Friday, January 02, 2015

Medicaid Reimbursement Rates Revisited

One of the lesser-known rules in the Affordable Care Act is that it requires states to reimburse providers at Medicare rates, not at prevailing state-level Medicaid rates.  This is just for "primary care" but that is a pretty large category of care.

I wrote about this back in March 2013 -- see here -- and made this prediction:

Ah, but here is the kicker and relation to the title of my post:  this requirement and in particular that the Federal government will pay for the higher rates only applies for two years!

The phrase "doc fix" refers to a law about ten years ago that was supposed to cut Medicare reimbursement rates to providers by a certain amount each year that the rate of increase in total Medicare expenses was too high.  Starting immediately, Congress overrode the mandated increase.  By now, there is around a 30% cumulative cut that is due, and each year Congress has to pass a law (the "doc fix") that keeps that cut from going into force.

Anyone besides me worry that we are going to get into a "Medicaid doc fix" situation? 

Look forward:  For two years, any Medicaid service that can be legally lumped into the "primary care" category is going to be paid at the relatively lucrative Medicare rates.  But in two years, states like NH are going to go back to the old rate schedule.  Really?

So the time has come for those higher rates to expire, and just like clockwork, here come the calls for extending them.  This NYT article titled "As Medicaid Rolls Swell, Cuts in Payments to Doctors Threaten Access to Care" is pretty good*; it definitely notes that the higher rates were meant to be temporary.  Given the results of the election this fall, it now appears that the higher rates will indeed expire (that should have happened yesterday!)  As the article notes, President Obama did propose an extension of the higher rates, but it was not accepted by Congress.

So my prediction was wrong, but I can live with that!  It should have been a conditional forecast:  IF the 2014 election does not bring a Republican-ruled Congress, then there will be a successful push to extend the Medicaid reimbursement rates.

*My caveat here is that I do think the article was slanted in favor of extending the higher rates.  Start with the title! And it focuses too much -- exclusively? -- on the negative aspects of ending the program.  Are there no positive aspects to leaving determination of Medicaid rates in the hands of the states?

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