RIP, Medicaid Parity Funding

Medicaid parity's days appear numbered, but debate continues about whether the provision of the healthcare reform law worked as designed and the extent to which its demise will affect healthcare delivery.

An air of resignation hangs among people paying attention to one provision—Section 1202—of the Patient Protection and Affordable Care Act, that the lame duck Congress will very likely allow to expire.

Better known as Medicaid-Medicare parity, the provision earmarked $12 billion in 2013 and 2014 to raise to Medicare levels the Medicaid fee-for-service payments for primary care physicians. Without action from Congress, however, the provision will expire at the end of the month and the 113th Congress has not shown it will act before it also expires at the end of the month.

Though Medicaid parity's days appear numbered, debate continues about whether the provision worked as designed, how much money it distributed during the PPACA's rocky, uneven rollout, and the extent to which its demise will affect care delivery.

American Academy of Family Physicians President Robert Wergin, MD, believes losing the parity money will mean that fewer primary care physicians will see Medicaid patients.

"As a small business, the question becomes can you afford to see some or any of the Medicaid population," Wergin says.

Big Drop in FFS Payments Ahead
"I will personalize it. I am president of the AAFP, but my day job is a rural practice in southeast Nebraska, a town of about 2,000. This makes you look long and hard at your practice. In a rural setting you have to see those patients anyway. They are your neighbors and you just take the hit and it erodes your infrastructure and you have to find your efficiencies. In urban situations. the decision might mean you become a boutique practice."

Nationally, Medicaid reimbursements for primary care average about 59% of what Medicare pays. The amount varies greatly with each state Medicaid program. North Dakota and Alaska Medicaid payments are higher. Reimbursements in most states are not. For example, if parity expires, on Jan. 1, 2015 California primary care physicians will see a drop of 57% in fee-for-service Medicaid payments.

"It pushes physicians into making hard decisions," Wergin says. "Physicians created the infrastructure to try to provide access and now it's a non-sustainable business model. Maybe they will have to draw back and not see that population. Those patients then would—which is what happened in the past—get their primary care and acute care in the emergency room at a much higher cost. Probably, that is what will happen."

Parity Law Won't be Missed
On the other hand, says Matt Salo, executive director of the National Association of State Medicaid Directors, "there are a whole lot of caveats to indicate that this is not going to be a disaster."

Salo says many states believe the Medicaid parity law was poorly designed, had little effect on care delivery while it was operating, and won't be missed after it's gone. Because of that, he says, there is little interest in renewing Medicaid parity funding.

"It's not really on our top triage list of things we are pushing for," Salo says. "If you asked a lot of our members 'do you want some free money to increase payment to providers' a lot of them would say 'yes.' But almost every one of our members would have also said, 'yes, but there is a better way to design this.'"

Salo says most of the state Medicaid officials he's spoken with believe that losing the parity money "is not that much of a problem because the vast majority of the primary care that is delivered in many state is done so through managed care and not in a fee-for-service environment. In reality, most folks are in managed care where the docs are getting paid a lot better."

In addition, Salo says, states found it "much more difficult to figure out how in a managed care environment you actually increase doctors' fee-for-service payments." States also weren't happy that Medicaid parity came without incentives for doctors to improve their practice.

"The way it is designed, everybody gets paid more, but states said they would like to pay people more if they met certain criteria," Salo says. "If you're a physician who is improving quality, or improving access, yes, let's pay you more. But if you're just in the bottom quintile of physicians why should you get paid the same as the top? Let's use this as an incentive to drive some much needed payment reforms."

Effect on PCPs Questioned
Salo also questions the degree to which the end of Medicaid parity will disrupt primary care delivery.

"It's a great sound bite for when you want to get paid more," he says. "Has this increased access or has this just paid people who were doing the right thing a little bit more for continuing to do the right thing?"

"I would guess that it is much more of the latter, that it hasn't actually increased access because of a variety of reasons, including the fact that people knew this was just going to be for two years. You don't change your business model based on the assumption that Congress is going to 'do the right thing' and extend something they didn't have the money or the political will to extend in the first place."

Even with those caveats and concerns, Salo says, "some states have decided that they know that Congress isn't going to extend it and they are going to try to find the money to keep it alive in whole or in part, at least for another year or so, and maybe on an ongoing basis."

"Is it really going to affect every primary care doctor? The answer is, 'that's not exactly true.'"