June 2, 2005

Higher Medicaid Payments are Good, but Not Great

A study published in the current issue of Health Services Research re-examines the effects of Medicaid payment generosity on access and care. The authors found that higher payments improve the probability of adult beneficiaries having at least one doctor/healthcare professional visit in a year, but does not affect their use of the emergency department or dentist. Among the adult population, higher payments also lead to increased beneficiary satisfaction and better communication between doctors and patients. There was no effect to the preventative care or immediate medical care among children. The results show, "the limited impact of Medicaid rates on beneficiary access and use suggests that modest pay cuts might be an appropriate policy option when state budgets get tight," co-author Stephen Zuckerman explains.

The authors examined the National Surveys of America's Families for years 1997, 1999, and 2002 and the Urban Institute Medicaid capitation rate surveys. The authors conclude that states that are able and willing to set higher payment rates can enhance Medicaid for their beneficiaries and increase its attractiveness to potential employees. However, given the limited impact of rates on access and use, modest pay cuts may also be an option that will not adversely affect users when state budgets tighten. Fees can be reduced by five to ten percent without serious, negative results. "In all cases where we detected significant payment effects, we found that higher rates improved access and use for Medicaid beneficiaries," state the authors.

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