Charity Care versus Managed Care

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Physician Participation in Managed Care Levels

By Staff Writers

According to Robert James Cimasi of Health Capital Consultants LLC, in St. Louis, Researchers at the Center for Analyzing Health System Change [CAHSC] completed a study several years ago on the effect of competition and managed care on charity medical care, provided by physicians, that further illustrates the effects of dysfunctional competition in healthcare.

The Study

The study was based on data on the amount of charity care provided by over 10,000 physicians between 1996 and 1997.

Definition of Charity Care

According to and others, charity medical care was defined as healthcare provided without cost or at a reduced cost because of the inability of the patient to pay for the cost of the service.

Inverse Relationship Findings

An inverse relationship was found between the amount of physician revenue derived from managed care and the amount of time spent providing charity care. Specifically, physicians who received 85% or more of their income from managed care provided only half of the hours of charity care provided by physicians who received less than 85% of their revenue from managed care contracts.

Also, physicians practicing in areas with high managed care penetration provided less charity care. Further, a relationship was observed between increased practice size and diminished time spent on charity care.


The reporter of the study, a contributor to and others, attributed these practice differences to increasing financial pressures faced by physicians because of increased competition and their reduced ability to use “cost shifting” to shift excess charges from paying patients to cover costs for those unable to pay. Under the scenario they describe, increasing numbers of the uninsured and the prevalence of managed care plans will continue to shift costs back to the government and the public for indigent care unless systemic changes are made to incorporate provisions for charity care into an increasingly for-profit healthcare system.

References: Cunningham, P. J., et al. “Managed care and physicians’ provision of charity care.” JAMA 281 (1999): 1087.


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One Response

  1. CHIP – Charity to a Fault

    I think it is noble of dentists to help the state with their obligations by volunteering for CHIP. I have always respected dentists who work for near-charity fees plus the bureaucracy – just like I respect those who work in charity dental clinics for no pay and without bureaucracy. They are equally generous.

    Personally, I would consider helping with CHIP, but the NPI number really scares me. I have watched how the NPI number has delayed physicians’ pay for months because of crosswalk foul-ups. Recently, the IRS has added their requirements to the NPPES as well. If a provider’s name does not match up with the IRS records it will also delay payment. I have even heard that some of those who need NPI numbers may have to reapply all over again because of the IRS’s late intrusion into the mess.

    But that is not the worse part. By volunteering for an NPI number, a dentist permits insurance companies to rank their quality by data-mining CHIP dental claims that they have been collecting for years. CMS intends to allow payers to post grades of CHIP dentists according to how long the restorations in kids’ mouths last, and compare the results to kids’ whose parents have dental insurance. As a general rule, children who are treated by the state do not keep their teeth as clean as others. Why should I risk so much for charity?

    It just does not seem fair to be treated with such disrespect by our own state when we are trying to help them out of their mess that we did not cause.

    D. Kellus Pruitt DDS

    Fort Worth, Texas


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