Does managed Medicaid result in poorer outcomes for the poor?

Emergency physicians share growing concern that they are being forced to "ration" care for their most vulnerable patients

Is your hospital unintentionally discriminating against the poor? For decades, EDs have portrayed themselves as the health care system's "safety net," or the providers of last resort for the nation's poor and uninsured. But a troubling development may be in the offing in the form of Medicaid managed care.

States are doling out millions in contracts to private health plans in hopes that managed care will help stem the costly outflow of health care dollars spent on the poor. In the process, hospitals and emergency physicians are being asked to contend with new payment restrictions involving Medicaid patients enrolled in these plans.

Poor may be victims of managed care

The restrictions could end up compromising the quality of health care much like commercial plans are accused of doing today. But in this case, some physicians contend, the health care is being delivered to a patient population seriously predisposed to poor health and high morbidity and used to using the ED as a source of primary care.

As a result, emergency providers may be forced to find new ways to affirm their long-held beliefs that they don't intentionally discriminate on the basis of a patient's ability to pay.

If anything, the discrimination may be subtle and unintentional. "Managed care already creates an institutional bias," says bioethicist Gregory L. Larkin, MD, MSPH, director of research at Mercy Hospital of Pittsburgh (PA) and an assistant professor of emergency medicine.

"[Commercial] health plans tend to enroll patients who are healthier and less costly to the system than the uninsured. The difference is what helps account for the poorer clinical outcomes in the uninsured," Larkin adds.

Now, the poor are entering managed care. And emergency providers are being held hostage to a system that may be indirectly selecting one form of managed care patient over the other-the commercial vs. the Medicaid health plan enrollee-and against the traditional Medicaid and uninsured patient, Larkin asserts.

In similar fashion, the same forces may be at work between Medicare fee-for-service and senior health plans, which have been rapidly proliferating. Critics, including the federal Prospective Payment Assessment Commission in Washington, D.C., have charged that Medicare managed care systematically selects healthier seniors and keeps the less healthy in fee-for-service plans.

Medicaid claims rejections climb

With regard to Medicaid in Pittsburgh, for example, 60% of health plan claims submitted by Mercy to managed care organizations (MCOs) with Medicaid contracts in the state are retrospectively denied, Larkin says. These were claims for patients who presented with serious, non-traumatic chest and abdominal pain, Larkin adds.

At Boston's Brigham and Womens' Hospital, a similar pattern exists. "There are certainly a lot more hoops for managed care patients to jump through today," observes James Adams, MD, Brigham's vice chairman of emergency medicine.

The uninsured pose a serious financial threat to an institution, but at least they present fewer administrative headaches, Adams adds. "In some ways, the [uninsured] were a pleasure because they were less of a hassle," he says.

In both instances, the distinction between Medicaid and commercially enrolled patients in health maintenance organizations (HMOs) isn't being felt at the bedside, Adams insists.

"Physicians and nurses don't know the difference up front. It's an institutional bias brought on by the nature of managed care itself," he adds.

But frontline hospital administrators are keenly aware of the difference. And if they're not reminding clinicians with every single patient, physicians are nonetheless getting the message, says William Gotthold, MD, an emergency physician at Central Washington Hospital in Wenatchee, WA.

Hospital drug formularies, for one, already tie physicians' hands on the basis of costs. "They remind us what each health plan is willing to pay for which medications," says Gotthold.

And emergency physicians are making decisions daily about deferring expensive, marginally beneficial tests such as magnetic resonance imaging (MRI).

Physicians can't avoid ethics

"Regardless of payer arrangement, all physicians, including emergency physicians and MCO physicians, are susceptible to conflict of interest," Gotthold wrote in a 1996 article co-authored with Larkin and Adams.1

For Medicaid patients, a highly vulnerable group clinically, these distinctions could add up to a subtle form of negative selection if not vigilantly monitored, and they can compound an already adverse public health problem, Adams says.

"Sure, I'm not going to order an expensive medication like Zithromax for someone who obviously can't afford it. It doesn't make sense to prescribe a $60 drug for a patient who isn't going to buy it," Gotthold says.

Clinicians have been aware of this systemic disparity for some time. A Rand Corporation health insurance study conducted in the early 1990s revealed that quality-of-care measures for HMO enrollees were about the same when matched with fee-for-service patients.

But "this equivalence was not borne out when the data were adjusted for income and the presence of existing illness," Larkin and his associates wrote in their 1996 article.

"Specifically, low-income and initially sick patients in HMOs suffered worse outcomes than their matched fee-for-service counterparts," the article concluded.

These concerns are only now being given more attention in emergency medicine at a time when managed care is enjoying unprecedented growth:

    · As of 1996, every state, excluding Alaska, Vermont, and Wyoming, operated a Medicaid HMO program. According to the National Academy for State Health Policy in Portland, ME, the number of Medicaid beneficiaries enrolled in at least one managed care program ranged between 12 million and 13 million.

    · The number of patients enrolled in Medicare and Medicaid capitated HMO plans has doubled since 1992. In one year alone, between 1995 and 1996, Medicare HMO enrollments jumped nearly 30% The growth in Medicaid was even larger. (For a chart that tracks these trends, see page 2.)

      According to the Health Care Financing Administration in Baltimore, more than one out of every 10 Americans eligible for Medicare benefits is currently enrolled in a Medicare HMO.

    · Virtually every major HMO in the country offers some form of Medicare risk program, and the number that offer Medicaid plans is growing steadily.

    · States such as Arizona and Wisconsin are experimenting to simultaneously offer both Medicaid and Medicare managed care to high-risk patients from both programs in an effort to stem costs.

What can physicians do about the existence of unfelt institutional biases at their hospitals?

Be vigilant, advises Adams. "An accumulation of small biases can add up to a systemic problem within a hospital," he says. Hospitals and MCOs have a moral responsibility not to make physicians the direct rationers of care, Larkin adds. Until that day arrives, awareness can be a physician's strongest asset, Larkin says.


    1. Larkin GL, Adams JG, Derse AR, et al. Managed care ethics: An emergency? Ann Emerg Med 1996;28:683-689.