Somewhere between 11 million and 21 million will become newly insured under Medicaid thanks to the Affordable Care Act (ACA), depending on whether you subscribe to the latest estimates from the Congressional Budget Office (CBO) or the Urban Institute. The Supreme Court’s decision in NFIB v. Sebelius gave states have a choice about whether to expand Medicaid to people with incomes up to 138 percent of the federal poverty level. There are many potential ramifications of doing so, and anyone interested in a list can go to my post, Arguments for and Against States Opting for ACA Medicaid Expansion.

Surge in Demand for Primary Care:

One major issue states are concerned about is having enough primary care physicians to meet the expected surge in demand for primary care starting in 2014, when the ACA Medicaid expansion goes into effect. Even states that do not expand Medicaid can expect more demand from low- and moderate-income families who become newly insured with qualified health plans (QHP) through Health Insurance Exchanges (HIX).

Part of the problem has been that Medicaid fee-for-service reimbursement rates for primary care physicians are low, in most states. To address the issue, the health reform law required states to raise primary care reimbursement to match Medicare’s physician rates in CY 2013 and CY 2014, regardless of whether states choose to expand the Medicaid program. The federal government will pay for the cost of raising the payments, expected to be more than $11 billion, up to the difference between the rates in 2013 and 2014 and those on July 1, 2009.

CMS Final Rules Explained:

The Kaiser Commission on Medicaid and the Uninsured recently published two good briefs on Medicaid primary care reimbursement rates and the ACA. The first brief gives an update on the Centers for Medicare and Medicaid Services’ (CMS) final rule on the Medicaid fee increase, published November 6, 2012.

A few details worth mentioning are:

  • The rate increases will apply to family physicians, internists, pediatricians, and subspecialists if they are certified by a medical board, or if at least 60 percent of the Medicaid codes billed the previous year were for primary care, as defined in the ACA.
  • States whose fees are higher today than in 2009 could save an estimated $545 million, again because the federal government is paying states the difference between their 2009 primary care rates and their 2013 and 2014 rates.
  • Physicians serving Medicaid managed care enrollees will also benefit from the rate increase, regardless of the Medicaid health plan’s payment method. States can choose how to implement this requirement and must submit proposed methodology for approval.
  • Primary care providers serving Medicare-Medicaid dual eligibles will also get the full Medicare reimbursement amount. State Medicaid programs often do not pay the full 20 percent Medicare coinsurance when dual eligibles receive care.

Current Medicaid Primary Care Reimbursement Varies by State:

The second Kaiser brief is an overview of how current Medicaid payment rates for physicians and for primary care services in all 50 states compare to Medicare rates.

The key findings are:

  • Medicaid physician payment rates averaged 66 percent of Medicare rates, and ranged from 37 percent in Rhode Island to 134 percent in North Dakota.
  • 40 percent of Medicaid beneficiaries nationally lived in states where Medicaid physician reimbursement was less than 60 percent of Medicare’s reimbursement.
  • Medicaid physician rates will rise an average 73 percent in 2013 to meet the ACA requirement, and fees will at least double in six states, including Florida, New Jersey, and California.

Once the higher rates have been in effect two years, CMS will collect data from states to assess how well the policy has worked to boost the supply of primary care for Medicaid beneficiaries.