There are healthcare providers who do not accept Medicaid patients because of inadequate reimbursement. The same is true of some hospitals, which say reimbursement does not cover the costs of care.

“Many individuals hold the view that hospitals have the same ethical obligations as the medical profession and should therefore accept all patients who are in need of hospitalization,” says Robert M. Sade, MD, director of the Institute of Human Values in Health Care at the Medical University of South Carolina.

Nevertheless, hospitals are businesses. As such, says Sade, one of their primary goals is to remain solvent. If it is a for-profit hospital, the goal also is to make a profit for the hospital’s owners. Assuming Medicaid pays hospitals too little to cover their costs, and that the number of Medicaid patients seeking services exceeds the ability of the hospital to absorb the financial shortfall, “hospitals are justified in turning away those patients, except in emergencies, of course,” Sade adds.

Hospitals must obtain sufficient revenue to at least cover their costs. By doing so, they can continue to serve their communities. That does not mean money is the only consideration. To gain the long-term trust of the community, says Sade, “requires following business ethics guidelines, such as decency, honesty, fairness, and avoidance of coercion.”

For example, it would be unethical for a hospital to advertise its outcomes falsely to generate business, or to permit unqualified providers to care for patients. Ethical practices regarding Medicaid patients also are needed.

Sade says that while hospitals refusing Medicaid could consider providing information about where those patients could receive the care they need, “they have no legal or ethical obligation to do so, in my opinion.”

Ethicists can help clarify the hospital’s obligations to this group of patients. Most ethics committees review and revise hospital policies that carry ethical implications. “That would include policies relating to hospital admission criteria, such as for patients with inadequate funding,” Sade offers.

Policies also can clear up confusion over ethical and legal obligations to Medicaid patients who present with emergencies. A patient who is treated for an emergency under EMTALA becomes a patient of that hospital.

“Once the emergency is resolved, the hospital might have no legal obligation to continue treating the patient. But it risks harming its reputation if it refuses to continue care for the patient,” Sade cautions.

A physician’s primary ethical obligation is to serve the best interests of the patients. “But they must also remain financially solvent,” Sade notes.

This means earning sufficient income to offset expenses. “Expenses for most physicians have increased enormously in recent years, owing largely to burdensome regulations,” Sade argues. When uncovered costs become too great, physicians are ethically justified in refusing to accept Medicaid patients, according to Sade. “If they do accept such patients, however, they are ethically obligated to offer them the same care as they do for all of their patients,” Sade says.

For example, ICUs sometimes are filled when a new patient arrives needing ICU-level care. This may mean moving a patient of lesser acuity out of the ICU. A hospital should not allow a policy that specifies transferring Medicaid or any other low-pay patients before transferring other patients. “Such decisions should be made on medical considerations only, without regard to ability to pay,” Sade offers.

Sumit Agarwal, MD, an instructor in medicine at Brigham and Women’s Hospital in Boston, frequently hears this argument: “If I accept patients on Medicaid, I won’t be able to pay my staff or keep the lights on.”

“I take issue with this argument for several reasons. First, the highest-paid specialties are often the most likely to reject Medicaid,” Agarwal observes.

Additionally, physicians do not need to necessarily open their practices to all Medicaid patients. “Would a self-imposed quota of 1% or 5% or 10% run practices into the ground? I am doubtful,” Agarwal says. “Would it require a bit of sacrifice from physicians? Probably.”

Agarwal says physicians’ status as a profession, which itself is derived from the public, comes with certain responsibilities. That includes caring for the indigent and resolving health disparities. Agarwal is skeptical that physicians would really need to close their doors if they accepted some Medicaid patients.

“A safety net hospital might be able to make this argument, as we’ve seen with recent closures, but others providers cannot,” Agarwal says. “The real tradeoff is between healthcare as a business and healthcare as a service.”

Turning away all Medicaid patients is one way for physicians to call attention to the need for better reimbursement and less red tape. “But it does so with questionable impact — and, more importantly, at the peril of patients who genuinely need care but have few realistic options by way of health insurance,” Agarwal adds.