Recent news stories are warning of widespread pay cuts to physicians as reimbursement for treating Medicaid patients has fallen. But what are the real facts?

The Patient Protection and Affordable Care Act (PPACA), or Obamacare, increased Medicaid reimbursement rates for primary care physicians to the same levels as Medicare, through a 100% federal-match subsidy, but only during 2013 and 2014. The move was intended to encourage doctors to accept more Medicaid patients.  Now, since January 1, the increase has expired and Medicaid reimbursement rates have returned to earlier levels. This means that doctors who take Medicaid patients could see an average fall of 42.8%, according to an Urban Institute report.

Regarding Medicare, doctors could see an average reduction of 21.2% in reimbursement rates in 2015, according to the Department of Health and Human Services. This is because the most recent "doc fix" preventing a major cut to Medicare payments is due to expire at the end of March. Congress has approved 17 "doc fix" bills over the last 11 years that allocate more money to Medicare funding in order to avoid cuts in reimbursements for doctors; however, there is no guarantee of a repeat in 2015.

The Urban Institute report examined the fee decrease by state and found that the average reduction would be higher, at 47.4%, for states that do not plan to extend the Medicaid "fee bump" using state funds. Among the southern states, this applies to Florida, Kentucky, and North Carolina. Alabama, Mississippi and South Carolina do plan to extend the fee increase through 2015, however. Two of these states - Alabama and Mississippi - did not expand Medicaid under the PPACA. They will share the costs with the federal government based on the formula that applies to that state's overall Medicaid program.

Georgia, Virginia, and West Virginia remain undecided. Tennessee was omitted from the report as it does not have any fee-for-service component in its Medicaid program. The report also estimates that doctors in the 27 states that expanded Medicaid under Obamacare will see a 46.2% reduction, compared with 36.8% for states that did not expand Medicaid. Among the southern states, only Kentucky and West Virginia expanded Medicaid.

A one-year $5.4 billion extension of the Medicaid fee bump was proposed in President Obama's 2015 fiscal year budget, but with Republicans controlling both houses, the legislation is unlikely to be accepted by the new Congress. This may have severe consequences for the rates of doctors providing Medicaid and the number of individuals insured under Obamacare.  The rate cuts, however, may not be quite as severe as these figures suggest, as the Urban Institute report did not include managed care Medicaid plans, which cover approximately three-quarters of Medicaid beneficiaries. A US Government Accountability Office report last year estimated that managed care plans may pay higher rates for primary care than fee-for-service Medicaid in many states, though the differences were only 5% or less on average.

The decision to extend the fee bump in Mississippi was taken despite opposition to Obamacare among state leaders. Blake Bell, a lobbyist for The Mississippi State Medical Association, explains, "Even though the money was tied to Obamacare, it did help out the state because of the need to help primary care physicians. The fee bump does help to incentivize our physicians to continue taking Medicaid patients because these are uncertain waters for physicians right now."

In Alabama, where the fee bump will continue, lobbyists also focused on the state's need for more primary care physicians participating in the PPACA. Mark Jackson, executive director of the Medical Association of Alabama, says, "It's been our goal for a while to get those rates up, and this wasn't discussed as being part of Obamacare but rather in terms of getting people better access to care."

In Alabama this year, the legislature approved funding to extend a nearly 30% pay raise to its primary care doctors. It is the first across the board pay raise to primary care physicians in nearly 20 years, with more than 3,000 physicians due to benefit. Don Williamson, Alabama's state health officer who oversees Medicaid, said, "It was a simple decision. If we let those higher rates expire, our primary care would unravel and this money would keep things in place."

But those in North Carolina, among the other states where the fee bump has ended, may face financial hardship. Dr Andrew Mueller, a family practitioner at Novant Health, in Charlotte, points out, "The hardest thing for providers and patients is going through periods of rapid change and uncertainty."

All of these changes mean that Medicaid patients may not be able to find a doctor who will take them. Dr Sandra Decker, from the Centers for Disease Control and Prevention, believes, "Past evidence indicates that Medicaid pay increases spur participation by physicians. Lower fees will make it harder for Medicaid patients to find doctors willing to see them or that they will have to endure long waits to see doctors who accept Medicaid patients."

This also means there may be a greater need for community health center providers, as the demand for services in underserved areas continues to increase. Otherwise the healthcare system as a whole could be harmed, leading to longer appointment wait times, more emergency department usage, and ultimately worse health outcomes.  Fortunately, the pay bump was just one aspect of the PPACA; another was an $11 billion boost to community health centers from 2011 to 2015 to help them expand and potentially mitigate the impact of the end to the fee bump.

Overall, the effects of Medicaid cuts are likely to unfold in coming months, as it becomes clear how much of a hit doctors will take.

References:

US Department of Health and Human Services Fiscal Year 2015 Budget in Brief

2014 survey of America's physicians conducted on behalf of The Physicians Foundation

The Urban Institute: Reversing the Medicaid Fee Bump: How Much Could Medicaid Physician Fees for Primary Care Fall in 2015? Evidence from a 2014 Survey of Medicaid Physician Fees

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