KCMU Examines Medicaid and Medicare Reimbursement

February 13, 2013

The Kaiser Commission on Medicaid and the Uninsured (KCMU) released an issue paper in December assessing how much the Medicaid physician reimbursement rate for primary care will rise in 2013. KCMU commissioned the Urban Institute to initiate a 50-state survey of Medicaid physician payment in 2012. The ACA allows states to expand eligibility for their Medicaid programs in 2014. In an effort to expand capacity before the expansion, the ACA requires states to raise their Medicaid reimbursement rates to Medicare levels. The difference between the two rates will be fully funded by the federal government. The paper compares states’ Medicaid reimbursement rates, how Medicaid payment rates compare to Medicare levels, and how Medicaid payment rates have changed over time. Key findings indicate that:

  • Medicaid reimbursement rates vary widely by state. California, Florida, Indiana, Michigan, Missouri, New Jersey, New York and Rhode Island had payment rates more than 10% below the national average in 2012.

  • On average, Medicaid pays 66% of Medicare payment rates, and as indicated below, California paid less than 60% of Medicare levels in 2012.

  • Most notably, the Medicaid physician payment rate for primary care services will rise by 73%(on average) in 2013. As seen below, the payment rate will more than double for six states, including California (136%), Florida (105%), New Jersey (109%), Michigan (125%), New York (156%), and Rhode Island (198%). This rate increase far exceeds any other past payment increase, and if it is successful in improving physician participation, the interest in extending the higher Medicaid rate will be substantial.

States are obligated to collect data on physician participation and primary care utilization during the rate increase so that the full impact of the law can be properly assessed. How the payment increase will impact California’s Medicaid program remains to be seen.

The full report is available online.