Medicaid Physician Reimbursement Rates Lag Medicare

Medicaid physician reimbursement is significantly lower than commercial payer and even Medicare payments for the same services despite growing enrollment in the public healthcare program, reveals a new Urban Institute study.

The study recently published in Health Affairs found that Medicaid physician reimbursement in the fee-for-service portion of the program was 72 percent of Medicare physician reimbursement for 27 common procedures in 2019, the most recent year for which researchers had complete data.

Medicaid-to-Medicare physician fee index was also similar in 2008, 2012, and 2019, ranging from 0.66 to 0.72 across the period.

Primary care, in particular, faced a lower Medicaid-to-Medicare physician fee index of 0.67, which was similar to the index in previous years.

In contrast, the Medicaid-to-Medicare physician fee index for other services increased from 0.72 in 2008 to 0.78 in 2019.

Notably, the index was also lower in states with higher Medicaid enrollment compared to states with fewer Medicaid enrollees. States with more than 1.5 million Medicaid enrollees, for example, had an average Medicaid-to-Medicare physician fee index of 0.68 versus 0.82 in states with fewer than 500,000 Medicaid enrollees.

The consistently low Medicaid physician reimbursement rates could spell trouble for future access to care, especially in light of growing Medicaid enrollment because of the COVID-19 pandemic, researchers stated.

“Historically, low Medicaid fees have limited physicians’ participation in the program, and new enrollees could face difficulty obtaining non-COVID-19-related care,” they wrote in the study.

“Second, several states have explored Medicaid buy-in proposals, and New Mexico has introduced legislation to create a Medicaid-like public option. Such approaches would pay physicians according to the state’s Medicaid fee schedule or negotiate a new fee schedule with those fees as a starting point. This approach would keep costs low but could limit physicians’ willingness to accept the new coverage,” the study continued.

About two in five working-age adults did not have stable healthcare coverage in the first half of 2020 largely because of job and coverage disruptions stemming from COVID-19, the Commonwealth Fund reported.

The data pointed to the growing importance of Medicaid coverage during the pandemic, researchers said.

The Biden administration has already made some moves to bolster the Medicaid program, with President Joe Biden signing an executive order shortly after inauguration calling on policymakers to review the previous administration’s policies, including block grant funding, Medicaid work requirements, and any policies that undermine protections for patients with pre-existing conditions, reduce coverage, establish barriers to coverage, or reduce coverage affordability.

“The administration is sending an incredibly powerful signal about where they're heading on Medicaid policy and a return to viewing Medicaid as a key, foundational piece of the Affordable Care Act and a primary vehicle for coverage for people, particularly during the pandemic,” Jocelyn Guyer, managing director at Manatt Health, told HealthPayerIntelligence.

But federal leaders may need to take a look at physician fee schedules in addition to policy, the Urban Institute study indicates.

Providers are already less likely to accept new patients insured by Medicaid (70.8 percent) than those with Medicare (85.3 percent) or private insurance (90.0 percent), according to a 2019 Medicaid and CHIP Payment and Access Commission (MACPAC) presentation.

But providers were more likely to take on new Medicaid patients if physician reimbursement rates were higher. In fact, researchers found that a one percentage point increase in the Medicaid-to-Medicare fee ratio would increase acceptance by 0.78 percentage points.

There were over 70.5 million people enrolled in Medicaid as of September 2020, according to the latest dataset from Medicaid.gov. Enrollment was up 1.1 percent compared to the previous month and 10.3 percent compared to last February.