Low reimbursement rates are generally one of several factors contributing to the shortage of physicians willing to treat Medicaid enrollees. On average, Michigan pays physicians participating in the fee-for-service state Medicaid program only about half (51 percent) as much as Medicare pays for the same service — in other words, physicians treating Medicare patients get paid twice as much for the same services.[*] For primary care, Michigan Medicaid fee-for-service pays less than half (46 percent) as much as Medicare. Compared to commercial insurers, the authors estimate that Michigan’s Medicaid fee-for-service program pays physicians about two-fifths (41 percent) as much as a private insurer does.[†]
It should be noted, however, that in Michigan a majority of Medicaid enrollees participate in Medicaid managed care plans, rather than Medicaid’s fee-for-service program. Proponents of these plans say they provide better access to health care providers than standard fee-for-service Medicaid. There is considerable disagreement, however, about whether Medicaid spending is lower under managed care than fee-for-service programs. To the extent that managed care saves money, managed care payment rates are unlikely to greatly exceed fee-for-service rates.