Provider Reimbursement Rates

Provider reimbursement levels also may affect access to the personal health care system. It is well documented that patients with Medicaid as their primary source of payment for health care have a more difficult time finding a private physician to treat them (Holahan, 1984; Perloff et al., 1987). A major reason is that Medicaid reimbursement rates tend to be substantially lower than customary charges and reimbursements from other payers. If a provider receives lower-than-average levels of reimbursement for treating Medicaid patients and AIDS patients cost more to treat than the average patient, the provider may be even more reluctant to treat AIDS patients. The implications of inadequate reimbursement for the AIDS patient may differ for hospitals, clinics, physicians, home health providers, and nursing homes. Consequently, they are discussed separately below.

The cost-to-charge ratios of hospitals reflect whether, for various types of services, their accounting cost for producing a service is higher or lower than what they charge for it. This cost in turn might differ from their reimbursement for the service by third-party payers. Andrulis and his colleagues (1989) surveyed U.S. hospitals and asked them to estimate their costs per inpatient day and per outpatient visit for treating AIDS patients. Across all regions, both public and private hospitals reported losing from $4 per patient day among private hospitals in the South to $386 per day among southern public hospitals. Reporting hospitals also noted that they were experiencing losses with non-AIDS medical/surgical patients, but these losses were substantially lower. Similar findings were reported for outpatient visits.

Hospitals that note discrepancies between costs incurred and reimbursements received for AIDS hospital admissions may attempt to minimize their exposure to financial risk by limiting the number of AIDS admissions, particularly those insured by Medicaid. Green and Arno (1990), as well as Andrulis and coworkers (1987a), have shown that Medicaid patients are underrepresented among AIDS admissions to private hospitals, compared with public hospitals.

The hospital outpatient clinic has become a central point of treatment for persons with HIV disease. Public hospitals have a long tradition of providing care to the poor and uninsured, and these clinics are training sites for medical schools and affiliated academic medical centers. Andrulis and colleagues (1987a) found an average of 161 HIV outpatients (median = 36) with an average of 1,460 visits per year in the 80 public hospitals they surveyed. On average, the 196 private hospitals surveyed served far fewer outpatients. Whether this differential is due to the diversion of high-cost, low-reimbursement patients to the public sector or to the fact that few private hospitals specialize in this care is not known at this time.

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