The Obama administration’s strategy of enticing more primary-care doctors to treat the poor by raising Medicaid reimbursement rates is off to a slow start.
Only a handful of states, including Maryland, have begun paying doctors at the higher rates, which average a 73 percent increase nationally. That’s because the administration did not issue the rules until November, and state officials say they haven’t had time to make changes and get the federal government to approve them.
While Medicaid doctors’ fees vary by state, they are generally far below those paid by private insurance plans and Medicare, which serves seniors. A two-year pay hike was included in the Affordable Care Act and was supposed to have started five months ago.
Neither Virginia nor the District has carried out the raise. Maryland has not only implemented the higher rates but has also extended them to all doctors — increasing pay 24 percent on average for specialists as well as for primary-care doctors. Maryland taxpayers are footing the bill for the extra costs, estimated in the tens of millions of dollars.
“We wanted to shore up our provider capacity in advance of the Medicaid expansion,” said Charles Milligan, deputy secretary of the Maryland Department of Health and Mental Hygiene, adding that the state needed more specialists willing to treat poor people.
He said the higher rates have attracted additional doctors, although he couldn’t specify the number.
The District’s experience with boosting doctors’ pay may offer a cautionary tale, however. The District increased Medicaid rates to all doctors in 2009 to the same level as Medicare but failed to see a big increase in participation, said Medicaid Director Linda Elam.
“I understand the logic of the higher rates,” she said, “but our evidence shows it does not make a big difference.”
As a result of budgetary pressures in 2011, the District reduced the payment rates. The city is now waiting for the federal government to approve its plan to raise the rates again.
Gene Ransom, chief executive of MedChi, the Maryland State Medical Society, said the District’s previous rate increase probably did not draw many new doctors because poor people are concentrated in neighborhoods where few doctors practice.
In Maryland, in contrast, people on Medicaid are dispersed throughout the state, he said. Ransom anticipated that the pay increase would spur more doctors to participate and to see more Medicaid patients. Previously, many limited their Medicaid patients because of low reimbursements, he said.
Other states that have begun making the higher payments include Massachusetts, Michigan and Nevada, according to the American Academy of Family Physicians.
All states have applied to the federal government to start offering the higher rates, but the Centers for Medicare and Medicaid Services has approved only seven of them
“CMS remains confident that the higher payment rates ultimately will help increase access to care for Medicaid beneficiaries,” the agency said in a statement.
Earlier this year, CMS said doctors would be able to get the higher fees retroactively to Jan. 1. But many states have set deadlines of April or May for doctors to attest that they are primary-care physicians eligible to get the retroactive pay. Those who miss the deadline will receive the pay raise but not retroactively.
Several major physician groups — including the American Medical Association, the American Academy of Pediatrics and the American Academy of Family Physicians — wrote to the administration this month expressing frustration with the delays.
“Our organizations have grown increasingly concerned that the brief time frame which states had to implement this provision has resulted in confusion both by state employees responsible for administering the program and the physician community,” stated the letter to Cindy Mann, who runs the Medicaid program.
Stephen Zuckerman, a senior fellow at the Urban Institute, said doctors were already hesitant to sign on given that the pay raise expires at the end of 2014, and the implementation problems won’t help.
“Because of the temporary nature of the pay raise, it was always questionable how many doctors would jump at treating Medicaid patients if they had not done so in the past,” he said. “If doctors were tentative before, they still have a reason to be.”
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.