Ask the Expert

Is Medicaid Parity Achieving Goal of Boosting Primary Care Access?

May 28, 2014 02:35 pm Michael Laff

Medicaid is being expanded in many areas of the country as part of the Patient Protection and Affordable Care Act (ACA), thereby increasing access to care for millions of previously uninsured individuals. To support the primary care physicians who are providing that care, the ACA called for higher Medicaid fees for many evaluation and management and vaccine administration services in 2013 and 2014.

[Julia Paradise Mug]

Julia Paradise

So, what are the prospects for patients' access to care with increased Medicaid payments for physicians? AAFP News reached out to Julia Paradise, an associate director of the Kaiser Family Foundation’s Kaiser Commission on Medicaid and the Uninsured, to find out.

Q: What is the Medicaid program’s role in providing access to primary care?

A: Medicaid plays a major role in providing access to primary care, in terms of both scale and effectiveness. The program covers more than 66 million low-income Americans, and that number is rising because of Medicaid expansion in the states moving forward, increased participation in the program by people who are eligible under the traditional rules, and underlying demographic changes.

While primary care physicians participate less in Medicaid than in private insurance, most primary care physicians do accept new Medicaid patients. Surveys indicate that a small minority of Medicaid beneficiaries have difficulty finding a general doctor or provider, and core measures of access to primary care are comparable between Medicaid and private insurance among both children and adults.

Looking ahead, robust participation in Medicaid among primary care physicians will be important to ensuring that the purpose of coverage -- to connect people with care -- is realized, and that health care delivery models in Medicaid that put primary care at the center can take root more widely.

Q: A major concern physicians have about accepting Medicaid patients is that Medicaid’s low payment rates often don’t cover the cost of visits. What effect has the ACA had on this issue?

A: The ACA boosted Medicaid payment rates for most primary care physician services quite significantly. One major theme in the ACA is the essential role of primary care providers in advancing the law’s goal of improving care and lowering costs, especially for patients with the most complex needs.

In that spirit, the ACA provided for a large expansion of Medicaid to millions of low-income uninsured adults. It also strengthened support for primary care physicians who participate in Medicaid by requiring that, in 2013 and 2014, state Medicaid programs pay them no less than Medicare fee levels for almost 150 evaluation and management and vaccine administration codes. Medicaid managed care plans are specifically required to pass the full increase through to their primary care physicians.

To gauge the impact of the ACA increase, the Kaiser Commission on Medicaid and the Uninsured conducted a 50-state survey of Medicaid physician fees in 2012, the year immediately before the ACA rate boost took effect. The survey indicated that, nationally, Medicaid fees for the ACA primary care services would increase by 73 percent on average in 2013. Of course, the other major aspect of the ACA provision is 100 percent federal funding for the rate increase relative to the Medicaid fees states were paying as of July 1, 2009.

The final rule on increased rates was not published until November 2013, which delayed state implementation, especially in the managed care context. Also, outreach to physicians was limited, and some physicians didn’t realize they had to sign up to receive the higher payments and, as a result, they missed out on some of the benefits. Unfortunately, these problems dampened the impact of the fee increase in the first year.

Q: Historically, which states have the lowest Medicaid reimbursement rates?

A: The 50-state fee survey showed that in 2012, Medicaid fees for physician services overall averaged 66 percent of Medicare fee levels, but the Medicaid-to-Medicare fee ratio for the ACA primary care services was lower, at 58 percent, and varied widely by state -- from 34 percent to 137 percent. Rhode Island, New York, California, Michigan, New York, New Jersey and Florida, which all paid less than 50 percent of Medicare fees for the ACA primary care services, ranked last among the states. As a result, primary care physicians in these states are seeing the largest increases in their Medicaid rates, which have more than doubled and nearly tripled in Rhode Island.

Q: Is it likely that the Medicaid-Medicare parity provision in the ACA will be extended beyond 2014?

A: President Obama's proposed budget for 2015 includes an extension of the ACA Medicaid payment boost for primary care physician services, including 100 percent federal funding, through the end of 2015. Whether the proposal becomes law depends on the outcome of budget negotiations between the White House and Congress.

If the federal budget does not ultimately include the payment parity provision, states could still decide to continue the policy on their own. Under this scenario, states would have to come up with their regular Medicaid state share of the incremental cost (except that costs for Medicaid expansion for adults are 100 percent federally funded through 2016 and funded by the federal government at least 90 percent thereafter). A few states -- primarily large rural states -- paid Medicaid rates that were between 95 percent and 138 percent of Medicare fee levels for primary care even before the ACA.

Q: Can accountable care organizations (ACOs) and other new models of health care delivery have a positive impact on payment for primary care physicians serving Medicaid patients?

A: So much of what is going on today in health care delivery and payment system reform is focused on bolstering support for primary care and its care coordination role. For example, under the new Medicaid health home option that 15 states have adopted so far, primary care physicians, group practices or other entities serving as health homes receive extra per-member, per-month or fee-for-service payment for the health home services they provide to Medicaid beneficiaries.

Managed care plans that contract with state Medicaid programs on a risk basis have a lot of flexibility in determining internal payment arrangements with their networks of physicians. The plans can pay physicians more than the Medicaid fee schedule amount for their services or provide other financial incentives to reward selected activities or performance.

ACOs have the flexibility to design their payment incentive structures to drive quality and cost performance and can decide how to distribute any shared savings among their providers. The impact of ACOs on primary care physicians will depend upon the specific payment approaches the organizations use.

Q: Medicaid payment rates are often among the first casualties when states face steep budget deficits. Is there any way to offset this by creating a permanent funding source at the state or federal level?

A: Yes, in principle, but I might use the word “standing” rather than “permanent,” since lawmakers and policy officials can always decide to change course. Congress could continue the payment parity provision established by the ACA by further amending the Medicaid statute. Because Medicaid is an entitlement program, additional federal funding would not require a special appropriation from Congress – it would flow automatically from the new statutory provision.

At the state level, either legislation or administrative action would be needed to extend the provision, depending on the state’s process for making changes in its Medicaid program. While states can change their Medicaid payment rates and policies, they cannot change the federal Medicaid matching rate -- only Congress can do that -- so they would have to commit additional state dollars to finance higher primary care payment rates.

Q: Overall, how is the public image of Medicaid changing?

A: It might come as a surprise, but one out of every five Americans is covered by Medicaid at some point during the year, so it’s not a marginal program. It’s actually the largest single insurance program in the United States. Medicaid is also popular with the public. Over half of all Americans surveyed in the Kaiser Health Tracking Poll in July 2012 said that the Medicaid program was important to their own family. When asked why, about two-thirds of these respondents said that a major reason was that they had received coverage through Medicaid themselves or knew someone who had.

Eight out of 10 Americans said that if they were uninsured, needed health care, and qualified for Medicaid, they would enroll in the program themselves. Other research shows that the vast majority of adults in the income band targeted by the ACA Medicaid expansion view Medicaid as a good program and would be interested in enrolling if they were uninsured.

As millions more working individuals and families obtain coverage through Medicaid, and as consumers encounter a simplified Medicaid enrollment process, as required by the ACA, Medicaid may be perceived increasingly as a mainstream program that’s part of the nation’s broader health coverage system.