States Drop Pay Raises for Medicaid Doctors

When a federal program to increase Medicaid doctors' pay ends Jan. 1, most states will choose not to keep it up.
by | October 24, 2014
Bethany Mollenkof/MCT

A federal initiative to boost participation among some Medicaid doctors by increasing their pay will mostly go defunct at the end of the year as most states have chosen not to extend it with their own money.

The initiative of the Affordable Care Act boosted rates for primary care doctors and some specialists to Medicare levels, which are higher than Medicaid, in hopes of boosting access to doctors as states expanded Medicaid. Overall states saw $11 billion in additional federal health-care funding. The increase generated an average 64 percent pay increase. But the two-year program ends in December, which means states have to come up with funding on their own to maintain the pay bump and prevent a pay cut.

Doctors have long blamed low rates for lower levels of participation in Medicaid, which varies dramatically by state, from a low of 40 percent in New Jersey -- where the rates are also low -- to near total participation in Wyoming. But the national average is near 70 percent.

Fifteen states have said they will continue the pay raise, at least at partially higher rates or with some other modifications, according to the Kaiser Family Foundation’s annual survey of Medicaid agencies. They include more conservative states such as Alabama, Mississippi and South Carolina, but also Colorado, Connecticut and Maryland.

The survey also said that 12 states were still undecided about whether they’ll continue the policy. Those include Arkansas, Arizona, Georgia, Vermont, Virginia and others. But within the group of states that reported being undecided, it’s clear that many have since shifted to “no.”

Although the survey started in the summer and continued into September, some states completed it before finalizing their budgets for the current fiscal year, which began in July. Of the states that responded to requests for comment, all said they’ve now decided against extending the pay raise with state money.

Key among their reasons were the cost and, in some cases, a sense that the program hadn’t made a noticeable difference in the number of participating doctors. Nationally, there’s no formal study of increased participation, and the Centers for Medicare and Medicaid Services have said it hasn't been tracking it.

That’s left evaluating the program’s effectiveness to individual states, many of whom didn’t get the program up and running for a year or a year and a half into the pay raise, said Eileen Ellis, a former Medicaid director who’s now with a consulting firm that conducts Kaiser’s survey. Medicaid directors have blamed administrative lag at both the state and federal levels for the delayed pickup, which left many with limited data to draw conclusions about the program’s effectiveness.

But other issues include the difficulty of determining whether a newly participating doctor joined because of the pay increase or because of Medicaid expansion. And even in non-expansion states, many are dominated by managed-care companies who create a buffer between state officials and provider networks, making it a challenge to measure increased participation, Ellis said. “The [managed-care companies] have had to tell them participation was great all along as a condition of contracting, so it’s hard to know,” she said.

Connecticut was a rare example of a state that specifically reported to Kaiser a “significant” uptick in participation, and the state is extending the pay increase, albeit at a reduced level. But others say they haven’t been able to discern a noticeable difference -- especially not enough to justify spending tens of millions in additional state funding. “It’s really hard to tease it out, but our gut feeling was it didn’t have a significant impact on more physicians participating,” said Bill Lessard, Virginia’s director of provider reimbursement.

The Medicaid and CHIP Payment and Access Commission, a federal advisory panel, found states like Virginia were far from alone. The panel reported in late October that states had no plan to formally evaluate the effect of the increase, but it had, at best, only a modest impact, according to the National Association of Medicaid Directors. MACPAC similarly reported that states didn't get the increase off the ground until much later, and they questioned whether it was truly enough to promote access to primary care.

Note: This story has been updated to include information about a late October meeting of MACPAC.