California’s reimbursement to physicians for treating Medicaid patients ranks in the bottom fifth of all states on a cost-adjusted basis, according to a report released today by the Medi-Cal Policy Institute (MCPI), a project of the California HealthCare Foundation (CHCF). Called Medi-Cal in California, Medicaid is a national program but physician reimbursement rates are set by each state.

“Low payments have been a longstanding issue in many states’ Medicaid programs and have clearly affected doctors’ willingness to treat Medicaid beneficiaries,” said Joel Menges of The Lewin Group, which conducted the study for MCPI. “The challenge to sustain Medi-Cal as a quality health program for Californians depends upon its ability to offer competitive reimbursement for good care.”

The report, Comparing Physician and Dentist Fees Among Medicaid Programs, found that payments to physicians for treatment of Medi-Cal patients in California ranked 37th among the nation’s 51 Medicaid plans in average unadjusted fees. But once differences in geographical costs are factored in California’s rates drop to 42nd place. Further, on average, Medi-Cal only pays physicians 65.2% of the rate they would receive from California’s Medicare program for providing a comparable service. Another study recently conducted for MCPI by PricewaterhouseCoopers found that for most Medi-Cal services, doctors are paid at rates ranging between 35 and 60% of rates paid to doctors that treat patients with private health insurance.

Relatively low doctor reimbursement can affect the quality of health care received by Medi-Cal patients because it tends to limit the number of physicians that provide care and because doctors are likely to carry a larger than average patient load.

“You get what you pay for,” noted Crystal Hayling, director of MCPI. “The good news is that the Medi-Cal fee increases contained in last year’s budget raised Medi-Cal’s average physician payment rate from 58 to 65% of what Medicare pays. Several additional increases of this magnitude would place Medi-Cal rates in a more competitive position.”

These reports are available online through the links below.