Medicaid Pay for Primary Care Now at Medicare Levels

October 21, 2013

The health insurance exchanges under the Affordable Care Act (ACA) may have stumbled out of the gate this month, but another aspect of the law is finally on track: As required, Medicaid programs in nearly every state have raised physician reimbursement for primary care to Medicare levels.

That's not the only good news from a new study by the Kaiser Family Foundation (KFF). Thanks to an improving economy, 14 state Medicaid programs have given raises to specialists in fiscal 2014; only 5 states have reduced specialist pay. In contrast, states that cut specialists' rates outnumbered rate-hiking ones in fiscal 2011 and 2012, according to the KFF study, released earlier this month.

"Things have gotten better in the past few years, so we're seeing reinvestments back into reimbursement rates," said Matt Salo, executive director of the National Association of Medicaid Directors, in an interview with Medscape Medical News.

Loosened purse strings also apply to managed care organizations (MCOs) that receive payments from state Medicaid programs and then reimburse physicians and other providers in a variety of ways, which include fee-for-service as well as capitation. The number of states that increased rates for MCOs rose from 18 in fiscal 2011 to 25 in fiscal 2014, whereas those with rate reductions fell from 11 to 2 during that period. Salo noted that increased payments to Medicaid MCOs do not necessarily translate into higher pay for participating physicians. Some states, for example, may have given MCOs more money as part of extending Medicaid coverage to new patient populations, some of which are costlier to treat.

Is the 2-Year Raise "Enough to Move the Needle?"

The most dramatic change in Medicaid reimbursement, which is notorious for being skimpy, stems from the ACA provision that increases compensation rates for evaluation and management (E/M) services and vaccination administration rendered by primary care physicians to Medicare levels in 2013 and 2014. As a result, fees for these services were expected to jump 73% on average nationwide and to more than double in California, Florida, Michigan, New Jersey, New York, and Rhode Island, according to a KFF study released last year.

Consider, for example, the mainstay service of primary care, the midlevel office visit with an established patient — known in shorthand by its billing code of 99213. In 2012, physicians received $38.20 on average for such visits from state Medicaid programs. That same year, a 99213 claim submitted to Medicare garnered $70.46 on a nationwide basis.

Lawmakers wrote the higher rates into the ACA to motivate more physicians to treat Medicaid patients, particularly because their numbers originally were expected to grow by 16 million as state Medicaid programs expanded eligibility requirements. The historic Supreme Court ruling on the law in June 2012 allowed states to opt out of Medicaid expansion, and 26 chose to do so. Nevertheless, the Medicaid raise for primary care applies in all 50 states.

This raise was supposed to, but did not, take effect on January 1. The Centers for Medicare & Medicaid Services did not issue final regulations on implementing the increase until November, giving state Medicaid programs little time to meet the deadline. As of early March, primary care physicians had yet to experience what policy wonks call "Medicaid–Medicare parity," although there was comfort in knowing the raise was retroactive back to January 1.

The KFF study released last week reported that as of mid-September, "nearly all states reported currently paying the enhanced primary care rate." Salo told Medscape Medical News that based on what he has heard from his association's members, all state programs are reimbursing primary care physicians for E/M services and vaccine administration at Medicare levels and are catching up on payments from the first of the year.

Four states in fiscal 2013 and 12 in fiscal 2014 increased primary care reimbursement beyond what the ACA called for. Several of these states, such as Alaska and Oklahoma, were already paying above or close to Medicare levels for primary care.

Family physicians, internists, and pediatricians who are already treating Medicaid patients welcome the ACA sweetener, but Salo and others wonder whether this provision of the law will persuade them to see more of these patients or motivate other physicians to sign up as Medicaid providers. After all, the raise expires after 2014.

"Is that enough to move the needle on access?" asked Salo. "Is it enough for providers to say, 'Yes, I'm going to change my book of business and increase the number of Medicaid patients I see?'

"I don't know the answer, but I'm worried that [the primary care raise] won't have much of an impact on access."

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