Medicaid rates in 44 states to rise in fiscal 2018

Although Medicaid's future path remains uncertain, most states plan to raise their provider rates for their programs this fiscal year, according to a Kaiser Family Foundation survey of state directors.

In fiscal year 2018, 44 states plan to or have already implemented a rate increase for at least one provider type, such as inpatient and outpatient hospitals, primary care physicians, specialists, dentists or nursing homes.

This is the second fiscal year in a row where the majority of states are handing raises rather than rate cuts. The trend is one of the reasons that state Medicaid spending increased 3.5% between fiscal years 2016 and 2017.

"Overall, we had more states that increased rates than decreased rates, suggesting a bit more economic stability," said Kathy Gifford, a principal at Health Management Associates, which helped conduct the survey.

Inpatient hospitals aren't reaping the rewards of the rate hikes as much as other providers. Only 17 states plan to increase inpatient hospital rates this fiscal year, while 33 plan to cut or keep rates the same.

Rising provider rates may quickly become a thing of the past if Republican lawmakers' attempts to turn Medicaid into a block grant or per capita cap program ever succeed, according to the survey.

Medicaid directors said they were concerned a block grant or per capita cap system could lead to a budget shortfall, leading to decreasing provider rates as well as program enrollment reductions.