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Think Tank

Doc Shortage Made Worse by Low Participation in Medi-Cal

California faces two intertwining problems about to get more acute: not enough family practice physicians and not enough physicians treating Medi-Cal patients.

How should California deal with these two shortages?

Government officials estimate the country is about 16,000 primary care physicians short of what’s needed now. And, according to the Association of American Medical Colleges, the physician shortage will grow to 125,000 by 2025.

For California’s low-income population, the family physician shortage is exacerbated by the scarcity of physicians willing to treat Medi-Cal patients. According to a UC-San Francisco survey, almost all physicians in California are accepting new patients (90%) and most are accepting new Medicare patients (78%), but far fewer are willing to take on new Medi-Cal patients (57%).

Both of these shortages are expected be become more problematic in the next several years as health care reform brings millions of formerly uninsured people into the equation. Almost seven million people are covered now by Medi-Cal and that number will grow by as much as 40%, according to some estimates, when new eligibility rules go into effect in 2014.

We asked stakeholders:

  • What can be done to encourage more family physicians to practice in California?
  • What can be done to encourage more physician participation in Medi-Cal?
  • If the shortages are not adequately addressed as 2014 approaches, what options should be explored?

We got responses from:

Medical Home Model Can Help

The inadequate supply of primary care physicians is a complex issue that has been a national concern for many years.  The solution to this problem must consider multiple factors.

One fundamental issue relates to the pipeline that produces family medicine and other primary care physicians, such as general internists, pediatricians, and obstetrician-gynecologists.  In recent years, medical students are choosing to enter specialty, rather than primary care residencies.  A factor in this decision is likely the huge loan burdens many medical students accumulate while in medical school.  On average, their medical education debt exceeds $150,000 per graduate.  Incomes for medical specialists are often several times higher than incomes for primary care physicians.  If incomes for primary care physicians were increased, more medical students might choose a primary care career path.

Another disincentive to primary care practice has been the responsibility for large numbers of patients per physician, leading to briefer, unsatisfying encounters between physician and patient.  In contrast, the experience of the Group Health Cooperative in Washington state demonstrates that implementation of an effective medical home practice model can create a much enhanced practice setting that benefits both patients and primary care providers.  One of the design elements at GHC was a deliberate reduction in patient panel size achieved by hiring more physicians.

California has the infrastructure and organization to advance the medical home model.  Therefore, within the Department of Health Care Services, we believe that the medical home model has great potential to improve medical quality for the Medi-Cal program by enhancing the integration and coordination of health services provided to the program’s beneficiaries.

Importantly, as has been demonstrated in various sites around the country, the medical home model can allow primary care physicians to practice in a setting that is more professionally rewarding and satisfying.  DHCS will be working closely with stakeholders to encourage dissemination of effective applications of the medical home model.

A recent California HealthCare Foundation report, “Physician Participation in Medi-Cal, 2008,” by Bindman, Chu, and Grumbach, noted that Medi-Cal reimbursement rates for primary care services are at approximately 50% of Medicare.  Stakeholders have cited such rates as a barrier to physician participation in the Medi-Cal program.  While there is currently a $19 billion deficit in the state budget, an increase in physician reimbursement rates would be an important issue to be addressed by state government.

We must do everything possible from a policy perspective to improve the efficiency of our administrative processes so that providers can be paid on a timely basis, while ensuring the fiscal integrity of the billing process.  As a new fiscal intermediary assumes operations, we will be implementing numerous system enhancements to improve our efficiency.  In the managed care portion of the program, we will continue to work with plans, medical groups, and other stakeholders to focus on policy and programmatic changes that allow for a practice environment for the Medi-Cal program that can consistently attract and retain primary care providers.

Given the short timeframe, many stakeholders anticipate shortages in the primary care physician workforce.  Certainly, policymakers in government and the health care sectors should be ensuring that nurse practitioners, physician assistants and other health professionals are fully utilized as part of California’s primary care network.

There may be innovative approaches to care delivery, such as the use of group appointments and expansion in telehealth, that could increase productivity of the primary care delivery system. Additionally, the further development of electronic health records across the state, with available federal funding, may also help to increase the efficiency of care delivery.

Finally, the importance of healthy lifestyles and communities cannot be overemphasized in reducing the need for and cost of medical care, both primary and specialty care.

Ensure Access to Quality Care

Health reform is a historic opportunity. It will increase the number of insured people and provide a platform to transform the delivery of health care. Nowhere will this be noticed more than in California, where the focus should be on ensuring access to quality medical care.The University of California is addressing the need for more family physicians — particularly doctors who treat Medi-Cal patients — on three fronts: expanding medical education, making innovations in health care delivery and advancing its medical safety net role.

Expanding Medical Education

UC Health trains three of every five medical students in California. UC has increased medical student enrollment for the first time in three decades, thanks to its Program in Medical Education — known as PRIME —  aimed at training physician-leaders committed to helping California’s underserved communities. PRIME enrollment is expected to grow from nearly 200 students last year to 300 students next year.

UC is slated to open a sixth medical school in 2012 at UC-Riverside. UC-Merced, which starts a PRIME program next year, is developing plans that could lead to a medical school. Also, UC-Davis’ nursing school welcomes its inaugural class this fall. These are chances to train more health professionals where they are needed most.

Health Care Innovations

Increasing medical school enrollment is only part of the solution. To close the gap, medical school graduates would need to increase by more than two-thirds by 2015.

UC is using technology and improving care coordination to deliver health services more effectively and efficiently. The just-launched California Telehealth Network is a UC-led partnership that uses technology to expand access to care to all corners of the state. UCLA’s Pediatric Medical Home Program serves more than 90 children with special health care needs, a team approach to high-quality, cost-effective care. UC San Diego’s IMPACT-ED program, which will expand under a $15 million federal grant, uses an Internet-based referral system that allows emergency departments to schedule follow-up clinic appointments, thus improving care and reducing return ED visits. Health reform will encourage more such innovations that improve health care delivery.

Medical Safety Net Role

Finally, the safety net must be stabilized. This is a priority for UC, where nearly one-fourth of patients are covered by Medi-Cal — a figure expected to increase with health reform.

Renewing the Medi-Cal waiver, set to expire at the end of August, is crucial to stabilizing Medi-Cal funding for safety net hospitals such as UC medical centers.

Underpayment is Root Cause of Both Problems

The family physician shortage must be solved, as millions more people become insured and the state’s population over age 60 increases by eight million by 2014.

Two very different problems contribute to physician shortages:

  • Absolute shortages of primary care physicians (family physicians and general internists) in nearly 40 counties; and
  • Shortages of Medi-Cal-empanelled physicians throughout the state.

The root cause of both problems is the same: physician underpayment — for primary care specialties in general and for all physicians paid by Medi-Cal.

Public and private payers must invest in primary and preventive care, including chronic disease management. Investments will yield improvements in patients’ health, while saving billions of U.S. health care dollars annually.

Medi-Cal currently pays physicians about half the Medicare rate, ranking California 48th in the nation in Medicaid payments. In addition, all payers pay primary care physicians substantially less than subspecialists. Over a lifetime, primary care physicians earn millions of dollars less than subspecialists and also work a disproportionate number of uncompensated hours. Students leaving medical school with average debts of $200,000 do the math and decide they cannot afford to specialize in family medicine.

With national health care reform, Medicaid payments for primary care services will increase to the same level as Medicare payments in 2013 and 2014 and Medicare will pay eligible primary care physicians a 10% bonus for services from 2011 to 2015. To solve the shortage in the long term, California must maintain payment increases after that.

Health care reform also begins improving low-interest student loan, scholarship and loan repayment programs for medical students entering primary care; California must continue strengthening these programs. This would allow students who are interested in family medicine to follow their passion rather than the money. Studies show, for example, that medical students from rural and underserved communities are the most likely to practice there. Let’s make that economically feasible.

Another critical part of the solution is implementing new health care delivery models in which physicians, nurse practitioners, physician assistants, medical assistants and others practice in a more integrated fashion. In the proven Patient Centered Medical Home model, for example, physician-led teams deliver cost-effective care that improves health outcomes. This model allows all team members to work to the fullest scope of their licensure, increasing job satisfaction and permitting payment for the full scope of their services. In support, the California Academy of Family Physicians is sponsoring Assembly Bill 1542 to help define the medical home.

Increase Reimbursement, Training Options

The problem begins with Medi-Cal’s terribly low reimbursement rates. First and foremost, the state and federal governments must raise those payments.

Why is it that roughly half of California’s practicing physicians aren’t taking new Medi-Cal patients? Because they can’t afford to. It’s as simple as that.

The payments must be enough to keep physicians who are treating Medi-Cal patients economically viable. But at present rates — and California has among the lowest Medicaid payments in the nation — many physicians actually lose money because the reimbursements don’t cover the full costs of providing care.

If Medi-Cal reimbursements stayed in step with health care costs and provided physicians with a reasonable payment for treating Medi-Cal patients, then many more doctors would be participating in the program.

Excessive bureaucracy and administrative burdens also add to the hassle of Medi-Cal and should be eliminated.

Family practice physicians, who already earn far less than specialists, are harmed even more by low Medi-Cal rates. Federal health care reform includes measures to address the compensation gap, such as significantly raising reimbursement rates for family practice for two years.  While this is a good start, it is not enough.

Increasing the overall number of physicians is critical to increasing the number of family practice doctors. Physicians who are educated and trained in California are much more likely to stay and practice in California.

The California Medical Association is a strong advocate of establishing new medical schools at both UC-Riverside and UC-Merced and making sure the state gets its fair share of federal residency program funding. California accounts for 12.5% of the nation’s population, but only has 8.5% of the country’s medical residencies.

The state’s budget may be tight, but investing in high-quality medical education is essential to getting more physicians in the pipeline.

In addition to building medical education and training infrastructure, steps need to be taken to address the high cost of medical education, which can run a student upwards of $200,000.

Programs such as California’s Steven L. Thompson Loan Repayment Program, which provides significant medical school loan repayments to physicians who practice in underserved areas, have been instrumental in improving the distribution of primary care physicians in California.

With the right incentives and funding, we can produce more family practice physicians and improve doctor participation in Medi-Cal. But to do so is going to require a serious, long-term commitment.

More Minority Physicians Needed

The new health care law got it right by investing in health centers as the key to providing a primary care health home to the Medi-Cal population and other low-income communities. California’s community clinics and health centers are already the medical home to 1.5 million Medi-Cal patients.  A significant portion of the 1.3 million uninsured individuals we currently serve will be eligible for Medi-Cal when it expands to include more adults with annual incomes under 133% of the federal poverty level in 2014. Clinics have always been committed to serving the Medi-Cal population and by providing resources to expand health centers, the health care law is helping to ensure a health home for the newly insured in the future.

The health care law contains additional provisions to help us address our work force needs.  An investment of $1.5 billion over five years into the National Health Service Corps is estimated to provide up to 15,000 new primary care providers.  Primary care providers who have agreed to serve in medically underserved communities or professional shortage areas will receive this funding in the form of scholarships and loan repayments.  This funding will help address the workforce shortage and will focus efforts on the communities most in need.  The program has shown great success in reducing shortages for primary care providers because nearly 80% of these physicians stay in the underserved area after fulfilling their NHSC service commitment and more than half make a career of caring for underserved people.

An additional benefit of the health reform law is the establishment of grants for residency programs at community health centers.  Giving physicians the opportunity to work in a community clinic will result in more physicians continuing to practice in these primary care settings.

Given the diversity of California and particularly the diversity of the population that will be newly insured under health care reform, it is of prime importance that we increase the number of people of color, bilingual individuals and individuals from disadvantaged backgrounds who pursue medicine as a career.  One opportunity supported by the health care law is the Health Careers Opportunity Program. It’s designed to build diversity in the health fields by providing students from disadvantaged backgrounds an opportunity to develop the skills needed to successfully compete, enter and graduate from health profession training programs. 

Programs like HCOP are essential because physicians from under-represented minority groups practice in primary care specialties at a higher rate than all other physicians. This trend is likely to continue, with an even higher rate of newly trained physicians from underrepresented minority communities pursuing primary care compared to all other newly trained physicians. These physicians are also more likely to practice in federally designated primary care shortage areas compared to other physicians and are also more likely to serve a higher percentage of Medicaid patients in their practices.

Beyond these approaches, we also need to see a greater emphasis in our health professions education toward creating a strong primary care workforce.  In California, the UC medical schools should take the lead in promoting the important role of primary care physicians, especially those from diverse backgrounds.   At this time, this is more important than ever.  Studies indicate that less than 10% of medical students and residents are choosing careers in primary care.  We need to create policies and programs that dramatically alter this trajectory.

The new health care law’s influx of new funds for health centers, combined with a concerted effort to produce both more physicians from diverse backgrounds as well as more primary care physicians, are essential if we hope to successfully address the impending shortage.  We cannot overstate the fact that primary care physicians are the key to both the success of the new health law and the key to keeping our communities healthy.