Review of Economics of the Household

, Volume 5, Issue 1, pp 95–112 | Cite as

Medicaid physician fees and the quality of medical care of Medicaid patients in the USA

  • Sandra L. DeckerEmail author
Household health


When enacted in 1965, the original Medicaid legislation sought to finance access to mainstream medical care for the poor. I use data on visits to office-based physicians from the National Ambulatory Medical Care Survey in four years—1989, 1993, 1998 and 2003—to test the extent to which this goal has been achieved. Specifically, I test whether this goal has been achieved more in states that pay higher fees to physicians who treat Medicaid patients compared to states that pay lower fees. By comparing the treatment of Medicaid patients to that of privately-insured patients and by using state fixed effects, I am able to estimate the effects of changes in the generosity of Medicaid physician payment within a state on changes in access to care for Medicaid patients, therefore separating Medicaid’s effect on access to health care from any correlation between the Medicaid fee and other attributes of the state in which a patient lives. Using this method, I examine the effect of Medicaid fees on whether or not an office-based physician accepts Medicaid patients, on the fraction of a physician’s practice that is accounted for by Medicaid, and on the length of visit times with physicians. Results imply that higher Medicaid fees increase the number of private physicians, especially in medical and surgical specialties, who see Medicaid patients. Higher fees also lead to visit times with physicians that are more comparable to visit times with private pay patients.


Medicaid Physician care Duration of visit 

JEL Classifications




I am grateful for helpful suggestions from Catharine Burt, David Cutler, Douglas Elmendorf, Martin Feldstein, Richard Kronick, Joseph Newhouse, and two anonymous referees. The findings and conclusions in this paper are those of the author and do not necessarily represent the views of the Centers for Disease Control and Prevention.


  1. Buchmueller, T., Gumbach, K., Kronick, R., & Kahm, J. (2005). The effect of health insurance on medical care utilization and implications for insurance expansion: A review of the literature. Medical Care Research and Review, 62(1), 3–30.CrossRefGoogle Scholar
  2. Burstin, H. R., Swartz, K., O’Neil, A. C., Orav, E. J., & Brennan, T. A. (1998–1999). The effect of change of health insurance on access to care. Inquiry, 35(4), 389–397.Google Scholar
  3. Centers for Medicare and Medicaid Services (CMS). (2002). National Summary of Medicaid Managed Care Programs and Enrollment, 1996–2001. Washington, DC.Google Scholar
  4. Cohen, J. W. (1993). Medicaid Physician Fees and Use of Physician and Hospital Services. Inquiry, 30, 281–292.Google Scholar
  5. Decker, S. L. (1993). The effect of Medicaid on access to health care and welfare participation. Harvard University Ph.D. Dissertation. Cambridge, MA.Google Scholar
  6. Ettner, S. L. (1999). The relationship between continuity of care and the health behaviors of patients: Does having a usual physician make a difference? Medical Care, 37(6), 547–555.CrossRefGoogle Scholar
  7. Ettner, S. L. (1996). The timing of preventive services for women and children: The effect of having a usual source of care. American Journal of Public Health, 86(12), 1748–1754.CrossRefGoogle Scholar
  8. Flocke, S. A., Miller, W. L., & Crabtree, B. F. (2002). Relationships between physician practice style, patient satisfaction, and attributes of primary care. Journal of Family Practice, 51(10), 835–840.Google Scholar
  9. Glied, S., & Zivin, J. G. (2002). How do doctors behave when some (but not all) of their patients are in managed care? Journal of Health Economics, 21, 337–353.CrossRefGoogle Scholar
  10. Gray, B. (2001). Do Medicaid physician fees for prenatal services affect birth outcomes? Journal of Health Economics, 20, 571–590.CrossRefGoogle Scholar
  11. Gruber, J., Kim, J., & Mayzlin, D. (1999). Physician fees and procedure intensity: The case of Cesarean delivery. Journal of Health Economics, 18, 473–490.CrossRefGoogle Scholar
  12. Hadley, J. (1979). Physician participation in Medicaid: Evidence from California. Health Services Research, 14, 266–280.Google Scholar
  13. Hadley, J., & Holahan, J. (2003). Covering the uninsured: How much would it cost? Health Affairs, W3, 250–265.Google Scholar
  14. Health Care Financing Administration (HCFA) (1989). Enrollment fact sheet. Washington, DC.Google Scholar
  15. Hing, E., Gousen, S., Shimizu, I., & Burt, C. (2003/2004). Guide to using masked design variables to estimate standard errors in public use files of the National Ambulatory Medical Care Survey and the National Hospital Ambulatory Medical Care Survey. Inquiry, 40, 401–415.Google Scholar
  16. Kitagawa, E. M., & Hauser, P. M. (1973). Differential mortality in the United States: A study in socioeconomic epidemiology. Cambridge, MA: Harvard University Press.Google Scholar
  17. Kronick, R., Gilmer, T., Dreyfus, T., & Lee, L. (2000). Improving health-based payment for Medicaid beneficiaries: CDPS. Health Care Financing Review, 21(3), 29–64.Google Scholar
  18. Long, S. H., Settle, R. F., & Stuart, B. C. (1986) Reimbursement and access to physicians’ services under Medicaid. Journal of Health Economics, 5, 235–251.CrossRefGoogle Scholar
  19. McGuire, T. G., & Pauly, M. V. (1991). Physician response to fee changes with multiple payers. Journal of Health Economics, 10, 385–410.CrossRefGoogle Scholar
  20. Mechanic, D. (1996). Changing medical organization and the erosion of trust. The Milbank Quarterly, 74(2), 171–189.CrossRefGoogle Scholar
  21. Menchik, P. (1993) Economic status as a determinant of mortality among nonwhite and white older males: Or, does poverty kill? Population Studies, 47(3), 427–436.CrossRefGoogle Scholar
  22. National Center for Health Statistics (NCHS). (2005). Health, United States, 2005. Washington DC: Government Printing Office.Google Scholar
  23. National Center for Health Statistics (NCHS). (2006). Ambulatory Care Visits to Physician Offices, Hospital Outpatient Departments, and Emergency Departments: United States, 2001–2002. Vital and health statistics series 13, Number 159. Washington DC: Government Printing Office.Google Scholar
  24. Newacheck, P. W., Stoddard, J. J., Hughes, D. C., & Pearl, M. (1998). Health insurance and access to primary care for children. New England Journal of Medicine, 338(8), 513–519.CrossRefGoogle Scholar
  25. Norton, S. (1999). Recent trends in medicaid physician fees, 1993–1998. Urban Institute Discussion Paper 99–12. Washington DC.Google Scholar
  26. Physician Payment Review Commission (1991). Physician payment under Medicaid. Washington DC.Google Scholar
  27. Shen, Y.-C., & Zuckerman, S. (2005). The effect of Medicaid payment generosity on access and use among beneficiaries. Health Services Research, 40(3), 723–744.CrossRefGoogle Scholar
  28. Showalter, M. H. (1997). Physicians’ cost shifting behavior: Medicaid versus other patients. Contemporary Economic Policy, 15(2), 74–84.CrossRefGoogle Scholar
  29. Sloan, F., Mitchell, J., & Cromwell, J. (1978). Physician participation in State Medicaid Programs. Journal of Human Resources, 13, 211–245.CrossRefGoogle Scholar
  30. Smith, V., Ramesh, R., Gifford, K., Ellis, E., & Wachino, V. (2003). States respond to fiscal pressure: State Medicaid spending growth and cost containment in fiscal years 2003 and 2004. Kaiser Commission on Medicaid and the Uninsured. Washington DC.Google Scholar
  31. Starfield, B., Steinwachs, D., Morris, I., Bause, G., Siebert, S., & Westin, C. (1979). Patient–doctor agreement about problems needing follow-up visit. Journal of the American Medical Association, 242, 344–346.CrossRefGoogle Scholar
  32. Temkin-Greener, H., & Winchell, M. (1991). Medicaid beneficiaries under managed care: Provider choice and satisfcation. Health Services Research, 26(4), 509–529.Google Scholar
  33. Xu, K. T. (2002). Usual source of care in preventive service use: A regular doctor versus a regular site. Health Services Research, 37(6), 1509–1529.CrossRefGoogle Scholar
  34. Zuckerman, S., McFeeters, J., Cunningham, P., & Nichols, L. (2004). Changes in Medicaid physician fees, 1998–2003: Implications for physician participation. Health Affairs, W4, 374–384.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.National Center for Health StatisticsHyattsvilleUSA
  2. 2.National Bureau of Economic ResearchNew YorkUSA

Personalised recommendations