Managing Medicaid

Doctor pay cuts


When Obamacare passed in 2010, roughly half of the projected increase in health insurance coverage was expected to come through expanding Medicaid, a health care program for the poor and disabled jointly run by the states and the federal government. Some 16 million Americans were supposed to get coverage through the program by 2019, according to Congressional Budget Office estimates.

A 2012 Supreme Court decision had the practical effect of making the Medicaid expansion optional for individual states, muting the potential impact somewhat. But Medicaid remains a major vehicle for coverage expansion under the health care law. Between October 2013 and December 2014, the program saw its overall enrollment increase by 9.7 million, much of which is directly linked to Obamacare.

Yet new Medicaid enrollees may have trouble using their coverage. Fee formulas vary by state, but on average the program has historically had the lowest physician reimbursement rates of any health insurance scheme in the United States. Obamacare temporarily inflated rates to match Medicare payments, but the temporary bump expired at the end of 2014.

Rates in some states changed little, and Medicaid managed-care programs may set different rates. But on average, primary care reimbursements through the program dropped by 42.8 percent, according to a December study by Stephen Zuckerman, Laura Skopec, and Kristen McCormack of the Urban Institute.

Some members of Congress, as well as the administration, proposed extending the fee hike. Doctors certainly weren't pleased by the cuts. One New Jersey physician, Dr. George J. Petruncio, told The New York Times in December that the rate changes amounted to a bait and switch. "The government attempted to entice physicians into Medicaid with higher rates," he said, "then lowers reimbursement once the doctors are involved."