Will Medicaid parity be extended?

December 3, 2014

The provision of the Affordable Care Act that raises Medicaid reimbursement rates is about to expire. Here's what it may mean to your practice--and what medical societies are trying to do about it.

The Affordable Care Act (ACA) provision to increase Medicaid reimbursement to primary care physicians is set to end on December 31. Unless Congress acts to extend so-called Medicaid parity, primary care physicians (PCPs) will face a new year with reimbursement decreases, which many experts fear will halt the progress made by the ACA to provide greater access to healthcare.

One of the methods by which the ACA attempts to reduce the number of uninsured Americans is by expanding access to Medicaid coverage, something  27 states have agreed to do thus far. Between September 2013 and April 2014, Medicaid enrollment increased nationwide-even in states that chose not to expand their programs-by more than 10%.

To ensure a sufficient level of provider participation and patient access to medical services, the law included a two-year provision that increased Medicaid primary care reimbursement rates to the same level as Medicare for physicians who are board-certified in family, general internal or pediatric medicine. Under the Medicaid Parity provision of the ACA, providers are paid on par with Medicare rates for 2013 and 2014 for a defined set of primary care-related services. The increase is funded entirely by the federal government.

Prior to the rate increase, Medicaid programs paid, on average, 66% of Medicare rates for all services, and just 58% of Medicare rates for primary care services, according to a Kaiser Family Foundation report on Medicaid and the uninsured.

Next: The battle to extend parity

 

 

Numerous efforts are underway to extend the program. A one-year extension for Medicaid parity is included in President Obama’s 2015 budget. Bills have been introduced in both the U.S. Senate and House of Representatives to extend the rate increase by two and five years, respectively.

Read: Medical societies seek extension of Medicaid/Medicare parity

In addition, six states and the District of Columbia are planning to extend the increase on their own if the federal government fails to act, according to a report by the Washington, D.C.-based Center for Health Care Strategies.

“Other states may certainly follow their lead before the end of the year,” the report says. “This demonstrates that states see value in this policy (or fear the negative repercussions of ending it) and are willing to contribute their own funding to continue it.”

Bob Centor, MD, MACPThe short time remaining for Medicaid parity has medical groups worried, and the longer it takes Congress to act, the greater the concern.

“We don’t have a bill being voted on today. With Congress, until they’re actually voting on it, you just don’t know. I’m not pessimistic, but I’m not optimistic either,” says Bob Centor, MD, MACP, chairman of the board of regents of the American College of Physicians (ACP).

Perceptions of how the policy has worked thus far have been mixed. Implementing Medicaid parity was no easy task. In many parts of the country, physicians experienced significant delays due largely to the fact that the policy was designed to fit practices billing under a fee-for-service payment system.

“The problem is more than 70% of Medicaid beneficiaries receive care via managed care. That required a different policy to be put in place,” says Maia Crawford, MS, program officer with the Center for Health Care Strategies, and coauthor of a recent report, “Medicaid Primary Care Rate Increase: Considerations Beyond 2014.”

According to Crawford’s report, nine months after the policy’s start date, some or all qualifying PCPs in 14 states had still not seen their reimbursements increase. That potentially negatively impacted perceptions of the Medicaid Parity policy, Crawford says.

“We didn’t speak to anyone who disagreed with the intent of the policy, but people were frustrated with the delay and what they felt was unclear guidance from CMS,” she adds.

Next: Parity's impact still unclear

 

 

Despite its administrative challenges and mixed reviews, many physicians and policymakers are concerned about the possibility of Medicaid parity ending, particularly as more Americans are expected to enter the system and seek medical care.

But has the program accomplished what it set out to do? Experts say Medicaid parity hasn’t been in place long enough to draw any definitive conclusions.

“Everything we’ve found has been anecdotal and that’s been mixed,” Crawford says. “We heard from some physician groups who believed this was having an impact on the number of providers who are seeing Medicaid patients. Others thought it probably contributed to an increase but there might have been other factors, and then others didn’t seem to think this had much of an impact at all,” she says.

Crawford reports that the biggest gain in primary care providers since the policy’s implementation occurred in Connecticut, where 3,256 PCPs were participating in Medicaid in December 2013, compared with 2,370 participants at the start of 2013. Still, it is unclear whether the increase in Connecticut and elsewhere was a direct result of the enhanced payments, or if other factors were at play, Crawford says.

Many physicians say Medicaid parity has had a positive impact on their practices. “It’s been extremely important in both pediatrics and family medicine,” Centor says.

Reid Blackwelder, MD, FAAFP a family physician in Kingsport, Tenn. and board chairman of the American Academy of Family Physicians echoes

Reid Blackwelder, MD, FAAFPCentor’s comments. “Medicaid parity helped those of us who see Medicaid patients, because now those patients’ insurance pays on par with Medicare. That was a substantial help to our program to keep our doors open,” he says.

Despite the lack of conclusive evidence that increased pay has led to more participating doctors, previous research suggests a possible correlation, says Stephen Zuckerman, Ph.D., senior fellow with the Urban Institute’s Health Policy Center. “But-and this is a big but-most of that research is based on fee variation and fee changes within a state…of five or 10 percent,” Zuckerman says.

The difference in pre-2013 Medicaid rates for primary care as compared with those following Medicaid parity’s implementation ranged from 30% to 100%, depending on the state. For that reason, Zuckerman says, “I have been skeptical about the ability to roll this back.”

For patients, the impact of Medicaid parity isn’t so positive. A report recently released by the Office of the Inspector General found that nationwide, Medicaid beneficiaries generally face great difficulty accessing healthcare providers, both primary care and specialists. Often, the report said, patients are having to wait months for appointments or travel very long distances to be seen.

Next: What happens if parity ends?

 

If Congress doesn’t act to extend Medicaid parity, experts say the effects of rates returning to their pre-2013 levels could be quite severe in some parts of the country. Doctors would face a nationwide average pay cut of 41 cents on the dollar, according to the ACP.

 “In some of these states, this would be huge a fee cut to go back to pre-2013 levels for some of these services,” says Zuckerman. 

For example, in 2012, Medicaid fees for primary care services averaged just 58% of Medicare fee levels, according to a survey of physician fees coauthored by Zuckerman. Moreover, the lowest rates are paid to physicians practicing in states where 40% of all Medicaid beneficiaries live: California, Florida, Michigan, Missouri, New Hampshire, New Jersey, New York, and Rhode Island.

According to the survey, California, Florida, Michigan, New York, and Rhode Island all paid less than 50% of Medicare reimbursement rates, and another 30 states paid no more than 75%.

By itself, an end to Medicaid parity would be of great concern to PCPs. “The threat of a Medicaid cut-because that’s essentially what we’re talking about, is a Medicaid payment cut-is devastating,” Blackwelder says. 

However, in concert with other government programs set to expire, the financial future for PCPs looks especially daunting, according to Blackwelder. The ACA also included a 10% primary care bonus payment, which is scheduled to end December 31, 2015. “If both of these things are enacted, primary care physicians take a huge hit,” Blackwelder says. 

The accompanying threat of a 24% cut in Medicare reimbursements resulting from adjustments to the Sustainable Growth Rate, scheduled for the end of March 2015 unless Congress acts, only adds to the anxiety among physicians. The ACP recently surveyed its 141,000 members to gauge their reaction to the potential end of Medicaid parity. Among  those who had enrolled in the Medicaid parity program, 46% said they would reduce the number of Medicaid patients they accept in 2015, while 40% said they would drop out of the program entirely if it ends.

“What I worry about is less and less physicians taking Medicaid just because they have to pay the bills,” Centor says.

Blackwelder has the same concern and says the fact that the policy was in place for just two years seems counterproductive to the goals of the ACA and Medicaid expansion. “If you’re sitting there thinking in 16 months and 12 months, and now in 4 months, that payment is going to go back to two-thirds of Medicare…there’s no way that you can, in a financially responsible fashion, take on more patients with ­Medicaid.”