Association for Public Policy Analysis & Management

Provider participation in insurance markets is a critical component to healthcare access. However, in mixed-economy markets in which both government and private payers participate, public payers, on average, offer lower reimbursement rates to providers for the same services. This disparity in reimbursement rates can discourage some providers from participating in public markets which reduces the value of public insurance and access to care for enrollees. Within the U.S. provider participation in public markets is a long-standing concern. The problem of limited provider participation is particularly severe in Medicaid; the primary insurer of low-income families. In 2013 over 30% of physicians were not accepting new Medicaid patients.

In 2014 the Affordable Care Act (ACA) was implemented and substantially expanded Medicaid. A concern among ACA designers was the above-noted limited provider participation in this program. To address this issue, between 2013 and 2014 the federal government mandated a substantial increase the Medicaid reimbursement rate for a range of primary care services in all states; referred to as the Medicaid ‘fee bump.’ The extent of the fee bump was determined by states’ pre-2013 rate. Qualifying physicians included family physicians, internists, and pediatricians, as well as other physicians who demonstrated substantial delivery of primary care services to Medicaid patients. The objective of the fee bump was to induce new primary care physicians to enter the Medicaid market and to support previously participating physicians, and thus increase access for Medicaid enrollees in advance of ACA implementation.

Studies suggest that the fee bump increased reimbursement rates and primary care physician participation in Medicaid; increased Medicaid-financed prenatal care utilization among Medicaid enrolled pregnant women and birth outcomes; and increased office visits and improved health outcomes among Medicaid enrollees. Our paper adds to this literature by focusing on behavioral health outcomes and service use. The extension to behavioral health is important for several reasons. First, Medicaid populations have elevated rates of behavioral health problems and unmet need for treatment. Second, behavioral healthcare provider participation in Medicaid is particularly scarce and there are overall shortages in behavioral healthcare workers. Third, behavioral healthcare is increasingly being delivered in primary care settings. Fourth, behavioral health problems cost the U.S. $1.3T annually.

We leverage rich survey data from the National Survey on Drug Use and Health between 2010 and 2016 coupled with a differences-in-differences design. We document that the Medicaid fee bump lead to improvements in mental illness, SUDs, and tobacco product use among likely Medicaid enrollees. We find no statistically significant evidence that behavioral healthcare service use changed following the fee bump. Our estimates are robust to numerous sensitivity analyses. Combing our findings of improved behavioral health with research that documents increased office visits post-fee bump and clinical studies establishing the effectiveness of primary care in treating behavioral health, we hypothesize that primary care physicians are efficient in producing better behavioral health among Medicaid enrollees. Given established shortages of behavioral healthcare providers, the ability of primary care physicians to effectively treat behavioral health offers a potential pathway to address such shortages