DOES INCREASING STATE MEDICAID PAYMENT RATES FOR PHYSICIAN SERVICES REDUCE PER ENROLLEE MEDICAID EXPENDITURES? EXPERIENCES IN NORTH CAROLINA AND MISSISSIPPI Steve Berman, Suk-fong Tang, Judy Dolins, Beth Yudkowsky. Children's Outcomes Research, University of Colorado and The Children's Hospital, Denver, CO; Division of Health Policy Research, American Academy of Pediatrics, Elk Grove Village, IL.

BACKGROUND: The willingness of pediatricians to care for children enrolled in Medicaid is associated with their payment rates. Having a medical home with a pediatrician can affect the pattern of Medicaid expenditures per pediatric enrollee. In 2000, North Carolina and Mississippi raised physician payment rates in order to increase pediatrician Medicaid participation and contain total pediatric per enrollee Medicaid expenditures while improving access to services. It is important to document the effect of these increased payment rates on the pattern of expenditures.

OBJECTIVE: Determine the effects of increasing Medicaid pediatric payment rates for physician services in North Carolina and Mississippi on the pattern of expenditures per pediatric enrollee.

DESIGN/METHODS: We analysed the CMS FY 1999 and 2000 pediatric non SSI Medicaid expenditures for all services as well as subcategories from North Carolina and Mississippi. The per enrollee expenditures were calculated by dividing expenditures by non SSI enrollees and adjusting the amounts using the CPI of the South Region (3.9%).

RESULTS: In Mississippi, the total adjusted per enrollee expenditures (APEE) decreased -2.1% from $918.80 (FY 1999) to $899.40 (FY 2000). Decreased APEE included inpatient hospital expenditures (- 6%: $318.70 to $299.60); outpatient hospital services (-3.7%: $90.90 to $87.50); clinic services (- 5.9%: $104.60 to $98.40) and lab and Xray services (-12.9%: $3.7 to $3.2). Increased APEE occurred in physician services (18.5%: $139.2 to $165.00); other practitioner sevices (13.4%: $33.3 to $37.8); and prescribed drug services (13.7%: $89.9 to $102.3). In North Carolina, total APEE increased by only 0.9% from $1046.90 to $1056.10. Decreased APEE included inpatient hosptial expenditures (- 3.9%: $298.10 to $286.50) and clinic services (-40.6%: $136.80 to $81.20). Increased APEE occurred in physician services (8.8%: $210.30 to $228.80); other practitioner services (627.6%: $5.30 to $38.30); outpatient hospital services (10.4%: $87.10 to $96.10); prescribed drug services (10.6%: $98.70 to $109.20); and lab and Xray services (62.0%: $14.50 to $23.50).

CONCLUSIONS: These data suggest that increasing Medicaid pediatric payment rates for physician services lowers inpatient hospital expenditures and contains total Medicaid per enrollee expenditures by improving access.