Medicaid Copays, Premiums May Threaten Physician Income, Patient Access

Monthly premiums. Copayments of as much as 20 percent of the cost of service. Health savings accounts for enrollees. Medicaid may start looking a lot like private insurance, thanks to provisions of the Budget Reconciliation Act of 2005. And that prospect could have implications for family physicians.

The new law includes provisions for 10 states to develop demonstration projects implementing health savings accounts for Medicaid patients. It also allows states to increase cost sharing for Medicaid beneficiaries by implementing unlimited monthly premiums and copayments.

According to the budget reconciliation act, families earning as much as 150 percent of the federal poverty level -- $24,900 for a family of three -- can be charged copayments of as much as 20 percent of the cost of their medical services, while those with incomes between 100 percent and 150 percent of poverty level -- $16,600 to $24,900 -- can be charged copayments of as much as 10 percent. Even beneficiaries below the poverty level "have no protections from premiums or cost-sharing amounts for services," according to a Kaiser Commission on Medicaid and the Uninsured report, "Deficit Reduction Act of 2005: Implications for Medicaid." (PDF file: 6 pages / 329 KB. More about PDFs.)

State-implemented cost-sharing policies may affect family physicians because FPs care for a significant percentage of Medicaid patients. Nearly 77 percent of FPs responding to the AAFP 2005 Facts About Family Medicine member survey said they take assignment on Medicaid patients. Among those practices, Medicaid patients comprise nearly 15 percent of the patient panel, according to the survey.

Practices that care for Medicaid patients likely will see the effects of cost sharing, according to Leighton Ku, senior fellow in health policy at the Center on Budget and Policy Priorities, and Victoria Wachino, associate director of the Kaiser Commission on Medicaid and the Uninsured. They cited research indicating that cost-sharing measures can make it harder for patients to receive needed medical services.

"Cost-sharing may also have adverse consequences for health care providers, who may experience a loss of revenue because of reduced utilization of health care or because some beneficiaries cannot afford their copayments or lose eligibility when they cannot pay premiums and seek uncompensated care," they wrote in "The Effect of Increased Cost-Sharing in Medicaid: A Summary of Research Findings," a 2005 Center on Budget and Policy Priorities paper.

Amber Isley, M.D., Orange Park, Fla., a member of the AAFP Commission on Health of the Public, agreed.

"Medicaid recipients in most states have very little disposable income, and most physicians will not refuse care for a $5 copay." she said. "I'm sure the copays may deter some patients, but most patients are savvy enough to tell the office staff, 'Bill me.' Uncollected copayments may become bad debt on many providers' books." Isley also noted that "large deductibles may keep patients from seeking medical care altogether."

Research into the impact of revisions to Oregon's Medicaid program that went into effect in 2003, including reduced benefits, higher premiums and cost sharing, found that the addition of monthly premiums -- which ranged from $6 for those with no income to $20 for those earning above federal poverty levels -- was linked to a dramatic drop in program enrollment.

"In less than a year, enrollment among the group subject to premiums fell by about one-half," according to the authors of a June 2004 report (PDF file: 21 pages / 430 KB. More about PDFs.) from the Kaiser Commission on Medicaid and the Uninsured. "An early survey found that nearly three-quarters of those no longer enrolled in Medicaid became uninsured," they wrote.