Department. of Health and Human Servces 
OFFICE OF 
INSP  TOR GENERAL 
MEDICAI 
HASSLE: STATE RESPONSES 
TO PHYSICIA COMPLAS 
0. stRVlq' 
Richard P. Kusserow 
ff 
INSPECfOR GENERA 
'0 
'f3a  MACH 199  OFFCE OF INSPECfOR GENERA 
The mision of the Offce of Inpector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrty of the Department of Health and Human Servce' (HHS)
programs as well as the health and welfare of beneficiaries served by those programs. This 
statutory mission is carred out through a nationwide network of audits, investigations, and 
inspections conducted by three OIG operating components: the Offce of Audit Servce, the 
Offce of Investigations, and the Offce of Evaluation and Inspections. The OIG also inform 
the Secretary of HHS of program, and management problems, and recmmends courses to 
correct them. 
OFFCE OF AUDIT SERVICE 
The OIG's Offce of Audit Servce (OAS) provides all auditing servce for HHS, either by
conducting audits with its own audit resource or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors in 
carryng out their respective responsibilties and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and effciency throughout the Department. 
OFFCE OF INTIGATIONS 
The OIG's Offce of Investigations (01) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 
unjust enrichment by providers. The investigative efforts of 01 lead to 
criinal convictions 
adminitrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 
control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 
AN 
OFFCE OF EVALUATION  INSPECfONS 
The OIG's Offce of Evaluation and Inspections (OEI) conducts short-term management and 
program evaluations (called inpections) that focus on issues of concern to the Department 
the Congress, and the public. The findings and recmmendations contained in these inpection 
report generate rapid, accurate, and up-to-date information on the effciency, vulnerabilty, 
and effectiveness of departmental programs. 
This report was prepared under the direction of Mark R. Yessian, Ph.  , Regional Inspector 
General, Offce of Evaluation and Inspections, and Martha B. Kvaal, Deputy Regional 
Inspector General, Offce of Evaluation and Inspections, Region 1. Participating in thi project 
were the following people: 
Boton Region  Headquars 
Rusell W. Hereford, Ph.  Project Leader  Vicki Greene 
David Schrag 
David R. Veroff  Department of Health and Human Servces 
OFFICE OF 
INSPECTOR GENERAL 
MEDICAI 
HASSLE: STATE RESPONSES 
TO PHYSICIA COMPLAS 
:0' . 
StRVtCl
Richard P. Kusserow 
INSPECfOR GENERA 
4lf'cf3'O 
OEI-OI-92-O100  EXECUTIVE 
SUMMAR Y

PUROSE 
This study describes approaches that States have taken in response to concerns about 
Medicaid' s admistrative burden on physicians. 
BACKGROUN 
Physicians contend that the "hassle factor --administrative red tape associated with 
participating in Medicaid--discourages many doctors from treating patients who are 
covered by Medicaid. The perceived hassle compounds other factors contributing to 
low physician partcipation, most notably low fees relative to other payers. When 
physicians refer to the adminstrative burden, they generally mean such problems as 
Slow payments; 
Rejection of claims because the biling form was completed incorrectly; 
Difculties in correcting claims that contain errors; 
Inabilty to veri recipients' Medicaid eligibilty, leading to claim denials; 
Frequent changes in policies, covered procedures, and required documentation; 
Obtuse provider manuals that do not meet the needs of program providers. 
We identifed States that are working to reduce Medicaid hassle through intervews 
with offcials of national and State medical societies, staff of the Health Care 
Financing Adminstration, policy analysts familiar with State health issues, and a 
review of the literature on Medicaid physician participation. We then intervewed staff 
from the Medicaid program, fiscal agent, and medical society in these States, and 
reviewed avaiable wrtten material. We also examied data from an DIG survey of
State Medicaid electronic claims management capacity, conducted in 
sprig 1991. 
FIINGS 
id 
ni  cr 
We  approache tht State havbe uforun  1to. b e response to physin
adtratie 
complain about Medaid's  resnd to  about 
claim presg, commatin between  Medaid agen, and
physins and 
provi 
manuls. 
Oai 
Improvg  Procing 
At least 28 States accept electronic claims for physician servces.

At least 21 States use automated systems to answer physician inquiries about 
claims status, recipient eligibility, and other routine matters.  Maryland and Florida give physicians wrtten guides that provide clear 
instructions on how to correct problem claims. 
Michigan and Florida use specialized programs and instructors to train 
physician offce staff about Medicaid billng and policy. 
Improvg Communcation between Physician and Medicad 
Washigton, Alabama, and Missouri established joint Medicaid-
physician task 
forces to identify and resolve administrative obstacles to physician participation. 
Florida uses its district Medicaid offices as provider relations units and 
participates in activities of State and local medical societies. 
Maryland employs a team of consultant nurses to enroll physicians for pediatric 
care and to assist them with administrative issues. 
SimpIig Provder Manua 
Michigan is revising its provider manuals to make them more understandable to 
physicians and their staffs. 
Maryland distributes manuals for pediatric screening servces that 
simplif the
biIg 
process and explain recommended screening schedules and tests. 
CONCLUSIONS 
On the basis of the reports from State government and State medical 
society offcials 
each of these approaches appears to have potential as a constructive response to 
physician complaints about Medicaid hassle. In weighing the potential impact of these 
approaches and their applicability elsewhere, it is important to take the following three 
considerations into account:

State and Federal requirements for financial accountabilty mean that some 
tension between Medicaid's administrative requirements and what providers 
perceive as hassle is unavoidable. 
Other policy initiatives, such as higher fees and development of managed care 
systems, often accompany efforts to reduce Medicaid's administrative burden. 
Fiscal constraints facing State governments limit the extent to which Medicaid 
programs can implement strategies to reduce the administrative burden.  .....................................
. ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ..  ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...  . . . . . . . . . . . . . . . ..   ...   ...   ...   ... .   ...   ...   ...   ...   ...   ...   ...   ... ...  . 
TABLE OF CONTENTS

PAGE 
SUMY 
EXECUTIV 
INODUCTION 
FININGS 
..................................................... 4 
Improvig Claims Processing 
Improvig Co=unication 
....................................... 8 
Simplifg 
Provider Manuals 
CONCLUSIONS 
APPENDIX A: Methodology....................................... A-
. . . . . . . . . . .. B-
APPENDIX B: Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  ' "
INTRODUCTION

PUROSE 
Ths study describes strategies that States have adopted in response to concerns about 
Medicaid' s administrative burden on physicians. It responds to a request from the 
House Energy and Commerce Subcommittee on Oversight and Investigations, which 
asked that the Offce of Inspector General provide inormation on State efforts to 
streamle Medicaid administrative processes for physicians. 
BACKGROUN 
Admtie Bur 
Deg Medaid' 
Physicians contend that the "hassle factor 
--adminstrative red tape associated with 
participating in Medicaid--discourages many doctors from treating patients who are 
covered by Medicaid. When providers refer to the adminstrative burden
, they 
generally mean such problems as: 
Slow payments; 
Rejection of claims because the biling form was completed incorrectly; 
Difculties in correcting claims that contain errors; 
Inabilty to verify recipients' Medicaid eligibility, leading to claim denials; 
Frequent changes in policies, covered procedures, and required documentation; 
Obtuse provider manuals that do not meet the needs of program providers. 
Pediatricians  reasons for limiting participation include (1) unpredictable payments 
(2) complex Medicaid program regulations, (3) payment delays, and (4) restrictions on 
health care servces covered by Medicaid."! Priary care physicians have concluded 
that "coverig more optional servces and reducing complicated benefit limitations and 
requirements for prior authorization might encourage more participation. 
Is 
in Medaid Physin Partpatin 
Although the admistrative burden appears to be an important 
factor in physician 
dissatisfaction with Medicaid, it is critical to recognize that easing that burden alone
wi not 
necessarily lead to higher participation rates. Other factors--most notably a 
low level of reimbursement relative to Medicare or private insurance--also contribute 
to low Medicaid provider participation rates. 
The Physician Payment Review Commission (PPRC) found that 38 State Medicaid 
agencies ranked low fees as one of the two most important factors for physician 
nonparticipation in Medicaid, while 14 agencies cited complex 
biIg, and 6 ranked 
payment delays as one of the two most important factors. Indeed
, the PPRC cautions 
that simply reducing Medicaid's administrative hassle without also increasing fees is  , '

unlely to induce more physician participation.4 The National Governors

Association has found that low fee levels and malpractice costs outpace admiistrative
problems as explanations for low partcipation among 
periatal providers in

Medicaid.
Some physician complaints about Medicaid hassle may be due to misconceptions. The 
American College of Obstetricians and Gynecologists (ACOG) cites examples from 
biIg
two States. A New Hampshire physician task force concluded that Medicaid "
pretty much like it is for other third-part payers." In North Carolia, perceptions of 
the "problems with claims processing. . . carried over from the 1970' , before the state 
had intiated automated claims processing."6 Florida s Medicaid director explains the 
consequences of these perceptions: "We sometimes fid an entire practice that wi 
not accept Medicaid, because the senior partners didn t get paid in 1978. They told the 
new partners in 1983  Don t bil Medicaid because you won t get paid at all and if you 
do get paid, it's a pittance.' Then they told the next group the same thig,  and we 
find three generations of physicians biased against us for things that happened more 
than a decade ago. It s very hard to get these people back in our system. 
Fedl Effort to Rede th Admtratie Bur on Physins 
The Secretary of Health and Human Servces has committed to reducing "the 
admistrative burden of Federal health care programs on patients and providers. 
The Health Care Financing Administration (HCFA) has engaged the issue of 
administrative burden on physicians who participate in Medicare. 
In February 1991 
HCFA announced the establishment of an Advisory Committee on Medicare-Physician 
Relationships. That committee s role is to advise the Secretary on Medicare policies 
that directly relate to physicians' provision of servces to Medicare beneficiaries and 
the "cost and admistrative burden the Medicare program places on physicians. 
The scope of that advisory committee does not extend to Medicaid. Nevertheless 
senior staff in HCFA' s Medicaid Bureau have expressed support for State efforts to 
reduce the admistrative burden on physicians.  AN METHODOLOY 
SCOPE 
We designed this study to provide inormation on approaches that a limited number of 
States have taken to address Medicaid's administrative burden on physicians. Ths 
study does not comprehensively review and evaluate these State initiatives. Rather
, we 
highlight what some States are doing to address complaints from physicians about the 
admistrative hassle that Medicaid participation imposes. 
We identifed States that are working to reduce Medicaid hassle on physicians through 
intervews with offcials of State medical societies, the American Medical Association 
staff of the Health Care Financing Administration, and policy analysts famiar with 
State health issues. 
Our intervews with medical association staff members in 13 States provided additional 
inormation on physician complaints about Medicaid hassle. In this report, we include 
quotations from these intervews to give examples of their complaints. 
We obtained inormation on a particular State s approach to reducing the 
administrative burden from intervews with Medicaid, fiscal agent, and medical society 
staff, and by reviewing wrtten material provided by the Medicaid agency. 
We also examined data gathered between May and July 1991, for a prior Offce of 
Inspector General study of State Medicaid electronic claims management capacity. 
Our review was conducted in accordance with the 
 Interim Standards for Inspections

issued by the President s Council on Integrity and Effciency. 
Appendix A provides additional information on our methodology.  FINDINGS
IDEN NI 
WE  APPROACH TIT STATE HAVE FOUN TO 
REPONSIV TO PHYSICI COMPLA ABOUT MEICAI'
ADMllRTI 
BUREN. TIY REPONBD ETOT C RCIMS ABOUT
Cl PROCING
, COMMCATION  PHYSICIS AN 
MEICAI AGENCI, AN PROVIER MAAL. 
IMPROVIG CLAS PROCESSING 
At let  28  State accept electrni claim for physin seres. 
The development of biling 
softare for personal computers means that even physician 
practices with a small volume of Medicaid patients can submit their bils electronically. 
In our prior survey of Medicaid programs' electronic claims management capacity, 28 
States reported the proportion of physician claims that are submitted electronically, 
ranging from 3 percent in North Dakota to 66 percent in Georgia,u 
Florida is one State that has made a significant commitment to increasing electronic 
claims processing among physicians. In conjunction with its fiscal agent
, Florida 
Medicaid has developed softare that enables any provider to submit claims

electronically. The softare is available free of charge to providers. They may also 
submit claims through private firms that offer electronic claims submission servces for 
a per-claim fee. Fiscal agent staff report that in 1991, 47 percent of physician claims 
were submitted on electronic media.  , "

Florida s electronic billng softare, entitled ASAP (Accelerated Submission and 
Processing), is based on the HCFA-1500 physician billing formP Physicians can
tailor the softare to meet their particular needs when it is installed. For example 
some inormation, such as the physician s name and address and the date of the claim 
may be automatically inserted each time a claim is prepared. In addition, physicians 
can defie up to 10 common diagnoses and procedures which, with their billig codes 
can be inserted with single keystrokes. Automated insertion of ths routine 
inormation is liely to reduce errors, with a commensurate decrease in problem
claims.
Staff at other State Medicaid agencies we spoke with stressed their commitment to
electronic claims submission. As one person said  We are really pushing electronic 
claims submission as havig great 
benefit. . .. It speeds processing, eliinates keying 
errors, and claims come in cleaner." Our 1991 survey of Medicaid agencies also 
14 Additional advantages 
suggests that electronic claims submission is less expensive.
cited for using electronic claims submission include:
Faster payment compared to submission of paper claimsY The claim 
can be read directly by the Medicaid computer and, if no errors are 
found, can be paid in the next batch of payments. 
Decreased likelihood of errors:
o Built-in safeguards and edits in the computer software identif 
errors prior to actually filing the claim 
o Paper claims do not have to be reentered into electronic 
format by fiscal agent staff, thereby reducing keypunch 
errors
Reduced cost to the provider for clerical servces, as paperwork is 
decreased and the physician s signature is not required on each claim. 
Despite the advantages of electronic claims processing, most physician claims are stil 
submitted on paper. Some of the reasons relate to Medicaid system requirements. 
For example, Medicaid may require paper documentation that is not easily sent
electronically, such as prior authorization or steriization consent forms 
. Other 
barrers to electronic processing of physician claims relate to slow developments in the 
state of the art. The most widely used physician claim form--the HCFA 1500--did not 
1991.1
have a standard electronic format until July 
In addition to these barrers, many physicians' offces simply do not have available the 
computer hardware necessary for electronic submission of claims. In fact
, medical 
society staff in one State estimated that fewer than 20 percent of physicians in private 
practice have the computer capability necessary for computer submission of claims.  in 
State use autmated system to anser physin  about claim
Ast tletasut   re21  cie 
eligiiJ, an othe rout matt. 
Determing whether a patient is eligible on a given day may well mean the difference 
between a physician s being paid for providing a servce and havig that claim 
rejected. At other times a physician simply may need information on the status of bils 
that had been submitted durig the prior month. In at least 21 States, Medicaid 
programs have established automated systems that can help providers address these 
questions. IS

Alabama s fiscal agent estimates that 75 percent of telephone calls to the Medicaid 
inormation number were questions about recipient benefit limits or eligibilty, or the 
status of submitted claims. To address this situation, Alabama established an 
automated voice response system (A VRS) in June 1991. This system, which operates 
7 days per week for 18 hours per day, allows physicians to obtain information on these 
routine tyes of questions using a touch-tone phone.

In Nort Caolia, where a similar system operates, the fiscal agent estimates that the 
A VRS handles 1 000 calIs per day, even without an eligibilty verification component. 
By establishing an automated voice response system to answer these routine telephone 
inquires, Medicaid staff are able to deal with more complex calls. 
Maland updated its eligibility verification system in November 1991. That system 
which operates 24 hours per day, 7 days a week, was enhanced to permit providers to 
veri past dates of eligibilty for servces rendered up to 1 year previously. In 
addition, even if a recipient does not have his or her Medicaid card, the physician can 
use the recipient's Social Security number to obtain the current Medicaid identifcation 
number. 
gu 
Marland and Flri gie physins wren  tht provi clear intrtins on how 
to co"ect prble claim. 
Marland sends all providers, including physicians, a Turn-Around Document (TAD) 
whenever a claim is delayed. The TAD includes an error code, a description of the 
error, and an explanation of how to correct that error. Providers must resubmit the 
corrected TAD to Medicaid within 45 days. At that point, Medicaid wil enter the 
changes and corrections into the computer system, and the claim wil be processed. 
The TAD and corrective explanations were created with input from the various 
provider groups.

Florida has developed a "Trouble Shooting Guide for Medicaid Physician Providers" to 
I9 
help physicians understand and correct the most common billig errors.
Physicians 
receive this guide upon enrollng as a Medicaid provider, as well as periodic updates 
when needed.  When a physician receives a remittance voucher listing claims that are not being paid
the voucher contains a code explaining the reason for the delay. Although the 
remittance voucher translates each code, it does not specif how to correct the 
problem. For each problem, the Trouble Shooting Guide explains why the error 
occurred and how to correct it. In addition, the guide references the appropriate page 
of the Medicaid provider handbook in case the physician wants more information. 
Flri 
Mstil hian and  use spcilied programs and intrtors to trin physin offe
about Medaid bilg an poli. 
Michiga s four-person seminar unit holds training sessions throughout the State on 
Medicaid policy issues, coverage, and biling procedures. The semiar instructors 
spend more than half their time in the field; the balance is spent preparig, editing,
and updating traing materials. In 1990, the training staff sponsored 152 semiars 
reaching more than 4 000 providers. Medicaid staff estimate that more than half of 
those attending were from physicians' offces. 
In addition, two field representatives visit providers in their offces to 
help resolve
biling problems, policy interpretations, and simiar issues. In 1990, according to 
Medicaid staf, the field representatives visited over 1,700 providers on-site. 
Florida conducts traing through a joint effort that involves the regional and central 
Medicaid offces and the fiscal agent. Each plays a different role in the trainng 
program. The district offce establishes district-specific guidelines for contacts with 
providers. The central offce provides information on  , such as eligibilty 
policy issues
criteria. The fiscal agent conducts training on billig procedures, problems, and 
solutions; remittance vouchers; and electronic biling. During the fist six months of 
1991, Florida conducted training seminars in 17 cities for more than 2 600 individuals.  IMPROVIG COMMNICA110NS BE1WEN PHYSICIAS AN MEDICA
iWdash igtn, Alabama and Misour establihe join Medaid-physin tak 
adtratie  parttin.  foTCes to
and resolve  obstacle to physin 
Involving the physician co=unity in solvig Medicaid red-tape problems can yield 
mutual benefits. Medicaid program staff can gain a better understanding of the "real 
world" in which physicians practice. This should enhance the staffs appreciation of 
the impact that admistrative processes have on provider views of the program. 
the same time, the State can use such an effort to educate the physician co=unity
about the constraints under which the Medicaid program operates. These constraints 
may include inerent aspects of the  (e.  the need to verify recipient 
program 
eligibilty), State fiscal problems that limit the availabilty of funds, or Federal 
requirements over which States have no control. 
We intervewed offcials in three States--Washigton, Alabama, and Miour--that had 
established physician task forces to try to increase physician participation in Medicaid. 
They described concrete steps that emerged from these task forces. As the director of 
one State Medical Society told us, the task force "is the best thing to come out of 
Medicaid in years. It has really been a boon. 
As a result of Washigton s "Red Tape Task Force " established in 1989, Medicaid 
claried definitions of emergency and non emergency procedures and 
distributed their corresponding procedure and diagnosis codes to 
physicians and hospitals; 
established field units to give technical assistance to physicians; and 
identified acceptable documents to confirm that a recipient lacks private 
third part coverage.
Alabama s Physician Task Force, established in 1990, led to 
an automated voice response system;  , "

increased time limits for claims submission from 180 to 365 days; 
assigrent of Medicaid eligibilty numbers to infants before birth, to 
make them eligible for Medicaid at birth; and 
shortened screening forms for the Early Periodic Screenig, Diagnosis 
and Testing (EPSDT) program. 
Miour' 
s physician task force, established in 1989, implemented 
a toll-free telephone number for eligibility verification and provider
information (previously, a toll call paid for by the physician); and 
an increase in the number of errors that can be identified 
durig the 
initial claims processing run, so that the same claim is not rejected 
multiple times. 
Flri  provi  un 
acti uses Us dit Medaid offes as  relatins  and partpates in
socti 
of State and loal meal 
Florida has restructured its 11 district Medicaid offices. 
Previously, these local offces 
had been providers of health servces such as transportation and EPSDT. In their new 
confguration, the district offces are an information and access point for consumers 
and providers. Provider-focused activities include: 
recruiting new providers to the program; 
resolving some claims payment problems, such as filing limts and 
eligibilty issues; and 
maintainng and updating provider records. 
, Florida Medicaid has begun to participate actively in State and local 
In addition
medical society activities. This participation includes attending meetings of physicians 
and their biling admiistrators. The director of the program notes  We staff a booth 
at the annual medical society conventions, and try to sell ourselves, just like any other 
vendor. 
Florida Medicaid and the State medical and osteopathic societies mailed recruitment 
material to every nonparticipating physician in the state. These materials included a
new pamphlet entitled "Medicaid Now Pays " explaining improvements in program fees 
and operations. 
petr 
Marayslta  emplos a team of consnt nues to elUoll physins for  care and 
to  th wi adtrtie is. 
Maryland combines active recruitment and administrative simplification to attract 
providers to Medicaid's EPSDT program, Healthy Kids. Seven nurse consultants  , "

recruit providers for Healthy Kids, maintain ongoing relations with them--including
assistance with Medicaid biling and administrative issues--and conduct annual quality 
assurance visits. Each nurse consultant covers a different area of the State. 
Recruitment efforts focus on physicians who treat children--pediatricians, famiy 
practitioners, and general practitioners. When a physician agrees to enroll, the nurse 
consultant helps obtain a Medicaid provider number, addresses programmatic issues 
and answers questions about working with Medicaid. 
One key nurse consultant role is explaining admiistrative and 
biling processes 
focusing on exactly what an EPSDT provider must do in order to be paid. According 
to the director of the program  The payment system is very comprehensive--it is just 
not very useful. We go in and tell the providers exactly what they need to do to make 
the (biling) forms work for them. . . what boxes to fil in, what doesn t need to be 
completed, what doesn t apply to them.
The nurse consultant also provides an ongoing contact for EPSDT providers who have 
questions or problems with Medicaid biling or other issues. Ths continuing 
relationship between health care professionals appears to be an important element of 
provider satisfaction. Providers apparently prefer to deal with a professional colleague 
whom they know rather than a "faceless entity at the other end of the telephone. 
Program staff estimate that the number of EPSDT providers has grown from 375 in 
early 1990 to more than 900 today, as a result of these outreach and recruitment 
efforts. SIMPLIG  MAAL
PROVIER 
th 
Michigan is revg it provir manuls to make  mare untandble 
th sta. 
physins an 
Michiga has begu to simpli its Medicaid manuals with an emphasis on graphics
reference indexes, and simple language. The revisions are based on surveys and
discussions with biling staff in physicians' offces. In addition to makig the manual
simpler to understand and use, staff hope that the revised format wil make it easier to
distribute policy changes to providers.
Another objective of the Manual Makeover Project is improving Medicaid'
s image 
among providers. Medicaid staff told us that their revisions have been 
widely
accepted withi the department, and "every doc on our Medical Society liaison 
commttee loved it.
" In a pretest of the draft manual, providers particularly lied its 
simplicity. They were not sure, however, that the claims processing system would 
actually work as the new manual describes. To address this concern
, project staff 
continue to work with the claims payment component of the Medicaid agency to
coordinate necessary changes.

Budget constraints have slowed the manual makeover process. A new manual has 
been fialied for durable medical equipment suppliers only. Medicaid staff note that 
although the revised physician manual is temporarily on hold
, they are committed to 
proceeding. petr 
Maryland ditrutes manuls for  screeng seres tht sipli th bilg 
reomm 
screeg s
pres an exlain  chedules and tets. 
Marland has developed two manuals for providers in its Healthy Kids initiative. A 
biIg manual ilustrates exactly how to complete the biling form. The document also 
contains procedure, immunization, and laboratory servce codes and explains how to 
refer chidren for additional treatment under EPSDT.
The Screenig Provider Manual contains information on current preventive child 
health standards and practices, as well as State and Federal regulations. Based on 
recommendations of the American Academy of Pediatrics, the manual includes 
optional gudelines for pediatric interval screening. These guidelines include 
forms
that can be used to document screening results for each age interval.  , " 
CONCLUSIONS

Based on reports from State Medicaid agencies and medical society staff, each of the 
approaches described in this report appears to have potential as a constructive 
response to physician complaints about Medicaid hassle. Other States may wish to
examine these intiatives in more detail to determine if they might work in their 
situation. 
In weighing the potential impact of these approaches and their applicability elsewhere 
it is important to take into account three considerations: 
req 
ten 
Fedl and State  for fincl accounbil mean th some 
between Medaid'  adtie reqem and what provi peeie as hale is
unvoidble 
To some degree, the burden that physicians and other providers perceive as a hassle is 
a function of Medicaid's public nature and the need to monitor the expenditure of 
public funds. As the director of one Medicaid program told us 
If Medicaid receives 
a clai that is wrong, it goes back to the doctor. Every claim is 
considered a bil 
against the State and it's ilegal for us to fi it on our own. Just because other payers 
give away money doesn t mean that we do. 
Medicaid pays for servces for eligible individuals only. Yet Medicaid eligibilty is 
much less stable than for persons with Medicare or private insurance coverage. 
Whether or not someone is actually eligible for Medicaid coverage depends on such
factors as income, marital status, and family makeup. Changes in any of these factors 
verig 
may affect a recipient's status. Although  whether someone is eligible for 
coverage on the date of treatment is a hassle, it is necessary to ensure payment. 
Several States also informed us that some of the hassle results from Federal 
requirements. For example, physicians and patients must complete and maintain 
special documentation for sterizations, hysterectomies, and abortions. 
Although empirical evidence is limited, hassle is not unique to Medicaid or public 
payers. The Texas Medical Association (TM) has been keeping a "
hassle factor log
to compile complaints from members. As of October 1991, TM 
had received fewer 
complaints for Medicaid (17 complaints) than for Workers
' Compensation (52),
Medicare (44), or Aetna Insurance (22). 
syst
Oth poli inties suh  an deelopme of maged 
as higher fees  adtrtie bur care 
oft accompa efort to rede Medaid' 
State efforts to decrease Medicaid hassle for physicians do not take place in isolation. 
Florida, for example, raised physician fees over a four-year period to at least the 50th  percentile of Medicare fees. Maryland and Missouri increased fees for obstetricians to
improve prenatal care.
Many of the efforts to reduce Medicaid hassle focus on traditional fee-for-servce
medicine. At the same time, many State Medicaid programs are encouraging the
development of managed care systems for Medicaid recipients. Although we did not
gather data on managed care programs, Maryland, Florida, and Michigan informed us
that they are actively working toward this goal.
In addition, hassle factor reduction may affect providers other than physicians. For
example, pharmacists and hospitals are more likely to submit claims electronically than
are physicians. Manuals can be simplified and made easier to understand for all
Medicaid providers.
gover li  ex 
Fiscailm copnslteri ns tftaecigg  State  adtrtithe  butro whih Medaid proms
can  to rede th 
Although some States have raised physician fees as part of their strategy to improve
physician participation, the fiscal climate surrounding State budgets makes it unlely
that fee increases will be widespread. State fiscal diffculties also may affect efforts to
reduce the admistrative burden of Medicaid. We discovered two specific examples
of how these fiscal problems can affect attempts to reduce Medicaid hassle. In
Michigan, the Medicaid Manual Makeover project has been delayed, because of the
resources required to design, publish, and coordinate a new set of manuals. Likewise
in Missouri, we were told that the physician task force has been inactive over the past
year because of the State s fiscal problems.
Even in light of these fiscal constraints, the State responses to Medicaid's hassle
appear to reflect an awareness that physician concerns have some legitimacy and
should be addressed. A staff person from one program summaried the comments of
several others when she told us that "Medicaid has changed its philosophy to improve
customer servce. If we can t increase fees, at least we can make it as easy as possible
to do business with us.
 , "
APPENDIX A
METIODOWGY 
We conducted this study in two stages: 
1. To identify State intiatives, we reviewed available literature and intervewed staf 
from: 
Physician organiations: The American Medical Association, the American 
College of Obstetricians and Gyecologists, and the American Academy of 
Pediatricians. We intervewed State medical society staff in Alabama 
Arkansas, California, Georgia, Florida, llinois, Iowa, Michigan, Missouri, New 
York, Ohio, Pennsylvania, and Texas. 
State organizations: National Governors' Association , National Conference of 
State Legislatures, American Public Welfare Association, and 
Intergovernental Health Policy Project. 
Health Care Financing Administration, Medicaid Bureau. 
Physician Payment Review Commssion. 
2. To obtain inormation on a particular State s approach to reducing the 
admistrative burden we intervewed staff from the Medicaid program, the fiscal 
agent, and medical society in these States. We also reviewed wrtten material 
provided by the Medicaid agency.
We examied data gathered in two surveys for an OIG study of State Medicaid 
electronic claims management capacity (OEI-OI-91-00820  Point-of-Servce Claims 
Management Systems for Medicaid " Draft Report, January 1992; OEI-Ol-91-00821 
Electronic Funds Transfer for Medicaid Providers " Draft Report, January 1992). 
These surveys were: 
A mail survey of Medicaid programs, conducted from May to July 1991, to 
which 45 States responded. We received at least partial responses from every 
State except Alaska , Arzona, Arkansas, Delaware, and Ohio. 
Telephone intervews with Medicaid claims management staff in 49 States (all 
except West Virginia) and the District of Columbia.  '"  , ", ," "
APPENDIX B
NOTE 
1. Beth K. Yudkowsky, Jenifer D. C. Cartland, and Samuel S. Flint  Pediatrician 
Partcipation in Medicaid: 
1978 to 1989  Pediatrcs  85 no. 4 (April 1990): 567-77. 
2. Janet D. Perloff, Phillp R. KJetke, and Kathr M. Neckerman  Physicians
Lit 
Decisions to  Medicaid Participation: Determants and Policy Implications 
Joumal of Health Politics , no. 2 (Summer 1987): 221-35. 
, Policy and Law 
3. Anne Schwartz, David C. Colby, and Anne Lenhard Reisinger  Variation in 
Medicaid Physician Fees  , no. 1 (Spring 1991): 131-39. 
Health Affairs 
4. Physician Payment Review Commission Annual Report to Congress  1991, p. 308. 
5. Deborah Lewis-Idema  Increasing Provider Partcipation: Strategies for Improving 
State Perinatal Programs  The National Governors' Association, 1988. This study 
addresses provider participation in both Medicaid and Maternal-Child Health 
Programs. The author notes that Medicaid agencies tend to place more emphasis on 
low reimbursement as the priary reason for low participation. 
6. American College of Obstetricians and Gynecologists  Improving Access to Maternity 
Care: Obstetrc Provider Partcipation in Medicaid  Washington, D.  , 1991
, pp. 14-15. 
7. "Makig Florida s Medicaid Program 'Provider Friendly,  State Health Notes 
October 21, 1991. 
8. Statement by Louis W. Sullvan, Secretary of Health and Human Servces on behalf 
of the Forum on Administrative Costs, November 5, 1991. 
8353, February 28
9. 56  FR  , 1991. 
10. These surveys provide information for two Office of Inspector General studies: 
Point-of-Servce Claims Management Systems for Medicaid " OEI-01-91-00820, Draft 
Report, January 1992, and "Electronic Funds Transfer for Medicaid Providers " OEI-
01-91-00821, Draft Report, January 1992. In the notes to this study, we refer to the 
survey documents as "OIG Telephone Survey" for the telephone intervews conducted 
with Medicaid claims management staff, and "OIG mail survey" to describe the mail 
survey of Medicaid programs.  , "

11. OIG mail survey. The followig States were able to provide data on the 
percentage of physicians' claims that was submitted electronically: Alabama 
Californa, Colorado, Connecticut, District of Columbia, Florida, Georgia, Idaho 
Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Minnesota 
Mississippi, Montana, North Carolina, North Dakota, New Jersey, Oklahoma, Oregon 
South Carolina, Tennessee, Texas, Utah, Washington , and Wisconsin. It is liely that 
some other States also accept physician claims electronically, but were unable to break 
out the proportion. Only four States--Nevada, Rhode Island, South Dakota, and 
Wyomig--indicated affrmatively that they did not receive electronically submitted 
physician claims. 
12. Ths figure compares with 87 percent of pharmacy claims, 81 percent of hospital 
claims, and 41 percent of dental claims. The 47 percent figure for physician clais 
does not mean that 47 percent of Medicaid physician providers are using electronic 
media. One would expect that large-volume Medicaid providers account for a 
disproportionate share of electronically submitted claims. 
13. The HCFA-1500 is identical to the American Medical Society's Universal Biling
Form. According to the American Public Welfare Association, 33 States use this form 
(Medicaid Management Information Systems- 
for physician claims submitted on paper. 
Provider Partcipation, Cost Containment Initiatives: State Characteritics  Summer 1991.) 
14. OIG mail survey. Twenty States provided usable information on the cost per 
claim and the percent submitted electronically. The mean cost per physician claim 
was $. 83. The cost and percent were highly negatively correlated (r = - 57), that is the
higher the percent of claims submitted electronically, the lower the cost per claim. 
15. Offce of Inspector General  Point-of-Servce Claims Management Systems for 
Medicaid " Draft Report, OEI-01-91-00820, January 1992. In 47 States responding to 
this question, the mean payment time for electronic claims is 10 days, compared to 17 
days for paper claims. 
16. In our telephone survey, we found that three States--Kansas, Montana, and New 
York--are workig on ways to automate prior authorization, although none is 
operational yet. 
17. "Point-of-Servce Claims Management Systems for Medicaid 
" p. 11. 
18. . OIG telephone survey. Nineteen States indicated in that survey that they had 
telephone automated voice response systems to veri eligibility: Alaska, Californa 
District of Columbia, Florida, Georgia, Iowa, Kansas, Louisiana, Maryland 
Massachusetts, Minnesota, Missouri, Nebraska, New York, North Dakota, Ohio 
Oregon, Texas, and Wisconsin. In addition, we learned through subsequent intervews 
that Alabama implemented such a system in June 1991, and North Carolina has an 
automated voice response system for general questions, but not eligibilty verication.  19. Florida has prepared similar 
guides for other Medicaid providers, including 
hospitals, durable medical equipment and hearing aid suppliers, and nursing homes.