Medicaid Mills: Fact or fiction

Physician nonparticipation in Medicaid programs not only will restrict access of the poor to mainstream medicine but will also encourage the development of large Medicaid practices (LMPs). Policymakers have become increasingly concerned that these settings may be "Medicaid mills" in which low quality care is provided. Using HCFA survey data, this study examined the characteristics of LMPs, defined as practices in which at least 30 percent of the patients are eligible for Medicaid. Nearly 60 percent of all Medicaid patients treated in private practices are seen in these LMPs (14.5 percent of all practices). Most LMPs do not appear to be Medicaid mills. LMP physicians earn what other physicians make at best; often they earn less. Nor is there any widespread abuse of ancillary services, skimping on auxilliary staff, or excessive markups over costs, all characteristic of Medicaid mills. Visit lengths are shorter in LMPs, but only by a minute or two. A substantial "credentials gap" does exist, however; the Medicaid market is dominated by less qualified physicians. LMP physicians tend to be older, non-board certified, and graduates of foreign medical schools.