Under the Affordable Care Act (“ACA”), Medicaid payments for most primary care services are scheduled to increase to 100% of Medicare rates for services rendered between January 1, 2013, and December 31, 2014. Historically, Medicaid programs have paid significantly less than Medicare for physician services. According to a report published by the Kaiser Commission on Medicaid and the Uninsured, Medicaid fees for physicians providing primary care services will increase an average of 73% in 2013, with some states seeing increases of nearly 200%. The aim is to improve access to services for Medicaid-insured patients and to reduce unnecessary utilization of more costly treatment settings.
Which specialties qualify?
The regulation covers selected primary care services that are performed by physicians who are board-certified in general internal medicine, family medicine, or pediatrics, or in the subspecialties that fall within each of these designations, as recognized by the American Board of Medical Specialties, the American Osteopathic Association, or the American Board of Physician Specialties. Also covered are advanced practice clinicians who are supervised by eligible physicians. Physicians who do not meet the board certification qualifications are also eligible if at least 60% of their Medicaid billing codes for the previous year consisted of evaluation and management ( E&M ) and/or vaccine administration codes. Along with office-based primary care physicians, hospitalists can qualify for the increased rates assuming they meet the board certification or service mix criteria. Many hospitalists are eligible due to the fact that the covered E&M codes include hospital observation and consultation for inpatient services. Hospitalists often serve a higher proportion of Medicaid patients than their office-based primary care counterparts, so the parity adjustment will be significant to many hospitalist groups.
What action should a physician take?
In order to realize the increased payments, physicians must ensure they meet the application requirements under their state s Medicaid program, which may include self-attestation regarding their eligibility to participate. While payment of these increases has been delayed by the large majority of states, the hike is required by law. Under Section 1202 of the Affordable Care Act, states will receive federal matching funds to cover 100% of the increase for the applicable period. After agencies have received approval for their Medicaid state plan amendments, they will distribute retroactive payments to physicians for the covered period assuming the physicians meet the state s attestation deadline. (Note: This may differ by state; please check your state Medicaid website for specifics.) For additional details regarding the provider requirements and services covered under the regulation, see the Centers for Medicare & Medicaid Services Qs & As on the Increased Medicaid Payment for Primary Care.
Will this affect provider compensation arrangements?
As these retrospective payments are distributed, certain compensation arrangements that hospitals have with affected groups may require reconciliation. For example, in order to ensure that physicians are compensated at fair market value, a health system may subsidize a hospitalist group based on the difference between its actual collections and reasonable expenses. The irregular timing of the Medicaid parity payments with some catch-up payments arriving well after the normal collection cycle will require monitoring and reconciliation by the subsidizing system and any affected physicians. These reconciliation efforts should focus on ensuring any financial assistance paid to the physicians takes into consideration the retrospective Medicaid parity payments received during 2013 and 2014 (and potentially the early part of 2015) to ultimately yield fair market value and commercially reasonable physician compensation. Additionally, if a subsidized group is eligible for Medicaid parity payments, but fails to complete the application steps required to receive the increase, the actual subsidy amounts paid by the hospital may no longer be appropriate.
For more information on how this payment change may affect the fair market value and commercial reasonableness of compensation within your provider agreements, please contact the expert listed below at PYA, (800) 270-9629.
