The Affordable Care Act gave states federal dollars to raise Medicaid reimbursement rates for primary care services — but only temporarily. The federal dollars ran out on Jan. 1. Fearing that lowering the rates would exacerbate the shortage of primary care doctors willing to accept patients on Medicaid, 15 states are now dipping into their own coffers to continue to pay the doctors more.
It seems to be working.
In Indiana, which is spending about $40 million a year in state dollars to keep the higher reimbursement rate, an additional 335 doctors have started accepting Medicaid patients since the beginning of this year. So have more than 600 other medical providers, such as nurse practitioners and physician assistants.
Colorado has had a similar experience. There the number of new providers participating in Medicaid is increasing by about 100 each month as tracked by the Department of Health Care Policy and Financing.
In addition to Indiana and Colorado, Alabama, Iowa, Maryland, Mississippi and New Mexico are keeping reimbursement rates where they were before the federal bump ended. Connecticut, Delaware, Hawaii and Maine, Michigan, Nebraska, Nevada, and South Carolina also are continuing to pay higher rates, though they aren’t as high as they were before the federal money disappeared, according to a March report to Congress from the Medicaid and CHIP Payment and Access Commission (MACPAC).
In the 23 states that have indicated they won’t continue to make the higher payments, payments for primary care will fall 47% on average this year, an Urban Institute analysis estimates.
In 2011, 31% of doctors said they wouldn't take new Medicaid patients, compared to 18% of doctors who said they weren't accepting new privately insured patients, according to a Health Affairs study. The study, which was the first to take a state-by-state look at the issue, found lower Medicaid reimbursements rates made doctors less willing to accept new Medicaid patients. Before the federally subsidized higher reimbursements were paid, Medicaid paid only an average of 59% of what Medicare did for primary care services, according to the Henry J. Kaiser Family Foundation.
When the federal subsidy ended, states had to decide whether to continue to pay higher rates with little hard data on whether doing so would persuade more doctors to accept Medicaid patients. Other factors, such as the relatively long time it takes doctors to receive their Medicaid payments, also may contribute to their reluctance to take on Medicaid patients.
A multi-state study on the impact of the reimbursement increase published in the New England Journal of Medicine in February found that the availability of primary care appointments for Medicaid patients had increased 7.7% with the higher payments. But the study did not examine how many more doctors were accepting Medicaid patients.
There was, however, anecdotal evidence from individual states. Alaska, for example, has long paid Medicaid reimbursement rates that are higher than those for Medicare. According to the Division of Health Care Services there is no shortage in that state of Medicaid providers.
And in Connecticut, the number of primary care doctors participating in Medicaid was 3,589 at the start of this year, up from 1,622 on Jan. 1, 2012, the year before the fee bump, according to the Department of Social Services.
Paying for the bump
The big diving factor behind whether a state is extending the higher payments is money. States that aren't planning to extend the fee increase are set to see a much larger drop in federal support in states that are extending it — meaning there's a larger gap to cover with just states funds. The states that are continuing the higher payments are turning to a variety of sources to finance them.
Indiana will do it with an increase in the cigarette tax and an eventual increase in taxes on hospitals.
Nebraska is using state general funds for the $8.9 million it needs to pay the higher rate. Maine is redirecting $7.4 million in state tobacco settlement money to help pay the higher rates. To get the $18 million it will cost to fund the increase for six months, Colorado is relying on an advantageous recalibration of its federal-state Medicaid match.
States Not Maintaining Increase in Physician Payments for Medicaid Payments:
- New Jersey
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Dakota
Source: Stateline, the daily news service of the Pew Charitable Trusts. April 20, 2015 | Michael Ollove