Tuesday, October 14, 2014
Kaiser Family Foundation
October 14, 2014
Medicaid in an Era of Health & Delivery System Reform: Results from a
50-State Medicaid Budget Survey for State Fiscal Years 2014 and 2015
By Vernon K. Smith, Kathleen Gifford, Eileen Ellis, Robin Rudowitz and
Primary Care Payments
The ACA included a provision to increase Medicaid payment rates for
primary care services to Medicare rates from January 1, 2013 through
December 31, 2014. The federal government funded 100 percent of the
difference between Medicaid rates that were in effect as of July 1, 2009
and the full Medicare rates for these two years. States were asked about
their plans to extend this provision beyond December 31, 2014 (at
regular FMAP rates). For states that have Medicaid rates for physician
services that were already at or close to 100 percent of Medicare rates,
this issue was not significant.
* Twenty-two states indicated that they would not be continuing the
primary care rate increase.
* Fifteen states (Alaska, Alabama, Colorado, Connecticut, Delaware,
Hawaii, Iowa, Maryland, Maine, Michigan, Mississippi, Nebraska, Nevada,
New Mexico, and South Carolina) indicated that they will continue the
higher rates at least partially if not fully. For example one state will
provide a proportionate increase for all primary care physicians (half
of the ACA rate increase); others plan to continue temporarily or target
it to certain types of primary care.
* Fourteen states indicated they had not yet made a decision on this
policy and were still evaluating whether the enhanced rates had any
impact on provider participation. Given the delayed implementation of
the rate enhancement and the difficulty of attributing changes in
provider enrollment and access to the enhanced payments, the impact of
the increased rates is difficult to determine.
Qs &As on the Increased Medicaid Payment for Primary Care CMS 2370-F -
Primary Care Services under Managed Care Delivery Systems
The requirements under 42 CFR 438.804 specify that the states submit two
methodologies to the Centers for Medicare & Medicaid Services (CMS) for
review and approval to implement this rule. How does approval of these
methodologies impact the approval process for managed care contracts and
rate packages for 2013?
Implementing regulations at 42 CFR 438.804 require states to submit to
CMS a methodology for calculating the July 1, 2009, baseline rate for
eligible primary care services and a methodology for calculating the
rate differential eligible for 100 percent of Federal Financial
Participation (FFP) by March 31, 2013. Further, 42 CFR 438.6 (c)(5)(vi)
establishes Managed Care Organization (MCO), Prepaid Inpatient Health
Plan (PHIP) or Prepaid Ambulatory Health Plan (PAHP) contract
requirements to comply with this provision. It is CMS's expectation that
as soon as practicable after the State submits the required
methodologies in 42 CFR 438.804 and receives CMS approval, the State will:
1. submit revised actuarial certification documents reflecting the
Medicare rate for eligible primary care services in their MCO, PIHP or
PAHP capitation rates; and
2. submit amendment(s) to this contract to ensure compliance with 42 CFR
After CMS approval of the revised contract and rates, the MCO, PIHP or
PAHP must direct the full amount of the enhanced payment to the eligible
provider to reflect the enhanced payment effective January 1, 2013.
Federal financial participation (FFP) is available at a rate of 100
percent for the portion of capitation rates attributable to these
enhanced payments; however, receipt of the enhanced FFP is contingent
upon the state's successful completion of this process.
CMS 2370-F - MANAGED CARE (Set II)
The final rule specified that states will need to recoup the enhanced
payments made to non- eligible providers identified through the annual
statistically valid sample. Must health plans follow the same procedure
for non-eligible providers?
States must require health plans to recoup erroneous payments found
through the sampled pools of providers, and in a number of states, this
sample will include both FFS and managed care providers.
Are MCOs permitted to include amounts sufficient to account for the
payment differential on expected utilization while still holding the
sub-capitated primary care physicians at risk for some level of increase
in utilization due to the higher rates? Or must MCOs remove the risk to
primary care physicians for utilization to ensure that these physicians
receive the increased amount for actual experience?
The purpose of section 1202 of the Affordable Care Act and the final
rule is to ensure access to and utilization of beneficial primary care
services. Towards that goal, eligible primary care physicians must
receive the full benefit of the enhanced payment at the Medicare rate
for eligible services rendered. If a Medicaid managed care health plan
retains sub-capitation arrangements, the health plan would be obligated
to provide additional payments to providers to ensure that every unit of
primary care services provided is reimbursed at the Medicare rate.
Comment by Don McCanne
As the Affordable Care Act (ACA) was being crafted, it was recognized
that the expansion of coverage under Medicaid could result in greater
access problems because of the low Medicaid payment rates and the lack
of willing providers. In order to improve access, at least to primary
care, it was decided to increase Medicaid primary care payment rates to
the same level as Medicare for the years 2013 and 2014. As with so many
of the ACA provisions, this seemingly simple solution has proven to be
Before and during this transition most states were moving many or all of
their Medicaid patients into managed care programs. So the government
had to issue guidelines on how to move enhanced Medicaid primary care
payments into managed care organizations receiving capitation payments,
and to be sure that these enhanced payments were directed to the
eligible primary care providers (more administrative excesses). Although
we are near the end of the two year period in which primary care
payments are enhanced, news reports suggest that confusion and delays
have not been entirely resolved.
Although these enhanced payments were considered to be crucial in
ensuring adequate participation of primary care providers, twenty-two
states have indicated that they would not be continuing the primary care
rate increases. Fifteen states have decided to continue, though many at
lower rates and perhaps only temporarily. Fourteen states are undecided.
"Given the delayed implementation of the rate enhancement and the
difficulty of attributing changes in provider enrollment and access to
the enhanced payments, the impact of the increased rates is difficult to
Medicaid is a welfare program, and, as such, will continue to be
chronically underfunded. Medicaid patients frequently have difficulties
accessing primary care services, and the continued underfunding will
perpetuate that problem. Access to specialized services is even more
limited because of the very low participation rates of specialists.
Single payer would eliminate these injustices since we would all have
the same high-quality program - an improved Medicare for all.
at 5:02 PM