Medicaid Primary Care Parity

A doctor checks out a patient in an examination room.

In the absence of conclusive research about the impact of the Medicaid bump, there is disagreement about the aftermath of its expiration.


What's the issue?

Section 1202 of the Affordable Care Act (ACA) required states to raise Medicaid primary care payment rates to Medicare levels in 2013 and 2014, with the federal government paying 100 percent of the increase. This provision—often referred to as “Medicaid primary care parity” or the “Medicaid primary care fee bump”—was intended to encourage primary care physicians to participate in Medicaid, particularly in the face of an expected increase in enrollment as a result of the ACA’s expansion of the program. Federal lawmakers failed to reauthorize the fee bump during the 113th Congress, ending in December 2014. As a result, states must decide whether to revert to previous primary care payment levels or continue at a higher level but without the benefit of the enhanced federal match. As of January 1, 2015, sixteen states and the District of Columbia had decided to continue paying enhanced rates, while thirty-four states had declined.

Although the program is over, the debate about whether it worked—and should, therefore, be reinstated in some form—continues. Evaluators have been challenged by the program’s later-than-planned start and short duration, which many believe made it impossible to detect program impacts. Another challenge to measuring the program’s impact is that it was intended to improve access to care—a variable that is difficult to measure directly. Evaluators’ focus has been primarily on provider participation, which may be an incomplete proxy for access. Finally, program evaluation is hampered by the difficulty of isolating the impact of the payment increase from the impact of hundreds of other changes made in both public and private insurance and delivery systems under the ACA.

This policy brief describes the Medicaid primary care fee bump, the rationale for the program, and the details of its rollout. Next, the brief explores evidence of the program’s impact, outlines stakeholders’ views on both sides of the debate, and concludes with some thoughts about how the program could be improved or modified in the future, if it is to be continued at the national or state levels.

What's next?

At the January 2015 MACPAC meeting, the commissioners discussed the program’s impact and whether or not they would continue to track it. At the moment, it does not appear that Congress will take up the issue of increasing Medicaid primary care fees in the near future. In the meantime, as noted, sixteen states and the District of Columbia will continue the fee increase, while thirty-four states will not. Commission chairperson Diane Rowland says that this situation provides a “natural experiment”— an opportunity to determine more definitively the impact of increasing Medicaid primary care fees. Other commissioners concurred. The general tenor of the discussion was that increasing provider participation is complex, and fees are only one piece of the puzzle.

Several commissioners noted that changes in the way providers are organized may also have an important impact on Medicaid participation, specifically calling out declining rates of independent practice and the accelerated formation of accountable care organizations. Along similar lines, researchers at the Center for Health Care Strategies have noted the shortcomings of designing the program around a FFS model. With so many public and private payers adopting value-based payment models, the fee bump program was tie to an old pay-for-volume paradigm that many believe is outdated. A more forward-thinking program would allow states to use enhanced federal funding for primary care to reward practice and quality improvement.

With sixteen states and the District of Columbia continuing to pay enhanced fees, there will likely be important variations among those programs’ goals and features, providing another natural experiment around the most effective use of payment as a lever to improve access to primary care in Medicaid.