Reversing the Medicaid Fee Bump: How Much Could Medicaid Physician Fees for Primary Care Fall in 2015?

Under the Affordable Care Act, Medicaid fees for primary care services were increased to Medicare levels from January 1, 2013 through December 31, 2014. This paper uses data from the Urban Institute’s 2014 survey of Medicaid physician fees to estimate how large a reduction in Medicaid primary care fees will occur on January 1, 2015, if the ACA’s Medicaid primary care fee bump expires. We estimate that, in the 49 states studied and in the District of Columbia, expiration of the Medicaid primary care fee bump would lead to an average 42.8 percent reduction in fees for primary care services for eligible providers.

The Affordable Care Act (ACA) is designed to increase access to health insurance coverage in part through an expansion of eligibility for states’ Medicaid programs. To date, 27 states and the District of Columbia have expanded eligibility for their Medicaid programs, and those states have reportedly added more than 7.5 million Medicaid enrollees since the third quarter of 2013 (Centers for Medicare and Medicaid Services 2014). Because of long-standing concerns about the level of physician reimbursement in the Medicaid program and its effect on physicians’ willingness to accept Medicaid patients, the ACA also includes a mandatory two-year increase in Medicaid fees for primary care services to Medicare levels. This increase is fully funded by the federal government and raises fee-for-service and managed-care Medicaid fees for certain primary care services provided by family physicians, internists, and pediatricians from January 1, 2013, through December 31, 2014. Using fee-for-service data from 2012, the Urban Institute estimates that this primary care “fee bump” would increase fees by approximately 73 percent on average (Zuckerman and Goin 2012). As of June 2014, the federal government had spent an estimated $5.6 billion on the fee bump (Medicaid and CHIP Payment Access Commission 2014).

Delays in federal rulemaking and implementation difficulties at the state level meant that most states did not have a clear policy in place until mid to late 2013, although the higher Medicaid fees were required to be paid back retroactively to the start of the year. Even if the implementation had gone smoothly, a long lag in the availability of survey data about physician acceptance of Medicaid patients would have complicated assessments of the effect of this policy on provider availability for Medicaid enrollees. To date, it is unclear whether the increase in Medicaid primary care payment has had an effect on the number of physicians accepting Medicaid or the number of Medicaid patients that physicians are willing to see, and anecdotal evidence is mixed (Crawford and McGinnis 2014). For example, although Connecticut has reported a significant increase in the number of participating physicians after the fee bump, other states expect little or no effect (Snyder, Paradise, and Rudowitz 2014).

Without an act of Congress, the federally funded payment increase will expire on December 31, 2014. As of October 28, 2014, 15 states had indicated their intent to continue the fee increase in 2015 using state funds, 24 states had said that they did not intend to continue the fee increase, and 12 states were undecided (Snyder, Paradise, and Rudowitz 2014). This paper uses data from the Urban Institute’s 2014 survey of Medicaid physician fees to estimate how large a reduction in Medicaid primary care fees will occur on January 1, 2015, if the ACA’s Medicaid primary care fee bump expires.