The Mayo Clinic has admitted it places Medicaid and Medicare patients in a lower priority than patients with private insurance. This is something that many doctors and hospitals likely do. It is well known that Medicare pays physicians only about 80% of what private insurers reimburse for the same coverage. Medicare reimburses hospitals about 70% of private payers. Medicaid rates are a fraction of Medicare’s rates.
Balancing payer mix is something that has become a necessity for most doctors and hospitals. For instance, about 30% of doctors do not accept new Medicaid patients. Something we don’t often hear is that even among the 70% who do accept new Medicaid patients, most do not accept all Medicaid patients who inquire about an appointment. Most doctor find it necessary to maintain a ratio of Medicare and Medicaid to private payers. The precise ratio varies from one doctor to the next. One complaint I’ve heard from doctors is many no not accept more Medicaid patients because of the higher rate of “no-shows.” No-shows are patients who schedule an appointment and never show up or call to cancel. Medicaid enrollees have a much higher rate of not showing up for an appointment than any other type of coverage.
Part of the issue for Mayo is it has name recognition; Mayo is a top tier hospital. As such it can demand higher fees from employers and private insurers, but cannot collect higher fees from Medicare and Medicaid. Top tier hospitals tend to have higher costs, since the amenities they offer are not without costs.
The Affordable Care Act increased the number of patients covered by insurance. But it also boosted Medicaid patients, most of whom are unprofitable. Mayo reported more than half a billion dollars in unreimbursed Medicaid costs last year.
There are a variety of ways this could play out. When scheduling patients who request appointments, slots could be reserved for privately insured or if there are limited slots, preference could be given to those with private coverage. Also, satellite facilities, clinics and advertising dollars could be targeted to the more affluent neighborhoods where private coverage is more common.