Medicaid: The Good, the Bad, and the Reality

Payman Sattar, MD, MS


August 25, 2021

Payman Sattar, MD, MS

Ten million Americans signed up for Medicaid in 2021. Although that sounds like a significant accomplishment, the question is: Is Medicaid good for patients or doctors? Or both, or neither?

I'm a physician who has been practicing for over 24 years, primarily at hospitals which care for mostly underserved patients. I've had significant experience caring for Medicaid patients and dealing with its bureaucracy.

Currently about 76 million Americans have Medicaid coverage. Without this, they would not be able to have essential medical care at their primary care physician's office or be able to afford emergency department visits. As more people sign up, it would be a good time to look into some of the realities of this program.

Taxpayers often have a very dim view of Medicaid. A recent audit of Medicaid in Mississippi showed that they could be wrongly paying out between $130 million and $145 million annually, to ineligible beneficiaries.

Many physicians also have a very poor view of Medicaid. The reimbursements are significantly lower than those from other types of insurance. Private insurance often pays about 1.5-2.5 times more than Medicare. Medicaid pays about 72% of what Medicare pays. This level of reimbursement is unsustainable for many practices.

Although approximately 80% of physicians accept Medicaid, often it only accounts for a small part of their practice. For some specialties, it is far less.

For instance, only 36% of psychiatrists accept Medicaid. On average, only 17% of a physician practice's insurance revenue comes from Medicaid. There are many reasons for this beyond just poor reimbursement.

Denial of payment occurs for about 17% of Medicaid claims, compared with only about 7.5% for Medicare and 4.5% for commercial insurance claims. There is a cost to this incomplete payment as well.

For a physician, trying to recoup some of this money is far more costly with Medicaid than with other forms of insurance — about two to four times higher.

Reimbursements can vary from state to state. Acceptance of Medicaid patients from one state to another can also vary. A recent study looked at Medicaid acceptance rates. It found that doctors are more likely to accept a patient whose plan offers higher reimbursement rates.

I have worked at two hospitals that took a large proportion of Medicaid patients. One of them had to receive significant funding from not only the federal government but also the state and county to stay solvent. The other was losing so much money that the large healthcare organization that owned it sold it for the cost of their debt.

Medicaid is also not optimal for patients. Hospitalized Medicaid patients are more likely to be sent home early or transferred to other hospitals. Transferring patients to other hospitals, in my experience, is quite a difficult task once it is discovered that the patient has Medicaid.

It is sometimes difficult for patients to find a physician near where they live. Finding primary care physicians is often not a significant burden; however, finding a specialist can be quite difficult. This can take up a substantial amount of time for doctors and patients.

Since its inception in 1965, Medicaid has changed over the years. With the Affordable Care Act in 2014, Medicaid has been expanded, allowing more people to sign up. Many patients have a very favorable view of Medicaid. They are now getting care where they weren't before. It is an important safety net for elderly persons, accounting for 60% of coverage for nursing home residents.

Although Medicaid provides healthcare coverage for nearly 1 in 5 Americans, there are many areas ripe for improvement.

Decreasing the bureaucratic costs of Medicaid, such as lowering the rate of reimbursement denials and the cost of recuperating incomplete payments, would help allow for increased reimbursements. This would probably have a ripple effect that would increase the number of doctors willing to accept new and more Medicaid patients.

As physicians, I feel it would go a long way for us to act as a unified front to the policymakers, demanding more transparency and less burdensome bureaucracy for our patients and ourselves. We need to be more vocal. If not, we will be stuck with our current system, which is often very difficult for our patients to access and is financially unsustainable for ourselves.

Medicaid is an ethical, fair, and essential proposition for every American to have medical coverage. But in practice, it falls far short of the ideal. We do a disservice to our patients by giving them only the illusion of hassle-free, complete healthcare coverage.

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