Healthcare Business News
 Reid Blackwelder, president of the American Academy of Family Physicians

Reform Update: In push to extend Medicaid pay bump, docs downplay ACA link

By Virgil Dickson
Posted: June 24, 2014 - 3:00 pm ET

Physician groups are lobbying hard to extend an Obamacare provision that requires state Medicaid programs to pay primary-care physicians at higher Medicare rates to improve access for Medicaid patients. But to persuade congressional Republicans to go along, they are downplaying the fact that the pay bump is part of the Patient Protection and Affordable Care Act.

In a recent letter to House and Senate leaders (PDF), a coalition of physician groups requested that a section of the Social Security Act that sets Medicaid payment rates for primary-care services at Medicare levels be continued for at least two years beyond its expiration on Dec. 31, 2014. Not extending the provision would hurt access to care for Medicaid beneficiaries, the doctors warn.

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This is a way to obscure the fact that it's the ACA that amended the Social Security Act to increase Medicaid payments to doctors. Supporters of the extended rate-parity proposal believe this may improve the chances of getting Obamacare foes to go along, said Dr. Reid Blackwelder, president of the American Academy of Family Physicians. “We needed to not make this a partisan issue,” Blackwelder said. “You mention the Affordable Care Act and some lawmakers draw lines in the sand. If you focus on the fact that this is about access to care for low-income patients, it's a different kind of conversation.”

But congressional Republicans and many state Republican officials have taken a hard line against expanding Medicaid in any form, so it's far from certain that this semantic tactic will work.

“At this point I think it is unlikely that any ACA provision would be extended unless the administration can find a way to do it that works around Congress,” said Chip Kahn, president and CEO of the Federation of American Hospitals.

“I don't think there is much hope of Congress working together to do almost anything to modify the ACA,” said Linda Blumberg, a senior fellow at the Urban Institute, a liberal-leaning think tank.

Blackwelder said the physician coalition has yet to receive a response to its letter to congressional leaders. Groups that are part of the coalition include the American Academy of Pediatrics, American Academy of Family Physicians, American College of Physicians and America's Essential Hospitals.

In 2012, the CMS estimated that the payment bump would cost the federal government $11 billion over a two-year period, with the federal government picking up the tab. The aim of the ACA's pay-parity provision was to entice more primary-care physicians to accept Medicaid beneficiaries under the law's expansion of the program to adults with incomes up to 138% of the federal poverty level.

It's unclear if the pay bump led to more doctors opening their doors to Medicaid beneficiaries, as the issue hasn't yet been formally studied. Anecdotally, physician groups report that practices which already were seeing a lot of Medicaid patients may have taken on more, while others that didn't serve many Medicaid patients made no changes.

To qualify for the higher pay rates, eligible physicians had to self-attest they are board-certified in family, pediatric or general internal medicine. Also covered are providers who self-attest that at least 60% of all Medicaid services they bill or provide in a managed-care environment are for specific evaluation and management, and vaccine administration codes.

Under most state Medicaid programs, physicians are paid as much as 60% less than they receive from Medicare or private insurers.

President Barack Obama allocated $5.4 billion for extending the Medicaid pay bump in his fiscal 2015 budget in March. But his budget has gone nowhere on Capitol Hill.

The coalition of doctor groups has offered no suggestions on where the money would come from to extend the pay-parity provision. But Blackwelder said he's optimistic that lawmakers won't let the provision sunset.

Some primary-care doctors saw as much as a 73% increase in Medicaid payments as a result of the bump to Medicare rates, according to the Kaiser Family Foundation. If that ends, it's likely that many doctors would close their doors to new Medicaid patients or drop the patients they took on due to the enhanced rate.

“A lot of patients will begin to return to the ER and hospitals,” Blackwelder said.

Many states did not implement the Medicaid payment bump promptly or smoothly when it was supposed to take effect Jan. 1, 2013, so a big chunk of the potential higher payments never got to doctors. There were a wide range of problems relating to inadequate or late guidance from the CMS and the states and the complexities of establishing the infrastructure to make payments under the provision. As a result, many doctors only recently have begun to receive Medicare-level rates for their Medicaid patients.

Even though much of the money set aside was not spent, federal budget policy typically does not allow for unspent funds to be used at a later date, said Kip Piper, a Washington-area consultant and former senior CMS official. “In this case, it was use it or lose it,” Piper said.

He said the cost of extending the payment bump may be higher now because there are millions more Medicaid beneficiaries. The CMS estimated that as many as 6 million people joined the program between October 2013 and May 2014.

Medicaid managed-care insurers generally support extending the rate bump. They would receive enhanced funding from the states to pay doctors the higher rates.

Some physicians have blamed the managed-care plans for the delay in receiving the pay bump. As the months went by, “there was a perception among physicians that we were sitting on top of the money,” said Cathy Clancy, senior vice president of Medicaid at MVP Health Care, a plan based in New York. But, she said, “We just got our first payment in the last 30 days.”

With the money finally flowing, she said her company supports the proposed extension of the pay bump because it would improve patient access to primary-care services.

Dr. J. Mario Molina, president and CEO of Medicaid managed-care insurer Molina Healthcare, said one way to keep the cost of extension down would be to target areas with the widest gaps between Medicaid and Medicare rates. The bump helped a lot in California, where the state has historically paid less than 60% of Medicare levels. That's a contrast with New Mexico, where there is not a significant rate difference.

In an addition to contacting members of Congress, the physician coalition also will be lobbying state officials to build support for the extension, said Dr. Jim Perrin, president of the American Academy of Pediatrics.

Some states, including California and Maryland, are trying to extend pay parity on their own, either at their own expense or through federal Medicaid funding or both. Indiana would extend the pay bump through its recently proposed Medicaid waiver, which has yet to be approved by the CMS. But that proposal would only bring rates for primary-care doctors to 75% of Medicare rates.

GAO: States, CMS need to better track managed Medicaid payments

The federal and state governments are having a difficult time tracking payments to healthcare providers made through Medicaid managed-care organizations. As a result, as much as $14.4 billion in improper payments may have been issued last year, according to the Government Accountability Office (PDF).

The funds were spent on treatments or services not covered or medically necessary under the Medicaid program.

About $75 billion in federal Medicaid expenditures in fiscal 2011 were attributable to Medicaid managed-care plans, which covered 57% of Medicaid beneficiaries, according to HHS.

“Unless CMS takes a larger role in holding states accountable, and provides guidance and support to states to ensure adequate program integrity efforts in Medicaid managed care, the gap between state and federal efforts to monitor managed-care program integrity leaves a growing portion of federal Medicaid dollars vulnerable to improper payments,” the GAO said.

Virginia Medicaid battle continues

Virginia's Republican-controlled House of Delegates has thrown out a veto by Democratic Gov. Terry McAuliffe that would have made it easier for him to expand Medicaid without legislation approval, according to the Washington Post.

Republican lawmakers had inserted text into budget legislation that explicitly prohibited expanding Medicaid under the Patient Protection and Affordable Care Act without legislative approval.

Last week, McAuliffe signed the overall budget but inserted a line item to veto the section barring the Medicaid expansion. House Speaker William J. Howell said Monday that the veto was outside the scope of the governor's authority and that it could be tossed out without the House having to vote to override it. Overriding the veto would have required the support of two-thirds of the Senate, which Republicans strongly opposed to the Medicaid expansion probably would not be able to muster.

Follow Virgil Dickson on Twitter: @MHVDickson

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