Medicaid Payment Reductions: Does Less Money Equal Fewer Patients?

Temporary Medicaid rate increases are set to expire at the end of 2014, which will lead to significant pay reductions for some Medicaid doctors. The expiring federally funded rate increases are part of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The idea behind temporarily raising Medicaid reimbursement rates to rates similar to Medicare was to encourage provider participation in Medicaid. Now, as the increases are set to disappear and many states have indicated an unwillingness to pay for the increases themselves, Medicaid patients are likely to be the ones to pay the price. According to a Kaiser Health News report, concerns are being raised that doctors are going to leave the Medicaid program as the pay raises expire, leaving millions of poor Americans with difficulty accessing doctors.

Pay Difference

According to a study conducted by the Urban Institute, on average, across the country, the primary care pay reduction to Medicaid providers from the expiration of the ACA Medicaid payment increases will be 43 percent. However, there is some variation among states regarding the reductions that Medicaid providers are expected to see. For example, in several states, like Michigan, California, and Florida, the reductions are expected to exceed 50 percent.

State Differences

The variation stems, in part, from the fact that states are approaching the fee bump expiration differently, according to a Kaiser Family Foundation perspective. As of October 28, 2014, 15 states were planning to continue with the fee increases, 24 states decided to abandon the fee increases, and 12 states were undetermined as to whether they would carry on the Medicaid increases into 2015. An additional component of the variation results from the fact that the ACA Medicaid increases affected states differently. A few states paid rates at least equal to Medicare before 2013; their rates were unaffected by the ACA increase.

Evidence and Impact

According to Kaiser Health News, some of the biggest concerns stem from the reality that there is insufficient evidence to show that the Medicaid pay raises actually increased provider participation. Accordingly, while organizations like the American Academy of Family Physicians have been lobbying Congress to extend the pay increase, without data to support the recruitment tactic, little has been done. The question now is how significant the expiration of the fee bump will be on provider participation and patient access.