OLR Research Report

July 16, 2009




By: Robin K. Cohen, Principal Analyst

You asked why doctors are reluctant to participate in the Medicaid program and what the state is doing to encourage them.


Physician participation in Medicaid is low throughout the nation. For decades, researchers have attempted to pinpoint the reasons for this. Conventional wisdom holds that inadequate reimbursement has been the primary factor in low participation, and many studies bear this out. New research shows that states have acknowledged this issue and increased Medicaid fees by 15% between 2003 and 2008. This may have been due to healthy state budgets during the early part of the decade. It remains to be seen whether such increases can be sustained during the current economic downturn.

Other research suggests that even when fees are raised, physicians may not be more willing to participate in the face of other obstacles, such as timely payments for services rendered or paperwork.

States, including Connecticut, have made concerted efforts to increase fees in hopes of attracting greater numbers of providers, and they have taken steps to address administrative burdens, too. In FYs 08 and 09, over $27 million of Medicaid funds appropriated to the Department of Social Services (DSS) for provider reimbursement was earmarked for increased physician fees. And the state has increased dental fees significantly in the last year, mainly in response to a lawsuit settlement. The dental suit settlement contains other provisions that are clearly designed to address some of the administrative burdens dental providers have faced, such as missed appointments. In 2007, the legislature created a Primary Care Access Authority and its charge is to increase the number of primary care providers in the state. The 2007 legislature also raised a bill to create a task force to increase provider participation in Medicaid, but it did not pass.

The state has also indirectly encouraged physician participation in Medicaid through its role in the federal loan repayment program. The federal government pays up to $50,000 to health care providers who agree to provide two years of service at sites in areas that have health professional shortages. The governor's latest budget proposal would eliminate the state's contribution to the program and the Department of Public Health's website says that it is no longer reviewing applications for it. But the federal economic stimulus legislation includes $200 million in funds and providers can apply directly to the federal agency that administers the program.


Considerable research exists on the issue of medical provider, specifically physician, participation in the Medicaid program. Several studies point to the positive impact that increased fees has had on the number of participating physicians. A 2005 study took the next step and correlated higher fees with better access and utilization (Shen, Yu-Chen and Stephen Zuckerman, The Effect of Medicaid Payment Generosity on Access and Use Among Beneficiaries, Health Services Research 40:3 (June 2005). And in 2008, the Urban Institute reported that Medicaid physician fees have been increasing (from 2005) but less than the inflation rate.

But the research also suggests that fee increases alone may not be enough of an incentive. A 2002 study published in Pediatrics (2002; 110;239-248) examined the effects of payment level, prevalence of managed care, and paperwork concerns on private primary care pediatricians' participation. The researchers found that payment increases resulted in increased participation, but participation decreased as the proportion of Medicaid enrollees with primary care capitated payments rose and as paperwork concerns increased. A more recent study supports these findings, suggesting that slow reimbursement would offset any gains in physician participation resulting from fee increases (Federal Medicaid law prescribes Medicaid prompt payment requirements, but these do not apply until the claims are complete or “clean.”) (“Do Reimbursement Delays Discourage Medicaid Participation by Physicians?” Health Affairs 28, no.1 (2009)


Fee Increases

Connecticut's Medicaid program is bifurcated. Most recipients are in the managed HUSKY A program, which is Medicaid for low-income children and their adult caretaker relates, and in which the managed care organizations (MCO) set the rates providers receive. The remaining beneficiaries (primarily aged, blind, and disabled people) receive their services on a fee-for-service basis, in which DSS directly pays providers based on a fee schedule it establishes. (DSS also sets the provider rates for HUSKY A dental and behavioral health services, which are administered by an administrative services organization (ASO) with which DSS contracts.)

The legislature has appropriated additional funds intermittently to increase the provider fees in the Medicaid fee schedule. The most recent increases went into effect on January 1, 2008 and apply to providers serving clients in the state's Medicaid FFS, HUSKY, State-Administered General Assistance, and Behavioral Health Partnership programs. (Although HUSKY rates are set by the MCOs, the current contracts the state maintains with the MCOs require that providers be paid no less than the amount in the DSS fee schedule.)

In May 2008, Connecticut Voices for Children, an advocacy group that, among other things, analyzes the state' s health care policy and its effects on DSS clients, compared DSS reimbursement rates for a number of health care services in 2006 and 2008. It actually found a negative change for pediatric preventive care visits (these fees were not increased and the researchers adjusted for inflation), while fees for pediatric outpatient visits increased an average of 6%. But the latter fee increases were not universal—longer visits were reimbursed more while shorter ones experienced cuts, which were exacerbated when 2006 fees were adjusted for inflation.

The new rates helped the state close the gap with Medicare, whose rates historically have been higher than Medicaid in most states. For general fees (not including primary care), the Medicaid gap narrowed from 45% of Medicare to 57% of Medicare. While this was an improvement, the national figures reported in the 2008 Urban Institute report cited above show Connecticut far behind many states in this index, with several states' Medicaid programs paying 100% or more of the Medicare rate. (See OLR Report 2009-R-0216, which discusses how

Oklahoma's rate increases, coupled with a statewide primary care case management Medicaid program, led to increases in provider participation.)

Do These Increases Result in Greater Participation? In May 2008, information Voices presented to the Medicaid Managed Care Council suggested that the fee increases, including those built into the MCOs' capitation rates, may have contributed to increases in the number of providers participating in MCO networks. In the past seven months, data presented at the Medicaid Managed Care Council shows the number of specialists increased from 35% to 49%, according to council administrator Mariette McCourt. In addition, the DSS cumulative network reports show that the number of HUSKY primary care providers and specialists continues to increase. Although the capitation payments include additional funding for increased fees, we do not know the extent to which these increases have actually resulted in higher physician fees. DSS is working on getting this information from the MCOs.

More recently, DSS began carrying out the provisions of the dental lawsuit settlement, which included rate increases and other measures expected to increase the number of dental providers.

Effects of Dental Lawsuit Settlement. In 2000, Legal Aid sued DSS on behalf of HUSKY A recipient children and adults, claiming that these individuals were not getting the dental care they needed from the MCOs responsible for providing access to it. The complainants alleged they could not reasonably find dentists and other dental providers in their communities who were willing to accept Medicaid and provide care to them. They also alleged that DSS fees were not high enough to entice providers to participate in the program. The plaintiffs asserted that this lack of access violated several provisions in Medicaid law.

Eight years later, the two sides settled. The settlement includes a lengthy list of actions that DSS was expected to undertake to address the issues raised in the suit. These included “carving out” dental services from the HUSKY program (the legislature had directed DSS to do this in 2003, but DSS had not carried it out, believing it would not increase access) and increasing the fee schedules, with DSS expected to spend at least an additional $20 million per year over base year amounts during the four years that the agreement is effective.

In 2006, OLR reported that there were few dental providers, in particular dentists, participating in Medicaid through the FFS program. (We did not know how many dentists were serving HUSKY participants

because DSS could not get the information from the MCOs, but we assume that some of these providers were participating in HUSKY, too.) At that time, we reported that 141 dentists (down from 289 in 2000) were participating providers.

Since the settlement was reached, DSS reports that as of May 31, 2009, 822 dentists and 89 hygienists are enrolled providers in the newly named Connecticut Dental Health Partnership, with 89 hygienists also in the network. Under the carve out, DSS has a contract with an ASO, BeneCare, which, among other things, is responsible for finding adequate providers to meet the needs of HUSKY recipients. DSS dental program director Dr. Donna Balaski attributes the increase in providers to DSS, BeneCare's, and the advocates working together to recruit and keep providers. Additionally, the Connecticut State Dental Association's (CSDA) website includes a list of 10 reasons why dental providers should participate in HUSKY, including the fact that care coordinators are available to work with clients to ensure they keep their appointments. In 2009 alone, the Partnership reports a 19.1% increase in participating providers. (A copy of the latest report is attached.)

Provider fees have also risen significantly. The CSDA website also includes some sample dental rates, showing that some have risen by more than 100% since the settlement. For example, periodic oral exams are reimbursed at $35, up from $18, while cleanings receive $46, rising from $22.

Easing the Administrative Burden

A 2003 OLR report (2003-R-0028) indicated that DSS and Electronic Date Systems (DSS' fiscal intermediary that, among other things, pays FFS claims) had taken several steps to address administrative problems that concern physicians who serve patients in the FFS part of the Medicaid program. The automated eligibility verification system (AEVS) allows physicians to obtain immediate response on client eligibility, program restrictions, and private insurance information. The most typical way AEVS was accessed was thought automated voice response systems. EDS also gives physicians the option of obtaining this information electronically through the use of a point-of-sale device they keep in their office, swiping the client's Medicaid card and receiving the same type of information.

OLR also wrote that EDS gives physicians software that allows them to submit claims and patient eligibility requests electronically. EDS also operates a provider assistance center that physicians can contact to discuss any issue. And it maintains a website, ctmedicalprogram.com, where providers can access DSS' manuals, fee schedules, claim forms, and a variety of other information. Finally, EDS offers workshops for providers to inform them of new rules and program changes.