Reform Update: Slow start for Medicaid fee-for-service rate bump

The Patient Protection and Affordable Care Act relies heavily on expanding Medicaid eligibility to increase insurance coverage and healthcare access. But its authors had to make sure that physicians would accept new Medicaid patients. So congressional Democrats included a temporary pay increase that ups fees for primary-care doctors serving Medicaid patients to Medicare rates for 2013 and 2014. Still, implementation has been slow.

According to the American Academy of Family Physicians, at least 26 states now are paying the increased Medicaid fee-for-service rate. Among the first to do so were Alabama, Arkansas, Florida, Kansas, Massachusetts, Maryland, Maine, Michigan, Missouri, Montana, Pennsylvania, Vermont and Wyoming.

The initiative got off to a late start when the CMS did not issue its final rule on the program until Nov. 1 last year. States had until March 31 to submit a plan to the CMS, which then had 90 days to approve them or ask for revisions. California remains the only state without an approved plan. But no matter how late approval is received, the payments are retroactive to Jan. 1, 2013.

The Minnesota Medical Association announced that Minnesota began paying Medicare-equivalent fee for service rates last week. Problems persist, however, with payment for managed care and Prepaid Medical Assistance Program enrollees.

The AAFP said Minnesota, along with Kentucky and New Mexico, were among the states required by the CMS to revise their payment methodology plan. The AAFP noted that managed-care payment-increase delays were not unusual. It said that as of last month, 33 out of 37 states had their managed-care rates approved, but only six states were paying at the increased rate.

After managed-care plans are approved by the CMS, the states are responsible for negotiating the pay increase with managed-care companies.

The good news from the AAFP for primary-care physicians is that all 50 states intend to pay the increased Medicaid rate by November—with many beginning in September.

Physicians in California recently got more bad news. Not only would Medi-Cal, the state's Medicaid program, initiate a 10% physician pay cut in the months ahead, it made the pay cut retroactive and will seek to recover a portion of payments made during the period after the decreased payment plan was approved but blocked by court actions from taking effect.

“These cuts could not come at a worse time, as California is poised to expand Medi-Cal to 1.4 million more Californians under federal health reform and the demand for physicians is expected to rise,” the California Medical Association said in a news release.

The cuts were effective on June 1, 2011, but there was a court injunction on their implementation. That injunction was lifted by a three-judge panel of the 9th U.S. District Court of Appeals last December. An appeal of that ruling was rejected on June 14.

For managed-care plans, the cuts are effective Oct. 1. For fee-for-service, they hit Jan. 9, 2014. Specialty physician services provided under Medi-Cal's managed-care plan will not be reduced.

According to the California Department of Health Care Services, retroactive recovery of payments made since June 1, 2011, won't begin until after the 10% pay cut is implemented and 60 days' advance notice will be given.

Primary-care physicians are also being hurt on the federal side. The Patient Protection and Affordable Care Act called on temporarily increasing states' Medicaid primary-care payments to match Medicare rates in 2013 and 2014. States had until March 31 to submit a Medicaid parity implementation plan and then the CMS had 90 to approve it or ask for a revision. While California is not the only state yet to carry out the increase, it is the only one still seeking CMS approval of its plan.

Follow Andis Robeznieks on Twitter: @MHARobeznieks