Medicaid Cuts For Primary Care Doctors Take Effect

Andy Pasternak, M.D., a family doctor in Reno, Nev., has seen more than 100 new Medicaid patients this year after the state expanded the insurance program under the Affordable Care Act.

But he won’t be taking any new ones after Dec. 31.  That’s when the law’s two-year pay raise for primary care doctors like him who see Medicaid patients expires, resulting in fee reductions of 43% on average across the country, according to the nonpartisan Urban Institute.

“I don’t want to do this,” Pasternak said about his refusal to see more Medicaid patients next year. But when the temporary pay raise goes away, he and other Nevada doctors will see their fees drop from $75 on average to less than $50 for routine office visits.

“We will lose money when they come to the office,” he said.

Experts fear other doctors will respond the same way as Pasternak, making it harder for millions of poor Americans to find doctors. The pay raise was intended to entice more physicians to treat patients as the program expanded in many states. In the last year, Medicaid enrollment grew by almost 10 million and now covers more than 68 million people nationwide.

The challenge is to convince physicians not just to continue accepting such patients but to take on more without getting paid what they’re used to, said J. Mario Molina, M.D., CEO of Molina Healthcare, one of the nation’s largest Medicaid insurers.

Charles Duarte, CEO of a large community health center in Reno where some patients already wait two months or more for appointments, foresees increased demand for services at his Community Health Alliance clinics, which are paid more generously by Medicaid and were not eligible for the enhanced pay.

“We will see more patients and longer wait times,” he predicted.

State Impact Differs

Despite the concerns, most states say they’ve seen no evidence the increase has resulted in greater doctor participation — mostly because it was temporary. The bonus boosted pay rates for primary care doctors who saw Medicaid patients to the same level as they are paid by Medicare.

Because Medicaid reimbursement rates for doctors vary by state, however, the pay bump varied from no change in Alaska, Montana and North Dakota, to a 50% raise or more in California, New York, New Jersey, Michigan, Florida and Rhode Island, according to the Urban Institute.

Only a handful of states have acted to continue the Medicaid pay boost using their own funds, including Maryland, Alabama, Colorado, Iowa and Mississippi. Connecticut will continue the raise, but not for primary care services done in hospitals.

Nevada and several other states are still considering extending it.

The American Academy of Family Physicians has lobbied Congress to extend the higher pay rate, but has been hampered by lack of data showing the higher fees spurred more doctors to join, said Robert Wergin, M.D., president of the academy and a physician in Milford, Neb.

Wergin said he participated in Medicaid before the health law and won’t be deterred from accepting new patients in the rural town in which he practices after the pay raise expires.

Nonetheless, “I believe access as a result of the cuts will be an issue,” he said.

Low reimbursement rates are not the only reason doctors’ avoid Medicaid. High patient no-show rates also make private physicians reluctant about participating, Duarte said.

Kaveh Safavi, global managing director of Accenture Health, said physicians have always gone in and out of the Medicaid program as a business decision. Others participate because they feel a social obligation, especially if they practice in an area where patients don’t have other health care options.

“There are a lot of dynamics at play … though historically, things have not changed [doctors’ participation] as much as when states make payment changes,” he said.

Rhode Island Faces Biggest Cuts

The Urban Institute study found that Rhode Island doctors will face the biggest pay drop next year — 67 percent. Even so, the Rhode Island Medical Society expressed doubt that the change will cause disruption. It notes that some large insurers require doctors in the state who want to treat privately insured patients to see their Medicaid members, too.

“Every little bit helps, but I don’t see this as a deal breaker,” said Steven DeToy, director of governmental public affairs for the society.

Officials with Neighborhood Health Plan of Rhode Island, one of two Medicaid health plans in the state, said they’re not worried about the end of the pay raise.

“We had wide availability of doctors before the pay raise and don’t expect much change when it ends,” said spokesperson Tom Boucher.

The pay raise went to doctors working for private managed care plans, as well as those in private practice.

Stephen Zuckerman, senior fellow at the Urban Institute, said the states that will use their own funds to continue the fee increase were typically paying higher-than-average Medicaid rates already. But the most populous states — among them, New York, California and Illinois — are not doing that.

“It’s an open question of whether more doctors will quit Medicaid or stop seeing new Medicaid patients,” Zuckerman said. “But these cuts cannot help.”

Impact Debated

Measuring Medicaid enrollees’ access to care is not simple.

While fewer primary care practices are willing to accept new Medicaid patients, those that do accept them typically offer appointments within a week, according to a separate Urban Institute study. 

But a December report by the Health and Human Services’ Office of Inspector General found that about half of Medicaid doctors listed as participating in managed-care plans don’t have availability or don’t contract with the health plan at all.

Jeff Myers, president of Medicaid Health Plans of America, the trade group, said the plan’s provider directories should be updated but the findings don’t mean patients can’t get care. He pointed to federal documentation showing increasing patient satisfaction.

Other experts note that the pay raise was just one way the health law tried to ensure that newly covered Americans would have a place to get care. Funding to community health centers was also boosted by $11 billion from 2011 to 2015 to help them expand.

“The Medicaid pay boost was never meant to be a silver bullet,” said Leonardo Cuello, director of health policy at the National Health Law Program, an advocacy group for low-income Americans.

Still, the provider fee cuts have him worried. “It won’t sink the ship but … I’m concerned it will contribute to access problems.”

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.