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Can Obamacare Get Doctors to Take Medicaid?

On November 1, 2012 the government announced a temporary increase in Medicaid primary care payments to physicians as part of Obamacare. The goal is to induce more physicians to participate, which makes sense. There will be many more Medicaid patents, and we already have too few participating providers. However, the increase may not work as planned.

Can Obamacare Get Doctors to Take Medicaid?

By Erica Cohen

On November 1, 2012 the government announced a temporary increase in Medicaid primary care payments to physicians as part of Obamacare. The rates will match Medicare payments, which are higher, from January 1, 2013 through December 31, 2014. The goal is to induce more physicians to participate, which makes sense. There will be many more Medicaid patents, and we already have too few participating providers. However, the increase may not work as planned.

The temporary rate hike is unlikely to convince providers who do not currently accept Medicaid to change their mind. The winners will be providers who already accept Medicaid, since their reimbursement may be even higher than private payer rates.

Although Medicaid reimbursement rates vary by state, the national average for physician services is only two-thirds of the Medicare rate. The increase in reimbursement is intended to improve access to treatment for Medicaid patients and encourage preventative care to avoid serious illness and costly hospitalization.

Although an increase in Medicaid reimbursement may seem like a welcome incentive for physicians, it is a short-term inducement that fails to consider how physicians will continue to treat Medicaid patients once the reimbursement rates return to baseline after 2014.The final rule provides increased rates for a mere two years, which isn’t nearly enough time to encourage Medicaid participation by those physicians who have already opted out.

Additionally, the increased reimbursement is available only to physicians who specialize in family medicine, general internal medicine, and pediatric medicine – with some exceptions for certain subspecialists, like pediatric cardiologists, who provide primary care within their scope of their practice.

Medicaid patients are typically sicker than privately insured patients, which means they are likely to require more time and energy from providers. Given that there is a significant physician shortage, many providers are even less likely to accept sicker, more time-consuming patients when they already have too many to manage. Furthermore, while approximately 74% of physicians accept Medicaid, only 64% are accepting new Medicaid patients due to declining reimbursements.

Long-term Medicaid reform is the only solution to this problem. While many oppose Medicaid expansion, studies show that Medicaid improves access to care, results in less medical debt, and lowers mortality rates.

A Harvard School of Public Health report released in August 2012 found that in three states (Arizona, Maine, and New York) that had expanded Medicaid, the death rates declined on average by more than 6% per year compared with a 0% reduction in neighboring states that did not expand Medicaid. Translated into raw numbers, for every 176 people who gained coverage, one death per year was avoided. 

Medicaid expansion will only be effective if reimbursement rates are increased indefinitely and the physician shortage is eliminated. While upfront costs are significant, cost savings from reduction in long-term serious illness and hospital inpatient stays could be significant.

The temporary increase in Medicaid reimbursement under Obamacare is a Band-Aid on a gaping wound.

About this blog

The Field Clinic reports and analyzes health care laws, government policies, and political trends that are transforming the care we receive and the way we pay for it. Read more about our panel of bloggers here.

This blog is produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health-policy research and communication organization not affiliated with Kaiser Permanente. Portions of this blog may also be found on Inquirer.com and in the Inquirer's Sunday Health Section.

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Robert Field, Ph.D., J.D., M.P.H. Professor, School of Law & Drexel School of Public Health
Jeffrey Brenner, MD Founder of the Camden Coalition of Healthcare Providers, Medical Director of the Urban Health Institute at Cooper University Healthcare
Andy Carter President & CEO, The Hospital & Healthsystem Assoc. of Pa.
Robert B. Doherty Senior Vice President of Governmental Affairs & Public Policy American College of Physicians
David Grande, MD, MPA Assistant Professor of Medicine at the University of Pennsylvania
Tine Hansen-Turton Chief Strategy Officer of Public Health Management Corporation
Drew A. Harris, DPM, MPH Director of Health Policy Program at the Jefferson School of Population Health
Antoinette Kraus Director of the Pennsylvania Health Access Network
Laval Miller-Wilson Executive Director of the Pennsylvania Health Law Project
David B. Nash, MD, MBA Founding Dean of the Jefferson School of Population Health
Mark V. Pauly, Ph.D. Professor of Health Care Management, Business Economics and Public Policy at The Wharton School
Howard J. Peterson, MHA Managing Partner of TRG Healthcare, a national healthcare consulting firm
Donald Schwarz, MD, MPH Deputy Mayor for Health & Opportunity and Health Commissioner for the City of Philadelphia
Paula L. Stillman, MD, MBA Healthcare consultant with special expertise in population health and disease management
Elizabeth A. W. Williams Senior Vice President & Chief Communications Officer for Independence Blue Cross
Krystyna Dereszowska A third-year law student concentrating in health at Drexel
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