Medicaid payment advocacy

Physician reimbursement for Medicaid primary care services, however, is inadequate.

The AAFP advocates to improve Medicaid physician payment, policy that would also boost primary care access nationwide while decreasing health disparities. This effort is part of the AAFP’s work to increase total US investment in primary care and physician reimbursement for primary care services.

Medicaid’s importance as a health payer can’t be overstated. Last year, more than 77 million adults and children were enrolled in Medicaid and CHIP. Primary care physicians cared for a disproportionately high share of the care those patients received.

According to research published in 2022, among primary care physicians (both pediatric and adult) who treated at least one Medicaid beneficiary in the surveyed year, 25% of physicians accounted for 86.2% of claims, with 29.9% of core primary care physicians (those who treated at least 150 Medicaid patients) responsible for 88.1% of outpatient care.

Physicians cite low reimbursement rates as a reason they are unable to accept more Medicaid patients, particularly in underserved or rural areas. The AAFP believes that this wide gap in payment is eroding the nation’s health care infrastructure.

The factors undermining Medicaid payment for primary care services include

The majority of Medicaid payers use Medicare’s values to set their own rates part of the reason the Academy advocates for CMS to overhaul Medicare physician payment.

A 2025 paper noted that primary care spend had dropped for all payers over the previous year, with Medicare and Medicaid declining the most.

Commercial insurers generally tie their physician reimbursement rates to those of Medicare. Medicaid physician reimbursement rates are, on average, some 30% below Medicare rates.

The 2025 budget reconciliation bill, H.R. 1, dramatically reduced states’ Medicaid funding and coverage. Most of these cuts are not yet in effect, but some states have already started cutting Medicaid spending, potentially exacerbating issues with patient access and primary care reimbursement.

Medicaid patients’ access to care improved when the ACA raised Medicaid primary care payment rates to Medicare levels for one year, starting in 2013. One study found that appointment availability increased during the primary care fee bump and decreased after it expired.

The AAFP urges Congress to legislate permanent Medicaid payment parity to improve access to primary care for Medicaid enrollees.

Medicaid is not just a safety-net program—it is a critical pillar of the American health care system. AAFP members provide care in rural, suburban and urban communities in a variety of practice settings.

The vast majority of individuals insured through Medicaid lack access to employer or other private health insurance benefits. Medicaid enrollees, often because of age, disability or dependency, lie outside the private health insurance market.

Medicaid also plays an important role in providing health care coverage to minority populations that would otherwise be uninsured. More than one in four Black and Hispanic adults are covered by Medicaid.

Low Medicaid physician payment rates are a proven barrier to health care access for Medicaid enrollees.

The Academy advocates for policies that would make Medicaid payment for primary care services at least equal to Medicare’s payment rate for those services. The AAFP has strongly supported proposals to increase the transparency of Medicaid FFS rates for physician services and require comparative payment rate analysis and disclosure by states.

Such policy improvements would ensure that clinicians have the resources the need to care for Medicaid patients and would help alleviate barriers to care for the enrollees most in need.