Health Care Costs and Financing

Researchers find SCHIP and Medicaid networks compete for physicians in some markets

The State Children's Health Insurance Program (SCHIP) was enacted in 1997 to provide health insurance coverage to low-income, uninsured children who lack private insurance but are ineligible for Medicaid. A recent study that was supported in part by the Agency for Healthcare Research and Quality and conducted as part of the Child Health Insurance Research Initiative (CHIRI™) examined whether the introduction of SCHIP had an impact on provider participation in Medicaid and the extent of the participation.

Provider participation in Medicaid is impacted by many factors, including low reimbursement levels, demand for services from private-paying patients, and the geographic separation of physicians and Medicaid enrollees. Given that SCHIP and Medicaid serve a similar population of low-income uninsured children, SCHIP enrollment might affect provider participation in Medicaid. States were given broad flexibility in establishing the overall design, benefits, administrative features and provider networks for these programs. For this study, researchers took advantage of a natural experiment by comparing the impact of SCHIP enrollment on Alabama's separate freestanding SCHIP program, which uses the Blue Cross Blue Shield provider network and fee structure, with the impact of SCHIP enrollment on Georgia's Medicaid look-alike SCHIP program, which uses the same provider network and fee rates as Medicaid.

Researchers found that increases in SCHIP enrollment had little effect on Medicaid physician participation in Alabama. These findings are consistent with predictions that SCHIP enrollment would have little impact on provider participation in structures where different provider networks were used for SCHIP and Medicaid. In Georgia, however, where the same provider network services both Medicaid and SCHIP enrollees, increases in SCHIP enrollment were associated with a decline in office-based physician participation in Medicaid, primarily in urban areas.

Implementing Medicaid expansions and using similar administrative and provider structures for Medicaid and SCHIP may be an attractive option for States seeking to improve administrative efficiencies between the two programs. The authors conclude, however, that adding more children to a provider system that is static or declining in size can negatively impact children enrolled in Medicaid. They note that linkage of SCHIP and Medicaid programs through the use of the same provider network needs to be accompanied by market conditions that encourage the expansion of the network, if access to health care for Medicaid enrollees is to be maintained. In other words, extending public health insurance coverage to new segments of low-income children may expand coverage at the expense of eroding the supply of physicians available to children who already have public coverage.

See "The impact of SCHIP enrollment on physician participation in Medicaid in Alabama and Georgia" by Janet M. Bronstein, Ph.D., E. Kathleen Adams, Ph.D., and Curtis S. Florence, Ph.D., in the April 2004 Health Services Research 39(2), pp. 301-317.

Editor's Note: CHIRI™ is co-sponsored by AHRQ, The David and Lucile Packard Foundation, and the Health Resources and Services Administration. CHIRI™ provides policymakers with information to help them improve access to and the quality of health care for low-income children. Select to access additional CHIRI™ findings.

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