Indiana Restructures Medicaid Program Around Primary Care

As part of a plan passed by the Indiana General Assembly in 2007, Indiana officials are working on making primary care services the cornerstone of the state's Medicaid program. The Indiana Check-Up-Plan provides bonuses and increased payments to primary care providers who participate in Indiana's Medicaid program.

The state approved bonuses for approximately 5,000 primary care Medicaid providers for 2007 and 2008. Those payments total approximately $39 million, or an average of $5,600 for each Medicaid provider.

Indiana also enacted a permanent rate increase of 25 percent, or $32 million annually, for primary care physicians and subspecialists who provide various primary care services, such as preventive care; certain evaluation and management procedures; early periodic screening, diagnosis and treatment; and scheduled weekend and holiday services. This is the first time in 14 years the state has provided a rate increase for Medicaid providers, according to a press release from the Indiana Family and Social Services Administration.

"It has been a priority of the agency for some time to focus on moving toward a value-driven health care system," said internist Jeffrey Wells, M.D., the state's Medicaid director, in an interview with AAFP News Now. "We really believe it is important to focus on prevention and wellness and the delivery of primary care to identify illness earlier, to better manage chronic disease and to, hopefully, avoid some of the downstream costs associated with emergency room visits and inpatient hospitalizations."

Indiana had the money to provide bonus payments and rate increases this year due, in large part, to an increase in the state's tobacco tax, said Wells. By awarding bonus payments to primary care providers, the state is sending a message that primary care is a "priority" for its Medicaid agency, he added. "We want to continue to ensure that there are strong primary care providers who are participating in Medicaid."

The bonus payments also are a way of saying "thank you" to primary care providers in the Medicaid program, Wells said. The Medicaid agency sent the first set of bonus payments to primary care providers in December and January and will follow up with a second round of bonus payments during March and April. In the meantime, Indiana was "in a position to increase payment rates going forward," a rate increase that will affect both primary care professionals and subspecialists, but one that is focused on promoting primary and preventive care services, according to Wells.

FP Teresa Lovins, M.D., of Columbus, Ind., medical director of Northside Family Medicine and president-elect of the Indiana AFP, said the increase in the Medicaid payment rate has been a "long time coming."

"We haven't had (an increase in Medicaid payment) since 1992," said Lovins. "It still does not bring it up to effective care for the patient, but it is better than what we were dealing with."

The Indiana Check-Up-Plan legislation also created a state-sponsored program called the Healthy Indiana Plan, which is a market-based program that relies on health savings accounts and private managed care plans to deliver care to residents who are considered part of the working poor but who are not sufficiently indigent to qualify for Medicaid.

The Healthy Indiana Plan, which went into effect on Jan. 1, will pay providers based on Medicare rates, which often are 20 to 50 percent higher than Medicaid rates. At the same time, the Indiana Check-Up-Plan increased payments by 400 percent, or $9.2 million, annually statewide for providers serving beneficiaries with complex conditions.

"This shows that in Indiana, we continue to have a commitment to focusing on aligning our payment to where we think we will get the most value," said Wells. "That is a continuation of focusing on preventive and primary care types of services."

The developments in Indiana have not gone unnoticed in neighboring states. For example, Joe Neller, director of government relations for the Michigan AFP, said the payment increases in Indiana were great news. "(Indiana) has recognized the benefits of preventive and primary care services and is beginning to pay family physicians more adequately," he noted.

With the increased payments, more physicians will want to treat Medicaid patients in Indiana, enhancing patient access and, thus, creating incentives for other states, such as Michigan, to increase their Medicaid payment rates, said Neller.

"We will be able to point to Indiana and show that you get a large return (by increasing payments)," he said.