NCPA - National Center for Policy Analysis


October 14, 2009

The Mayo Clinic, often held up by Obama administration officials as an example of a health provider that keeps costs low and provides quality care, has stopped accepting some Medicaid and Medicare beneficiaries, causing critics to question its viability as a national model for health reform, says the Washington Post.


  • Last week, the clinic's flagship facility in Rochester, Minn., announced that it will no longer accept Medicaid patients from Nebraska and Montana.
  • Patients from across the West and Midwest seek treatment at Mayo, but it will now only accept Medicaid patients from Minnesota and its bordering states -- Iowa, North Dakota, South Dakota and Wisconsin.
  • Already, about 5 percent of Mayo's Rochester patients are Medicaid beneficiaries, below the national average for large teaching hospitals and nowhere near the rate of Rochester's other hospital, which has a 29 percent Medicaid rate.
  • Meanwhile, Mayo's Glendale, Ariz., branch will no longer accept Medicare beneficiaries seeking primary care under a two-year pilot program.
  • The facility, which has 3,000 regular Medicare beneficiaries, will continue to see them for advanced care, but they will have to pay hundreds of dollars in fees if they seek primary care.

Mayo officials said the moves are "business decisions" dictated by underpayment from Medicare and Medicaid.  But critics point to studies indicating that hospitals relying heavily on Medicare and Medicaid -- without the large private-payer base Mayo enjoys -- report per-procedure reimbursement rates in line with actual costs. That suggests hospitals can make do with Medicare payment rates.  Mayo, however, extracts high payment rates from private insurers and payers and uses that money to pay for top talent and facilities, increasing its per-procedure costs in the process, says the Post. 

Source: Alec MacGillis, "Mao Clinic Faulted for Limiting Medicare Patients," Washington Post, October 13, 2009.

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