CMS Preparing for Medicaid Rate Hike for Primary Care Services

One of the many healthcare payment issues addressed in the health reform legislation is the low rates paid to doctors who furnish primary care services to Medicaid beneficiaries. Section 1202 of the Health Care and Education Reconciliation Act (HCERA) (P.L. 111-152) requires states to pay doctors the same rates as Medicare for primary care services. The rate hike applies for calendar years 2013 and 2014.

As with the Medicaid expansion, the legislation imposes a new requirement on the states and sweetens it by paying for the extra cost… for a while.During the two years that the rate hike is in place, CMS will pay 100 percent of the difference in cost.

What Congress gives, it can take away—or complicate. And the proposed rule that CMS has released gives a hint of just how complicated this increase will be.The Congress that negotiated the compromise to pass health reform was aware, of course, that the rates Medicare will pay physicians in the future are unpredictable. And one major reason for that unpredictability is the sustainable growth rate (SGR) provision, which requires deeper and deeper cuts as long as the issue is not fully addressed.

Knowing that “three years from now, we’ll pay you what Medicare pays” might be viewed more as a bet than a promise, the drafters of section 1202 provided that if the rate using the 2009 conversion factor would be higher than the actual 2013 Medicare rate, states must use the 2009 calculation.

The statute applies to payment for primary care services to physicians whose primary designated specialty is family medicine, general internal medicine or pediatrics.The term”primary care services” is defined according to designated billing codes for evaluation and management services and for vaccination administration.

In implementing this statute, CMS has faced some interesting questions that Congress didn’t:

  • What about subspecialists? If a pediatric cardiologist examines a child, should she get the increase because parts of the exam are primary care services as defined? Under CMS’ proposed rule, she will.
  • What about differentials based on the location of service? These are common in Medicare, but less so in Medicaid.
  • What about supplemental payments? If a physician at a teaching hospital receives an extra payment under Medicare, must the state Medicaid agency count it?

CMS will use the geographic adjustments in the Medicare physician fee schedule to calculate a Medicaid fee schedule. The federal government will pay 100 percent federal financial participation (FFP) of the difference between the state’s rate as of July 1, 2009 and the Medicare rate defined above. If all the Medicaid codes and services match Medicare, computing the difference may not be so hard. But pediatrics and geriatrics are different enough that not every service or procedure furnished by a pediatrician will have a parallel under Medicare. According to the proposed rule, CMS will find as many parallels as possible.

Under the statute, the administration of vaccinations is a primary care service. But some of the codes in the statute have been eliminated or consolidated since the law was passed, and some states never used the codes mentioned in the statute. Instead, they used codes that reflected each vaccine that was administered. Any time there is room for disagreement on the way a service would be paid, there will be long, expensive disputes about the Medicare payment, the Medicaid payment or both. In the proposed rule, CMS would direct states to combine the former codes and compute an average.

The statute also requires that Medicaid managed care organizations (MCOs) increase their payments to primary care physicians for these services. If the payments are fee-for-service, the issues will be clear. But if the MCO makes payments to the physician on some other basis, such as capitated payments, how is the Medicaid rate for the service compared to the Medicare rate?

CMS would require the MCOs to report to the states the additional payments made to primary care physicians. The states must enforce the requirements in their contracts with MCOs.  CMS must enforce the states’ obligations; it plans to do so by reviewing the states’ contracts with MCOs.

The proposed rule would allow physicians to attest to their specialty or subspecialty. If they are not certified by a board of the American Board of Medical Specialties, the state Medicaid agency would verify their status as primary care physicians with documentation that 60 percent of the Medicaid codes they billed during the previous calendar year were for the codes listed in the statute or rule. Finally, the Vaccine for Children program would get its first payment increase since 1994. CMS proposes to use the Medicare economic index (MEI) to calculate increases.