Since January, Medicaid agencies and health plans have been required to reimburse primary care providers at Medicare’s generally higher rates. The Affordable Care Act’s two-year “Medicaid bump” is completely funded by the federal government. These dollars represent an $11.4 billion boost for Medicaid primary care. Yet, given that many more people will qualify for Medicaid under the Affordable Care Act starting next year, and that a shortage of primary care providers who accept Medicaid is anticipated, ensuring adequate access to primary care for low-income residents is still a key concern for states and the federal government.

States are working diligently toward implementing the increase, though there have been many challenges. Since early 2011, the Center for Health Care Strategies has been working with a “rapid-learning group” of states (Arkansas, Colorado, Massachusetts, Minnesota, New York, Oregon, and Rhode Island), through a project funded by The Commonwealth Fund, to discuss and prepare for implementation issues.

While the payment rate increase is expected to improve access to primary care services for Medicaid beneficiaries—and, potentially, their health outcomes—it is not clear whether the gains will extend beyond the increase’s two-year time frame. To ensure continued access, it should be maintained by the federal government beyond 2014.

With a permanent rate increase achieved through new legislation and modified regulations, states could work toward not only enhancing access but also improving the quality of care while lowering costs. The recommendations below highlight ways that future iterations of the increase could better support state primary care access and quality improvement objectives.

Encourage states to use value-based payment methods to implement the rate increase.
States should be allowed to apply the increase to new payment methodologies designed to improve their ability to purchase high-value care. These payment approaches include quality-based care management payments, shared-savings approaches in which the payer and the health provider both benefit from savings achieved though efficiencies, bundled payments for an episode of care, and global (per-patient) payments. Future regulations should enable states to incorporate the increase into these alternative payments, if they already exist in the state, or to use the increase to pay for a transition to these models. States also should be given the flexibility to apply these increases to Medicaid managed care plans in ways that best support quality and efficiency in those plans.

Grant greater flexibility to allow more health professionals, e.g., nurse practitioners, physician assistants, and midwives, to benefit from the rate increase.
Under the current regulations, only states that require all health professionals to be supervised by a physician will be able to pay the enhanced rate to nonphysicians working in primary care. Given the greater anticipated need for primary care services, and the shift toward nonphysician providers to deliver those services, leveraging the skills and knowledge of nurse practitioners, for example, will be essential. The regulations should allow states the flexibility to determine who can receive the increased rates, including physicians, nurse practitioners, physician assistants, or other health professionals, whether or not physician oversight is a state requirement.

Allow states the flexibility to define “primary care provider.”
The Affordable Care Act includes an expansive definition of primary care provider, which includes physician specialists whose work may not be directly related to primary care—such as pediatric nephrologists. This approach may dilute the resources that could more wisely be directed to providers at the front lines of primary care. Since the intent of the legislation is to expand and stabilize the primary care workforce, states should have the flexibility to define the set of primary care providers eligible for the rate increase. Additionally, the attestation (the process used to confirm a patient’s primary care provider) can be simplified by allowing states to use existing sources of information, such as health plan physician enrollment data.

The Medicaid primary care increase provides states and the federal government a real opportunity to improve access to primary care services for current and future Medicaid beneficiaries. When aligned with other state and health plan efforts to reform how care is delivered and paid for, this provision—particularly if it is extended—has the potential to improve the quality of care while lowering costs.