Get out of here with your Medicaid
How Medicaid handcuffs patients, and how we could free them.
It was a beautiful winter day for a walk to my doctor. The February morning was crisp-cold. The sun, shining with all its might, reflected off the hundreds of skyscraper windows lining my walk, seeming to outline the shapes in my peripheral vision. I put on my sunglasses and shrugged deeper into my cozy coat, bunching my scarf under my chin. I walked up the stairs of the office in a good mood. Early appointments are the best for getting on with your day.
I had an agenda. But, much to my dismay, my plans were thwarted. I was turned away at the door because the clerk decided that my new out-of-network, non-Medicaid, $30,000-a-year, high-deductible Affordable Care Act marketplace family plan must be Medicaid. It was not. But it didn’t matter what I said or who I called (the insurance company); no one could sway the clerk, and I was not allowed to see my doctor. Weeks of back-and-forth ensued, and now I have a new doctor.
Win for the clerk(?) One thing he said stuck with me: “If you can afford to pay for cash for your healthcare, the government might decide you don’t need Medicaid.”
And this statement, plus my doctor-of-six-years refusal to see me, made me wonder — what’s the deal? Why aren’t patients with Medicaid allowed to choose to pay their doctors cash if they want to? Why would any doctor turn a paying patient away?
The answer made me even angrier. Not for me, I’m lucky to have the resources to find a new doctor. But angry for all the Medicaid patients who don’t have many primary care options to begin with.
Wouldn’t you know, in New York State and most U.S. states, if you have Medicaid, regulations either:
1) outright ban doctors who don’t participate in Medicaid from accepting any payment from patients, or
2) are so murky that non-Medicaid-participating doctors fear allegations of fraud and civil penalties that could result in huge fines and being kicked out of Medicare
Most states are in that second bucket and include language in their Medicaid regulations similar to New York’s. That is a mishmash of policies and guidance, without any specific clause to guide non-participating doctors on whether and in what cases it might be allowable for them to contract with Medicaid patients for cash. The language in New York includes:
18 NYCRR § 504.3(c) — “[By enrolling, the provider agrees] … to accept payment from the medical assistance program as payment in full for all care, services and supplies billed.”
Official NY Department of Health Guidance, which applies to all licensed doctors, states, “Providers must accept NYS Medicaid payment as payment in full.”
And this, 8-NYCRR-515.2, list of unacceptable practices, which I don’t have the space to write out, but implies that any doctor who would accept a payment from a Medicaid patient (even when Medicaid won’t pay that doctor) is, at best, taking advantage of the patient.
And a few states are more like California, where the law expressly forbids a provider of health care services from attempting to obtain payment from any entity other than Medi-Cal.
“A provider of health care services who obtains a label or copy from the Medi-Cal card or other proof of eligibility pursuant to this chapter shall not seek reimbursement nor attempt to obtain payment for the cost of those covered health care services from the eligible applicant or recipient, or a person other than the department or a third-party payor who provides a contractual or legal entitlement to health care services.”
Under these rules, doctors who are not enrolled in Medicaid and charge patients cash for services that Medicaid would cover can be charged with fraud, face censure, and exclusion from other programs, such as Medicare. This is despite the fact that Medicaid would not reimburse the non-participating doctor for these services. Because of this, doctors not enrolled in Medicaid will turn Medicaid patients away, as I was turned away, even if the patient waves hundred-dollar bills in their faces.
Maybe that doesn’t seem like such a bad thing. If folks can get free medical care through Medicaid, wouldn’t it be taking advantage of them for doctors who don’t participate in Medicaid to take their money?
But what if the patient clearly understands their choice to pay? Why can’t these patients simply sign a form acknowledging that both parties have chosen not to use Medicaid? Then there’s no chance of double-dipping, and it’s clearly the patient’s choice. Such a contract could require lists of prices and print in big, bold letters that the patient could be treated for free if they used a Medicaid-participating provider. If, for instance, they drove three hours to the city or waited six months for an appointment with their mandated primary care doctor (who they may not have chosen and might not trust).
While these rules were established ostensibly to protect patients and prevent fraudulent billing practices, they ultimately infringe on Medicaid patients’ freedom and choice. Furthermore, major instances of fraud have not been curbed by these laws, as evidenced by cases in which hospitals have been caught charging extra fees above what Medicaid reimburses, or, worse, billing both the patient and Medicaid for the same service and then selling that “debt” to bill collectors.
While it isn’t written into any legal language I have reviewed, I wonder if these regulations don’t stem in part from the crude idea expressed by the clerk who turned me away. If someone can afford to pay for their own medical care, they must not be “poor enough” to deserve Medicaid. Imagine getting mad at someone else for spending their own money instead of yours. Handcuffs like these, tied to help, aren’t helpful. These rules have the negative consequence of limiting patient choice and, in many cases, access to healthcare.
Patients who receive Medicaid could sign a million papers, but it wouldn’t matter. It seems we assume that because they need financial assistance with their medical care, they can’t decide to pay for any of it themselves.
Why is this a big deal? Why don’t Medicaid patients just use participating doctors and get free medical care?
Let’s ask the question in a few different ways.
Why would a Medicaid patient pay an urgent care doctor $50 to do a urine dipstick, diagnose their urinary tract infection, and prescribe them antibiotics rather than go to the emergency department and wait for five hours for the same (but free) service?
Perhaps the $50 they pay me means they’ll be able to go to work and earn a few hundred dollars instead of spending the day driving three hours, round trip, to see the one doctor in the area who takes Medicaid. Maybe it means they’ll have time to stop at the better grocery store to buy a vegetable for their kids’ dinner that night. Perhaps it will save them hundreds of dollars in childcare. Perhaps they won’t lose their job for missing a day of work.
Why would a Medicaid patient pay a primary care doctor in their neighborhood $100 per visit three times a year to manage and prescribe their cholesterol medication?
Perhaps they struggle to schedule evening appointments with the one Medicaid-participating primary care doctor in their area, and they need evening appointments to keep their job. And now with the Big Beautiful Bill, they need to keep their job to keep their Medicaid, which they would still need for specialist or emergency care.
Why would a generally healthy Medicaid patient pay their primary care doctor $150 for their annual exam when they could get it for free?
Maybe they’re only temporarily on Medicaid because they’re between jobs, and they want to continue to see the doctor they’ve had for many years. Or perhaps they have a semi-urgent issue and haven’t been able to find a doctor taking new Medicaid patients in their area.
But under the laws of most states, if patients are too poor to pay for their health insurance, they must be too poor to choose to pay for any health care. This infantilizes the poor when we should be empowering them.
It is genuinely difficult in many parts of the country to find doctors who accept Medicaid.
If there’s a shortage of primary care doctors, there’s an even bigger shortage of primary care doctors who accept Medicaid. This shortage of doctors who accept Medicaid is at the root of many of the issues patients face: choosing a doctor they trust, finding a clinic within a reasonable distance, long wait times for appointments, and the inability to schedule timely appointments.
The shortage is getting worse because the math doesn’t add up for doctors and clinics to stay enrolled in Medicaid.
The Center for Medicare and Medicaid Services plans to lower Medicare reimbursement rates in 2026. If Medicare doesn’t pay well, then Medicaid, which is indexed to Medicare, pays even worse. Medicaid reimburses doctors significantly below cost—on average, it pays 72% of the already low Medicare rate. In some states, that percentage is much lower, as illustrated by the chart below of the Medicare-to-Medicaid Fee Index by State.
Because of these poor reimbursement rates, many independent doctors don’t accept Medicaid. This means that doctors who do take it are overwhelmed with patients, and, worse, the majority of their patients bring in reimbursements well below cost, which imperils the survival of their practices.
These phenomena are even more pronounced in areas of the country with a shortage of doctors and hospitals. Fewer doctors overall means even fewer doctors who take Medicaid. Rural and urban areas, with disproportionately high numbers of Medicaid patients, are disproportionately affected by Medicaid cuts. Birthing centers are closing across the country. Community health centers are shutting down. Yet patients are still stuck looking for the nearest Medicaid participating doctor, since other doctors are legally barred from accepting their money.
Where can Medicaid patients get medical care?
Large hospitals and academic centers typically enroll in Medicaid. Participation in the program is more financially viable for large hospitals because they can pad their reimbursements with a variety of supplemental payments — payments for teaching through residency programs, payments for seeing a “disproportionate share” of Medicare and Medicaid or charity care patients, and “upper payment limit” payments to offset the lower reimbursements for Medicaid (compared to Medicare) patients.
These facilities are often top-tier teaching and research institutions that offer cutting-edge medical care. On the face of it, that’s a boon for Medicaid patients. Unfortunately, they aren’t evenly spaced across the country. Some states may have only one or two such facilities. In healthcare deserts, patients may have to drive for hours to reach a large hospital or clinic that accepts Medicaid.
Given the dearth of options for Medicaid recipients in many parts of the country, maybe we should allow them to access local primary care, even if they have to pay for it.
What can we do to improve patients’ choices?
There are clearly significant, systemic interventions that would make Medicaid more attractive for participating doctors. These include increasing reimbursement rates and broadening the use of supplemental payments. These options have significant trade-offs in terms of costs and incentives. And they oppose current moves by CMS and the federal government, which recently passed a bill (HR1) that reduced Medicaid funding in various ways.
Especially since we’re making it more difficult for patients on Medicaid to access healthcare, we could also just allow them to choose whether or not to use their Medicaid. The majority of people will continue to use their free care, because it’s free. But let individuals decide whether, and when it’s worth spending their own money on their own health.
Luckily, there’s a pretty simple fix. States can modify their regulations through language similar to Missouri’s. (MO HealthNet is Missouri’s Medicaid.)
“(1) When an enrolled MO HealthNet provider provides an item or service to a MO HealthNet participant eligible for the item or service on the date provided, there shall be a presumption that the provider accepts the participant’s MO HealthNet benefits and seeks reimbursement from the MO HealthNet agency in accordance with all of the applicable MO HealthNet rules. This presumption shall be overcome only by written evidence of an agreement between the provider and the participant indicating that MO HealthNet is not the intended payer for the specific item or service but rather that the participant accepts the status and liabilities of a private pay patient.”
The federal government could also affect this improvement by inserting essentially the same language into 42 CFR 447.15 along the lines of:
“Nothing in this section shall be construed to prohibit an individual who is eligible for medical assistance under the State plan from entering into a private written contract with a non-participating provider to obtain covered items or services for which no claim is submitted to the Medicaid agency.”
A definition for “private written contract,” which could specify necessary inclusions and considerations, can be added to 42 CFR 447.51: Definitions:
“Private written contract means a voluntary written agreement between an individual who is eligible for medical assistance under the State plan and a provider under which—
(1) The provider agrees to furnish specified items or services solely on a private-pay basis;
(2) The individual agrees to pay the provider for such items or services using funds other than medical assistance furnished under the State plan; and
(3) The provider does not seek or accept, directly or indirectly, payment for those items or services from the Medicaid agency, from a managed care entity or other intermediary that receives payment from the Medicaid agency for furnishing or arranging for Medicaid services, or from any other source as medical assistance under the State plan, and the State does not claim Federal financial participation for those items or services.”
This small change could significantly improve patient choice and health by broadening avenues of entry into the healthcare system. This change is especially relevant and needed as options for Medicaid patients to obtain primary care worsen nationwide. The least we could do is allow patients freedom to decide how to spend their own healthcare dollars. Given the current landscape of healthcare in the U.S., there are times when a person on Medicaid can’t afford not to pay cash for their care.
What do you think of this plan? What have I failed to consider? What would you add?
Thanks to Travis Pew, Allison Lehman, and Deric Tilson for their feedback and input on this article.
The image used to open this piece was generated by the author using ChatGPT 5.1 on Nov 18, 2025, using the prompt, “Show me a colored pencil style drawing based on the following prompt: The February morning was crisp-cold. The sun, shining with all its might, reflected off the hundreds of skyscraper windows lining my walk, seeming to outline the shapes in my peripheral vision.”