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Medicaid Physician Fees Still Lag Medicare Payment Rates

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Medicaid fees for physicians have continued to lag those paid by Medicare, a trend that may make it difficult for some patients to find care, according to a new study.

Medicaid physician fees averaged 72% of Medicare physician fees for common procedures in 2019. The ratio for fees for primary care dropped to 67%, and that for fees obstetric care was 80%, report Stephen Zuckerman, PhD, of the nonprofit Urban Institute, and coauthors in a study published February 1 in the journal Health Affairs.

The Medicaid-to-Medicare fee index, as calculated by Zuckerman and coauthors, decreased from 0.75 in 2008 to 0.66 in 2012 and then rose to 0.72 in 2019.

There were overall gains for both payers between 2008 and 2019, with Medicare fees increasing 23.6% and Medicaid fees rising 19.9%. The Medicaid-to-Medicare fee index for obstetric care slipped from 0.94 in 2008 to 0.80 in 2019. For primary care, the ratio was similar in 2008 and 2019. For other services, the ratio increased from 0.72 in 2008 to 0.78 in 2019.

The Urban Institute has tracked Medicaid physician fees since 1993 through a survey of fees for common procedures. The work by Zuckerman and coauthors is frequently referred to by other researchers. A previous article by Zuckerman, “Trends in Medicaid Physician Fees, 2003–2008,” for example, was cited in 42 scientific articles, according to the National Library of Medicine’s PubMed.gov site.

The updated study focused on 2019 data. Zuckerman and colleagues collected data from state websites for the 27 procedures, including primary care and obstetric services.

“There’s no question that payment rates are an important part of the reason that in many parts of the country, physicians are more reluctant to participate in Medicaid than in Medicare,” Zuckerman told Medscape Medical News.

“Workhorse” of US Healthcare

Policy researchers have described Medicaid as the workhorse of the US medical system.

The state-federal health program provided coverage for nearly 71 million people as of last September, or about 1 in 5 people living in the United States, according to the most recent monthly enrollment data posted on Medicaid’s enrollment data highlights page. Almost 31 million persons covered by Medicaid in September were children. Medicaid covered 43% of US births in 2018, according to a federal advisory committee on the program.

Every US state and the District of Columbia tapped their Medicaid programs in some way as part of their response to the COVID-19 pandemic, according to a tally kept by the nonprofit Kaiser Family Foundation.

The pandemic added new challenges in caring for children and their parents. At the same time, financial pressures on many medical practices grew, Ada Stewart, MD, president of the American Academy of Family Physicians (AAFP), told Medscape Medical News.

Asked to comment on the Zuckerman team’s latest research, Stewart noted how physicians now must help many patients cope with the effects of social isolation, job losses, the schooling of children at home, and caring for sick loved ones.

“Inadequate Medicaid reimbursement makes it more challenging for primary care physicians to accept more Medicaid patients, particularly among small practices, and threatens the viability of practices serving areas with a higher proportion of Medicaid coverage,” Stewart said in an email.

“Furthermore, the pay disparity between Medicaid and other payers further exacerbates the financial and workforce instability that primary care practices — especially those in rural and underserved communities — are facing due to the COVID-19 pandemic,” she said.

AAFP has supported legislation to raise Medicaid payment rates for primary care services to at least Medicare levels.

AAFP, for example, joined with three other medical groups — the American College of Obstetricians and Gynecologists, the American College of Physicians, and the American Osteopathic Association — in a June 2020 letter in support of a bill offered by Sen. Sherrod Brown (D-OH) and Sen. Patty Murray (D-WA) in the 116th session of Congress.

The Brown-Murray bill sought to temporarily reinstate a provision of the Affordable Care Act of 2010 that aligned certain Medicaid and Medicare payment rates for primary care in 2013 and 2014. The bill would reinstate parity of specific Medicaid payments with Medicare. The provision would also apply during declared public health crises. The Brown-Murray bill expired when the next 2-year session of Congress, the 117th, started on January 3, 2021.

Separately, Rep. Kim Schrier, MD (D-WA), a pediatrician, introduced a bill in the 116th Congress that would have put Medicaid payments for primary care services back in line with Medicare payment levels. Her bill sought a more lasting change and also would have expanded the list of eligible clinicians.

Schrier told Medscape Medical News on Wednesday that she intends to try again in the 117th session to win passage of a bill mandating parity of certain Medicaid and Medicare rates. She said she feels “optimistic” about the chances for attaching her legislation to a larger health package. Democrats are intent on trying to make healthcare “more affordable and accessible.”

Many people have lost their jobs during the pandemic, which likely will lead to further expansion of Medicaid’s enrollment, she said.

“We’ve just got to have a sustainable system that has care for everybody,” Schrier said. “I feel like we have a good chance” of getting a Medicaid parity bill enacted as part of a larger package.

Increasing Role of Managed Care

There was wide variation among states in Medicaid rates compared with Medicare rates, Zuckerman and coauthors report. The Medicaid-to-Medicare fee index ranged from a low of 0.37 in Rhode Island to a high of 1.18 in Delaware, they write. They note a potentially important gap in their work ― their study does not include fees paid by Medicaid managed care organizations.

In their Health Affairs article, Zuckerman and coauthors highlight the lack of data on Medicaid managed care physician payments as a potential limitation with their work.

Their research focused on the payments made by fee-for-service Medicaid programs.

For example, the authors dropped Tennessee from their calculations because it does not have fee-for-service Medicaid physician fees. Instead, the state relies entirely on three insurers to manage its Medicaid program: BlueCare, Amerigroup, and UnitedHealthcare Community Plan, Sarah Tanksley, a spokeswoman for TennCare, told Medscape Medical News in an email.

“In this study, we may have misstated true Medicaid-to-Medicare fee ratios for states with high Medicaid managed care penetration,” Zuckerman and coauthors write.

Insurers are playing an increasingly large role in Medicaid’s finances. Medicaid managed care plan enrollment more than doubled between fiscal years 2010 and 2018 — from about 26 million people to more than 56 million, according to the trade group America’s Health Insurance Plans.

But it appears that Medicaid payments for physician services set by insurers are similar to those set by state officials, Zuckerman and his coauthors write. They cite a 2014 Government Accountability Office (GAO) report that concluded that Medicaid managed care payments were generally equal to or higher than fee-for-service Medicaid. The GAO report was based on 2009 and 2010 payment information.

GAO told Medscape Medical News that it has not revisited this topic since their study was published. The 2014 report is its most current broad look at the relationship between Medicaid managed care organizations’ pay rates and those of the fee-for-service programs.

The research by Zuckerman and coauthors was funded by Arnold Ventures.

Health Aff. Published online February 1, 2021. Abstract

Kerry Dooley Young is a freelance journalist based in Washington, D.C. She earlier covered health policy and the federal budget for Congressional Quarterly/CQ Roll Call and the pharmaceutical industry and the Food and Drug Administration for Bloomberg. Follow her on Twitter at @kdooleyyoung.

For more news, follow Medscape on Facebook, Twitter, Instagram, and YouTube.

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