The Adequacy of Physician Reimbursement for Pediatric Care Under Medicaid

This article examines 1989 Medicaid physician reimbursement for pediatric care in 47 states and the District of Columbia. To assess the adequacy of payment, several state reimbursement policies were analyzed, including physician payment methods, frequency of payment updates, and fee data for five common evaluation and management codes and two Early and Periodic Screening, Diagnosis, and Treatment visit categories. Physician payment rates were evaluated to determine overall state and regional patterns of Medicaid reimbursement. They were also compared with regional private market fee data and average national Medicare fees to assess their adequacy. The majority of state Medicaid programs used fixed fee schedules as their physician reimbursement method. Nearly one fourth of states that update their fees overall by physician specialty have not adjusted their rates since 1985 or before. Medicaid reimbursement rates for five commonly used evaluation and management Physicians' Current Procedural Terminology (4th ed) office visit codes and Early and Periodic Screening, Diagnosis, and Treatment screening and follow-up examinations varied substantially across states and among regions. States in the West paid the highest rates for most office visits, while Northeastern states generally paid the least. A comparison of Medicaid payment rates with private market fee data revealed that Medicaid payments for established patients averaged less than two thirds of market rates for pediatricians, family physicians, and general practitioners. New patient care is reimbursed somewhat better. Regional variations are substantial. In addition, a comparison of Medicaid payment rates with 1988 Medicare fee data showed that average Medicaid reimbursement rates were less than four fifths of average allowed Medicare charges. Policy implications include the need to increase Medicaid rates so that they are much closer to private insurance and Medicare rates, particularly in the Northeast and in selected states, in order to increase participation by pediatric providers in Medicaid. In addition, efforts to re-evaluate reimbursement relative to level of service, as used in Medicare's resource-based relative value scales, deserve further research. Finally, comparable access to comprehensive pediatric care especially in underserved urban areas will require not only improvements in physician reimbursement but also more deliberate efforts to affect the maldistribution of mainstream medical care. Approaches to measure the impact of enhanced reimbursement on access to care by Medicaid-eligible children are discussed.