Monday, December 22, 2014
The New England Journal of Medicine
December 18, 2014
Medicaid Payments and Access to Care
By Sara Rosenbaum, J.D.
With more than 66 million beneficiaries, Medicaid is the United States'
largest insurer, and its impact on health insurance coverage, access to
care, and the health of the poor has been substantial. But historically,
Medicaid has faced a major challenge — a relatively low rate of
physician participation. In its March 2011 report to Congress, the
Medicaid and CHIP (Children's Health Insurance Program) Payment and
Access Commission (MACPAC, Congress's Medicaid advisory panel) pointed
out that the Medicaid population disproportionately resides in medically
underserved communities with serious shortages of primary care providers
and that the problem of isolation is confounded by low
Extensive research suggests that many factors contribute to low
physician participation: complex program requirements, payment delays,
and concerns about managing the care of patients with high levels of
health and social risk. But research also shows that low fees play a key
role and that substantial payment increases may be needed to alter
physicians' behavior. In a study conducted for the Kaiser Family
Foundation, the Urban Institute estimated that in 2012, Medicaid
physician fees averaged about 66% of Medicare payments and that the
Medicaid–Medicare pay disparity was widening.
For good reason, primary care tends to be the first area of focus in any
discussion of access in Medicaid. With a pronounced and growing shortage
of primary care professionals — a shortage that's estimated to reach
30,000 by 2015 — depressed Medicaid participation among available
physicians is a major cause for concern. In the case of primary care,
mitigation strategies exist. Safety-net providers such as community
health centers play a vital role in reducing the access gap in the
communities they serve.
Specialty care arguably presents the more serious Medicaid access
problem, especially since there is no obvious mitigation strategy for it
comparable to that offered by community health centers. The Commonwealth
Fund reports that low payment rates are the principal cause of reduced
Among the hot-button issues that define the tense federal–state Medicaid
relationship, no issue has historically been hotter than access to care,
because of fierce state resistance to federal oversight of provider
payment. This tension has led Congress to gradually strip most
provider-payment provisions out of the Medicaid statute. But one basic
legal principle remains: the so-called equal-access provision, which
specifies that as a condition of federal funding, states' Medicaid
provider payments must be "sufficient to enlist enough providers so that
care and services are available under the plan at least to the extent
that such care and services are available to the general population in
the geographic area."
The Department of Health and Human Services (HHS), however, has never
implemented this provision through regulations.
Under the Affordable Care Act, Congress funded a 2-year pay increase for
Medicaid primary care services in order to boost primary care payment
rates to Medicare levels. In its Kaiser study, the Urban Institute
estimated that the pay bump would increase fees by 73%. But the
increase, which took effect in 2013, expires at the end of 2014, with no
renewal in sight. News reports suggest that nearly all states plan to
roll back primary care payments to 2012 levels, despite anecdotal
evidence reported by some states of increases in provider participation.
Faced with payment rates that in some cases may be dangerously low,
beneficiaries and providers have turned to litigation. A fundamental
question, however, is whether providers and beneficiaries can go to
court when provider payments may be too low to ensure appropriate access
to care. In 2012, in Douglas v. Independent Living Center of Southern
California, which involved a challenge to deep rate cuts enacted by
California's legislature, the Supreme Court deflected this question.
Now, however, the issue is back; this term, the Court will hear
Armstrong v. Exceptional Child Center, Inc., which again raises the
question of whether beneficiaries and providers can protest low Medicaid
payments in court. Douglas involved a rate cut; Armstrong, in contrast,
involves a state's refusal to pay properly. The situation here is one of
a state's failure to pay a provider an HHS-approved rate, with no HHS
effort to enforce its own requirements.
Observers do not expect another deflection; in his Douglas dissent,
Chief Justice John Roberts made clear his objection to court involvement
in Medicaid-access cases, arguing that HHS — not the courts — should be
the sole enforcement authority.
The Armstrong situation may be more serious than that in Douglas.
Douglas involved an ongoing and active federal review, however slow it
may have been. In Armstrong, the federal government has chosen to play
no affirmative role whatsoever.
There is a deeper issue here, of course: getting the federal government
to do what it is supposed to do. That means issuing the long-delayed
access regulations, providing technical assistance to states, and
maintaining active and ongoing oversight of state program management.
Medicaid beneficiaries deserve no less.
Comment by Don McCanne
Medicaid has traditionally underpaid physicians for their health care
services. That has resulted in low participation rates, especially by
specialists, which, in turn, threatens health care access for Medicaid
patients. The Medicaid statute requires that states' Medicaid provider
payments must be "sufficient to enlist enough providers so that care and
services are available under the plan at least to the extent that such
care and services are available to the general population in the
geographic area." Failure of our government to enforce this equal-access
provision will now be heard by the Supreme Court.
The Affordable Care Act (ACA) greatly expanded eligibility for Medicaid,
though the increase was not quite as large as anticipated because of the
Supreme Court's previous ruling allowing states to opt out of the
expansion. Nevertheless, in an effort to ensure that enough physicians
would participate at a level to assure adequate access for the new
Medicaid enrollees, Congress included a temporary provision in ACA that
would increase primary care payments to Medicare levels. Next week, that
increase ends, and most states will revert to pre-ACA payment levels.
Most states are shifting their Medicaid patients into managed care
organizations for the purpose of reducing their spending for this
program. With the low payment rates, it is difficult to see how these
organizations can afford to finance their patients' care except by
significantly reducing the frequency and intensity of services
delivered. This is not a population that has been receiving an excess of
health care services. Quite the contrary, they were already doing
without services that they should have. These further reductions likely
will be able to be measured by an increase in suffering and death.
Although Chief Justice Roberts has already indicated that he does not
believe this is a matter for the courts, even if there is a ruling that
the equal-access provision must be enforced, it is likely that only
nominal adjustments will be made and that Medicaid will continue to be
Instead of tweaking Medicaid, we need to enact an improved Medicare for
all that would include implicitly an equal-access provision that applies
at 5:26 PM