is Founder and Executive Editor of Policy Prescriptions®. A summa cum laude graduate of Morehouse College, Dr. Dark earned his medical degree from New York University School of Medicine. He holds a master’s degree from the Mailman School of Public Health at Columbia University. He completed his residency training at George Washington University. Currently, Dr. Dark is an Assistant Professor in the Department of Emergency Medicine and a Health Policy Scholar in the Center for Medical Ethics & Health Policy at Baylor College of Medicine. He produces a health policy podcast for the American Academy of Emergency Medicine. Dr. Dark’s commentary and opinions on this website are his own and do not represent the views of Baylor College of Medicine or the American Academy of Emergency Medicine. Contact: Website | Facebook | Twitter | Google+ | YouTube | More Posts

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