One reason is that Medicaid reimbursement rates are lower than Medicare or commercial insurance. However, another (often overlooked) factor is the risk that physicians are denied payment and the administrative hassles they face when trying to obtain Medicaid reimbursement.A paper by Dunn et al. (2024)—— Cleverly named “Every day I deny it keeps the doctor away from me“- shows that Medicaid denies reimbursement at a much higher level than either Medicare or commercial insurance.
Who bears the consequences of healthcare management problems? We use data on repeated interactions between a large sample of U.S. physicians and many different insurance companies to document the complexity of health care billing and estimate its economic costs to physicians and consequences for patients. By looking at the back-and-forth sequence of claim denials and resubmissions for past visits, we can estimate how much it costs doctors to bargain with insurance companies to collect fees. Combining these costs with revenue that is never collected, we estimate that physicians lose 18% of Medicaid revenue due to billing issues, compared with 4.7% for Medicare and 2.4% for commercial insurers. By identifying physician movements and practices across state borders, we find that in states with greater billing barriers, physicians respond to billing issues by refusing to admit Medicaid patients. These barriers are quantitatively as important as payment rates in explaining changes in physicians' willingness to treat Medicaid patients. We conclude that administrative friction has overarching costs for physicians, patients, and equal access to health care. We quantified the potential economic benefits—reduced public spending or increased access to care—if these frictions could be reduced and found them to be considerable.
The right column shows average CIP, share of visit value by state and payer.“
Economists write every day There is a good summary of this issue.
