Better access to primary care decreases hospitalization costs

Hospitalization rates in Medicaid programs were lower in areas with a greater number of primary care physicians, and in states that on average provided more outpatient visits and paid more per outpatient visit, according to a study published in Health Affairs.1

"Overall, we take this to mean that state Medicaid programs with a more robust system of primary and outpatient care are able to provide better care management, and thus reduce avoidable hospitalizations," says Todd Gilmer, PhD, one of the study's authors and professor of health economics at the University of California-San Diego.

Dr. Gilmer recommends that Medicaid programs improve outpatient and primary care systems, and expand the workforce by incorporating lower-cost providers such as physician assistants. "Nurse-based care teams can manage some of the more common chronic conditions, while physicians can be reserved for more complex cases," he adds.

Low reimbursement, a limited supply of willing providers, and inadequate access to necessary support services are some of the problems with primary care access in Medicaid currently, says Robin Clark, PhD, director of research and evaluation for the University of Massachusetts Medical School's Center for Health Policy and Research in Shrewsbury.

"Demand is increasing, and the supply of primary care providers willing to accept Medicaid patients is limited," says Dr. Clark. "Low Medicaid payment rates discourage providers from accepting Medicaid patients and squeeze available time for physicians to spend with patients."

Pressure to cut rates

Low reimbursement rates is the leading reason given by physicians for not serving Medicaid beneficiaries, says Dr. Clark, and further cuts are likely to cause primary care physicians to reduce the percentage of their practice devoted to Medicaid patients.

"Larger practices affiliated with hospitals are likely to weather the storm, but the economics just don't work for small practices," he says. Even if primary care providers are spared from rate cuts, reductions in specialty areas may place additional responsibility on them to manage chronic conditions such as mental illness, Dr. Clark says.

Physicians perceive Medicaid billing and regulation practices as burdensome, says Dr. Clark, adding that Medicaid beneficiaries often have more complex and challenging health care needs than privately insured patients. Medicaid patients may require more management, coordination and patient supports, he says, such as transportation, interpreters, health educators, and care managers.

"These services are poorly reimbursed or unavailable in some locations," says Dr. Clark. In light of this, he says, many states are participating in demonstration projects such as primary care medical home initiatives, to improve access and responsiveness to patients' needs.

"Some of these demonstrations include payments to assist with care coordination and other support services," Dr. Clark says.

Monitoring is necessary

Medicaid directors can't know whether a new policy initiative is successful unless the outcome is measured, says Dr. Clark, but this kind of evaluation is often underfunded or neglected in times of financial stress.

Monitoring and evaluation are, in fact, critically important for making sure policies and practices are cost-effective, Dr. Clark emphasizes. "Ineffective and wasteful policies can easily become entrenched if they are not identified early," he says. "Virtually no one believes that we can deliver care of reasonable quality, or effectively manage health care costs, without a strong, accessible system of primary care."

While boosting payment rates to Medicare reimbursement levels may make it economically possible for physicians to continue serving Medicaid patients, this won't completely solve the primary care access problem, says Dr. Clark.

"Effective policies will address a range of issues that impact care," he says. In addition to improved reimbursement for practitioners, states must ensure that providers and patients have access to additional supports, including interpreters, better care coordination, access to specialty care, and transportation, says Dr. Clark.

"Some states are experimenting with ways to bundle payments for a range of services," he adds. "Others are offering additional reimbursement to primary care practices for expanding care management."

Waste of resources

Barbara A. Horner-Ibler, MD, a physician at the Bread of Healing Clinic, a free clinic in Milwaukee serving uninsured employed individuals, says that limitations in eligibility and "unachievable spend downs" are the biggest problems she sees currently with primary care access in Medicaid.

Dr. Horner-Ibler's patients are mostly 40 to 64 years old without dependent children and are not disabled, so they don't qualify for the state's BadgerCare program, but are unable to purchase an insurance policy because they have chronic illnesses and limited income.

Most of her patients who do qualify for Medicaid, usually because they have been awarded disability, are given a very large spend down, she says. "We have several patients with $4,500 every six months or $3,000 every six months. We treat these spend downs like high-deductible plans," she says.

Patients don't access Medicaid because they cannot afford these costs, says Dr. Horner-Ibler, which ultimately results in higher costs due to hospital admissions for uncontrolled chronic illness.

Dr. Horner-Ibler says she sees fewer clinics and physicians accepting Medicaid, noting that about 70% of primary care physicians in Milwaukee are employed by the hospital systems. "Hospital clinics severely restrict the number of Medicaid patients," she says. "They won't allow uninsured patients to even make an appointment without a down payment of $350."

Dr. Horner-Ibler adds that she doesn't think the mandated primary care rate increase will be enough to encourage any of the hospital systems to increase their primary care access to Medicaid patients. "Perhaps the [Federally Qualified Health Centers] will increase their capacity, but they are the clinics which already have six-week delays for employment and school physicals," she says.

One patient told Dr. Horner-Ibler that he goes to the emergency department every six months and falsely reports chest pain in order to reach his spend down, because the medical home he goes to won't see him unless he has reached the spend down limit.

"Of course, he is unable to pay the spend down. Instead of the clinic stuck with the bill, the hospital is stuck. But what a waste of money in the system!" says Dr. Horner-Ibler.

Eliminating the spend down, or at least reducing it to a more realistic amount, would reduce the overall cost to the system, she says. "It would create healthier patients who don't wait for an ED visit — or create a fictitious one — to be able to access appropriate health care," she says.

Contact Dr. Clark at (508) 856-4226 or, Dr. Horner-Ibler at (262) 754-1421 or, and Dr. Gilmer at (858) 534-7596 or


1. Gilmer TP, Kronick RG. Differences in the volume of services and in prices drive big variations in Medicaid spending among U.S. states and regions. Health Affairs 2011; 30(7):1316-1324.