Due to concerns over physician reimbursement rates in Medicaid and the reported effect on participation of providers, the Affordable Care Act (ACA) included a mandatory two-year increase in Medicaid fees for primary care services by eligible providers to Medicare rates. This increase, fully funded by the federal government, was approved to take effect on January 1, 2013 (whether or not states had implemented the rate change by that date), and, as Congress did not extend this increase, expired on December 31, 2014.
In the Kaiser Commission on Medicaid and the Uninsured (KCMU) Annual Medicaid Budget Survey conducted in October 2014, 15 states indicated that they intend to continue the fee increase in 2015 using state funds at their regular federal matching rate, and 12 states were undecided. Twenty-four states said they did not intend to continue the fee increase, with 23 of the states in this analysis covering 71.3% of all Medicaid enrollees. Prior to the primary care increase, 9 of these states had fees that were at or above 76% of Medicare fee levels (AL, AK, CT, DE, IA, MS, NE, NM, SC). In fact, in North Dakota, primary care physicians were paid 134% of Medicare rates. In Michigan, the state plans to use state funds for half the increase. Some states indicated they would change the terms of the fee increase, by either adding to or limiting the types of providers who would receive the increase.
In a recent study from the Urban Institute, the effect of the expiration of the primary care fee bump was estimated using the state’s Medicaid fee schedule as compared to the Medicare fee schedule for selected procedure codes. In states that do not plan to extend the fee increase, primary care fees would be reduced by 47.4% and in states that plan to extend the fee increase, or are undecided, the reduction would be 31% and 31.7% respectively if the fee bump were not sustained. As comparison, if no state would extend the fee increase (with the exception of Maryland), the impact would be an average reduction in fees by 42.8%.
Comparing states with above and below average primary care physician participation in Medicaid, the reduction in fees are greater in states with below average participation, although it is unclear whether the increase in payments has had an effect on the number of physicians willing to accept Medicaid patients. However, the study did not find any differences in fee reductions based on whether the state had expanded Medicaid in 2014. For state-by-state analysis, please refer to the Urban Institute brief.
Although the impact of the fee increase in physician participation has not yet been evaluated, in a Stateline report (The Pew Charitable Trusts), Sandra Decker, from the National Center for Health Statistics at the Centers for Disease Control and Prevention, commented that “past evidence indicates that Medicaid pay increases spur participation by physicians,” and predicted that “lower fees will make it harder for Medicaid patients to find doctors willing to see them or that they will have to endure long waits to see doctors who accept Medicaid patients.” The implications of this impact on provider participation are of concern, especially during a time when more patients are gaining coverage and in areas with limited access to care. If fewer primary care physicians are willing to accept Medicaid patients, there may be a greater need for health center providers, as the demand for services in underserved areas continues to increase.
 For a summary of the increase in the Final Rule published on November 6, 2012, see: Increasing Medicaid Payments for Certain Primary Care Physicians in 2013 and 2014: A Primer on the Health Reform Provision and Final Rule, available at http://kff.org/health-reform/issue-brief/increasing-medicaid-payments-for-certain-primary-care/
 Zuckerman, s.,and Goin, D. How Much Will Physician Fees for Primary Care Rise in 2013? Kaiser Family Foundation, December 2012, available at http://kff.org/medicaid/issue-brief/how-much-will-medicaid-physician-fees-for/
 Maryland used state funds to provide primary care fee increases to all provider types, and thus, it is assumed the increased rate would continue, as noted in Zuckerman, et al. (2014).
 Crawford, M., and McGinnis, T., Medicaid Primary Care Rate Increase: Considerations Beyond 2014. Center for Health Care Strategies, September 2014, available at http://www.chcs.org/media/Medicaid-Primary-Care-Rate-Increase-Brief.pdf.