Association for Public Policy Analysis & Management

Medicaid payment rates to providers are generally lower than those of Medicare and private insurers for the same services. In 2013 and 2014, the Affordable Care Act (ACA) increased Medicaid reimbursement rates to Medicare rates for some services provided by family practitioners, general internists, pediatricians, and mid-level practitioners supervised by those specialties.  While the impact of this change seems straightforward, the increase was narrowly targeted and had implementation barriers. The increase did not apply to hospital outpatient department fees and care provided by community health centers and rural health clinics.  Fees for evaluation and management, but not other services, were increased.  Physicians had to attest to their eligibility.  Many Medicaid beneficiaries receive their care through managed care plans, which also had to implement the increase, but states and plans had to share the physicians’ attestations.  While Polsky and colleagues found increased provider participation in Medicaid after the fee increase in some states, case studies conducted for the Medicaid and CHIP Payment and Access Commission indicate little or no effect on provider participation.  Hence it is important to know how much the fee increase affected physician payments.  This paper uses the Medical Expenditure Panel Survey (MEPS) to measure the increase in payments per visit primary care providers received before and after the fee increase. 

Our primary focus is on visits with Medicaid payments in 2008–2013. The sample is visits by the adults to family practitioners, general internists, and general practitioners.  Because the fee increase is limited to vaccination administration, and evaluation and management, we further narrow the sample based on the main reason for the visit:  check-ups, diagnosis or treatment, and vaccinations or shots.  Using confidential MEPS geographic information, we primarily focus on the 35 states that implemented the increase through their fee schedules, and exclude the states that made monthly or quarterly lump-sum supplemental payments and two states that paid at least Medicare rates prior to the 2013. 

Interrupted time-series methods are used on visits organized by month to assess whether the trend in payments per visit changed before and after the new fee schedule was implemented in January 2013.  Preliminary results indicate an increase in mean payments per visit of about 25%.  We further stratify by Medicare enrollment, because the effect is likely smaller for beneficiaries enrolled in both Medicare and Medicaid, for whom Medicare is the primary payer, and Medicaid pays costs that would be out-of-pocket for non-duals.  We also stratify by enrollment in Medicaid HMOs, because many states had difficulty transparently implementing the fee increase. 

We conduct several sensitivity tests.  As falsification tests, we use the same methods on adults in states that used lump-sum payments to meet the act’s requirements, and on adults with private insurance and Medicare.  Regression discontinuity methods are used to derive alternative estimates of the impact.