Physician Participation in State Medicaid Programs

Medicaid requires that physicians who accept Medicaid reimbursement for treating a patient agree to accept its payment as payment in full. Policy instruments under Medicaid's control are both levels of reimbursement and various administrative burdens imposed on physicians by the program. A model depicting the physician's participation decision is developed, and predictions from the comparative statics analysis are discussed. Data came from a 1975--76 survey of fee-for-service physicians. The results indicate that high fee schedules and low administrative burdens are ways to stimulate physician involvement with Medicaid patients. Results on the Medicaid policy instruments and other explanatory variables on the whole lend support to the model of physician behavior proposed earlier in the paper.