How Much Will Medicaid Physician Fees for Primary Care Rise in 2013? Evidence from a 2012 Survey of Medicaid Physician Fees - Issue Paper

1 3 3 0 G S T R E E T N W , W A S H I N G T O N , D C 2 0 0 0 5 P H O N E : 2 0 2 3 4 7 5 2 7 0 , F A X : 2 0 2 3 4 7 5 2 7 4 W E B S I T E : W W W . K F F . O R G How Much Will Medicaid Physician Fees for Primary Care Rise in 2013? Evidence from a 2012 Survey of Medicaid Physician Fees Executive Summary Under the Affordable Care Act (ACA), beginning in 2014, states will be able to expand Medicaid to cover millions of previously uninsured low‐income adults. This coverage expansion will increase demand for care in Medicaid. Low Medicaid physician fees in many states and their impact on physician participation have been a perennial concern. Still, in recent years, many states under recessionary budget pressures have reduced some Medicaid provider payment rates. To help ensure sufficient access in Medicaid as enrollment increases, the health reform law requires states to raise their Medicaid fees to Medicare levels at least, for family physicians, internists, and pediatricians for many primary care services. Physicians in both fee‐for‐service and managed care environments will get the enhanced rates. The primary care fee increase, which applies in 2013 and 2014, is fully federally funded up to the difference between a state’s Medicaid fees in effect on July 1, 2009 and Medicare fees in 2013 and 2014. To gauge the impact of the fee increase for primary care, and to get a current picture of Medicaid physician fee levels in general, the Kaiser Commission on Medicaid and the Uninsured (KCMU) commissioned the Urban Institute to conduct a 50‐state survey of Medicaid physician fees in 2012, the year immediately preceding implementation of the rate increase. This paper presents data from that survey showing how states compare to each other in their 2012 Medicaid fee levels, how Medicaid fees compare to Medicare fees, and how Medicaid fees have changed over time. The survey indicates that, in 2012, Medicaid physician fees averaged 66 percent of Medicare physician fees, but there is wide state variation. With respect to the almost 150 primary care services affected by the health reform provision, Medicaid fees averaged just 58 percent of Medicare fees. These new data on states’ 2012 fees for primary care provide a baseline for assessing the impact of the Medicaid primary care fee increase, which takes effect on January 1, 2013. Estimates of this imminent policy change are presented here for the first time. Key Findings Medicaid physician fees vary widely by state. Average Medicaid physician fees in 2012 varied substantially by state, ranging from 58% of national average Medicaid fees in Rhode Island, to 242% in Alaska. Medicaid fees were more than 10% below the national Medicaid average in California, Florida, Indiana, Michigan, Missouri, New Jersey, New York, and Rhode Island. Medicaid pays 66% of Medicare fees on average. In 2012, on average, Medicaid physician fees were 66% of Medicare fees. Underneath this national statistic, however, is considerable state variation (Figure 1). The Medicaid‐to‐Medicare fee ratio ranged from just 37% in Rhode Island to 134% in North Dakota. California, Florida, Michigan, Missouri, New Hampshire, New Jersey, New York, and Rhode Island, where almost four of every 10 Medicaid beneficiaries live, paid the least relative to Medicare – less than 60%. In all, close to half the states paid no more than 75% of Medicare fee levels. Figure 1 Medicaid‐to‐Medicare Physician Fee Ratios, by State