Primary Care Reimbursement Rates – Summary of New Federal Regulations

November 25, 2012

As you all know, the ACA provides for an increase in primary care physician reimbursement from the Medicaid levels to the Medicare levels with 100% federal financial participation (FFP) of the incremental costs of this increase for Calendar Years 2013 and 2014. The goal of this increase is to increase primary care physician participation and thus to shift the locus of non-emergency care from hospital emergency rooms to the doctor’s office.

The federal rules, 42 CFR 438, 441 and 447, are now final.  This is my understanding of what is required.

42 CFR 438.6 and 438.804 require health plans to reimburse at the 2013 Medicare rates for primary care services delivered by primary care doctors to Medicaid patients in 2013 and require states to pay health plans for these added costs. The Medicaid reimbursement rates for 2014 are based on the 2014

42 CFR 447.400 requires states to pay at the 2013 Medicare rates for primary care services delivered by primary care doctors in the fee for service component of Medicaid.

The state has to determine what it paid health plans for these services in 2009 and what are the additional costs of paying at Medicare rates in 2013. The federal government will reimburse states 100% of the incremental costs, the difference. The state methodology of determining these costs has to “reasonable”, “based on rational and documented data and assumptions” and “produces a reliable and accurate result to fullest extent possible.” The state has to make a comparable determination for 100% reimbursement on the fee for service side although this calculation is considerably less complex.

The state and the plans must be able to demonstrate that they fully passed through the ACA’s rate increase to the primary care doctors.

So who’s a primary care doctor? First, you must be Board Certified in family medicine, pediatric medicine or general internal medicine or a subspecialty recognized by one of the following three Boards: American Board of Medical Specialists, American Board of Physician Specialties or the American Osteopathic Association. Or 60% of your practice is primary care in the billing codes listed below. You may self-attest your status. See 42 CFR 447.400

  • What about nurse mid-wives, nurse practitioners, etc? If they are under the supervision of a physician, “yes”, if they are in independent practice, “no”. See comments on the rules RIN 0938-AQ63 [CMS-2370-F], which state that the enhanced reimbursements are for physician services.
  • What about a FQHC or RHC? “No”, they are clinics and already paid at favorable rates. What about a county clinic? Also “no”. See comments on the rules RIN 0938-AQ63 [CMS-2370-F] to the effect that clinics already are paid for the reasonable and necessary services.
  • What if I am treating a patient paid through the LIHP (Low Income Health Program) under California’s Medicaid waiver? Yes, your payments will be upgraded because these are Medicaid patients. This is particularly important in CMSP and payor counties. See comments on the rules RIN 0938-AQ63 [CMS-2370-F].
  • What if I work at an Academic Medical Center and am already paid at or above Medicare under my agreement with the institution, for example through the SNCP supplements for UC and county facilities under the state’s waiver? No, your payments will not be upgraded except in specified circumstances like “pay for performance”. See comments on the rules RIN 0938-AQ63 [CMS-2370-F] and 42 CFR 447.415.
  • What if I get a case management fee? That does not count against your enhanced reimbursement. See comments on the rules RIN 0938-AQ63 [CMS-2370-F].

What is a primary care service? It’s the Evaluation and Management (E&M) Codes 99201 through 99499 and the CPT (Current Procedural Technology) codes 90460, 90461, and 90471-74. See 42 CFR 447.400

  • What if my state does not use these codes? The state and CMS must cross-walk the state codes so they are equivalent to the federal codes.
  • What if my state cut reimbursement rates in the interim? How much is the state reimbursed? The state gets 100% FFP based on the increment in effect in 2009, and pays the normal state share on the increment that it reduced reimbursement between 2009 and 2013.

How soon does this begin? January 1, 2013, however states have the first quarter of the year to submit their state plan amendments for approval and payments will be made retroactive to January 1.

What do I get paid for these services if I am a primary care physician? You are paid the Medicare rate or a state average of the Medicare rates in your state. See 42 CFR 447.400

  • The Medicare rate for 2013 is issued in the final quarter of 2012; it includes geographic adjustments and site of service adjustments.
  • In California, there are no geographic adjustments in Medi-Cal, so the state may use a rate based on the mean of all Medicare geographies.
  • States may also use Medicare office rate rather than adjust by site of service and CMS appears to recommend this approach.  See comments on the rules RIN 0938-AQ63 [CMS-2370-F].

The rules also update the provider fees for vaccine administration under the Vaccines for Children program. 42 CFR 447.405

  • States must pay the lesser of the Regional Maximum Administration Fee or the Medicare fee schedule for billing code 90460 for Calendar Years 2013 and 2014. The updated Regional Maximum Fee in California will be $26.03.
  • The federal government will pay 100% of the cost of this upgrade for Medi-Cal patients.

What is the benefit to California’s physicians? The estimated national cost to the federal government is $5.6 billion in Calendar Year 2013 and $5.7 billion in Calendar Year 2014. See comments on the rules RIN 0938-AQ63 [CMS-2370-F]. The savings to all states are $235 million in 2013 and $310 million in 2014. California’s share is at least 14-15% of the total and maybe more as our Medi-Cal reimbursements for physicians are quite low as compared to Medicare.

States must report their Medicaid physician participation rates for 2009 and for Calendar Year 2013 so that Congress and the Administration can assess whether this policy increased primary care participation rates and should be extended, modified or discontinued when it expires after the 2014 Calendar Year. 42 CFR 447.400.