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Doctors May Shun Patients After Medicaid Compensation Cuts

By Adriel Bettelheim, CQ Roll Call

January 15, 2015 -- Starting this month many doctors who were likely to expand basic medical care offered to low-income Americans—a goal of the 2010 health care law—could see Medicaid fees drop an average of almost 43 percent.

The development could make the doctors less willing to treat patients covered by Medicaid, undermining the law and potentially creating a patchwork of payment policies across the country.

The doctors are getting paid less thanks to Congress' refusal at the end of 2014 to renew a fee bump in the health law (PL 111-148, PL 111-152) designed to level out a historic gap between what Medicaid, the federal–state program for the poor, pays doctors, and what Medicare, the federal program for the elderly and disabled, pays them.

Physician lobbies will try to persuade Congress this spring to retroactively restore the bonuses, but their best hope may be pressing states to step forward and pay the difference with their own money.

It's an ominous start to what's shaping up to be a politically dicey year for doctors. At stake is the availability and cost of care for millions of patients.

Beyond the uncertainty surrounding what's known as Medicaid pay parity, Congress will also have to decide by the end of March whether to spare physicians from steep Medicare cuts dictated by a 1997 budget law (PL 105-33). Lawmakers will later consider whether to renew funding in the health law for community health centers, as well as loan repayment and training for health professionals.

The pay parity issue affects primary care doctors, the health professionals who conduct physicals, interpret basic tests, counsel patients on lifestyle changes and often serve as a first contact in the health system. The thinking is that without such early intervention, some people would wait until they are sick to seek care, and obtain treatment in costly settings, such as hospital emergency rooms.

Doctors aren't crazy about Medicaid because it has compensated physicians at comparatively low levels since its inception in the 1960s. The program on average paid 66 percent of what Medicare spent in fees in 2012, before the payment bump took effect, according to the Kaiser Commission on Medicaid and the Uninsured.

But the program is central to the health law's insurance coverage expansion. The law allows states, which determine who is eligible, to expand Medicaid to people in families with income up to 138 percent of the federal poverty level.

Many states quickly spotted the contradiction of expanding the Medicaid program and simultaneously discouraging doctors from taking patients by cutting fees.

Fifteen states last year said they'd use their own funds if Congress didn't act.

But the 15 states, which include Connecticut, Maryland, Michigan, Nevada, and South Carolina, account for just 15.6 percent of Medicaid enrollees, according to the Urban Institute. The seven biggest states have opted not to commit, even though four of them—California, Illinois, New York and Ohio—could see an influx of new Medicaid-eligible patients under the health law's coverage expansion. A dozen states remain undecided.

The Urban Institute last year predicted the expiration of the fee bump would reduce Medicaid providers' fees for primary care by an average 42.8 percent.

The American College of Physicians predicts some doctors will limit the number of lower-income patients they see if the cost of care exceeds Medicaid payments because they're not required to participate in the program. Though dire warnings are frequently aired in debates over doctor pay, undecided states are checking whether rates affect doctor participation.

In Congress, Democratic Sens. Patty Murray of Washington and Sherrod Brown of Ohio and Rep. Kathy Castor, D-Fla., want to revive an effort they led in the 113th Congress to extend the Medicare payment threshold to Medicaid.

They're expected to face obstacles. Their best bet may be grafting their proposal on so-called "doc fix" legislation Congress is likely to craft in March to avert the Medicare physician payment cut.

If they don't succeed, some undecided states may opt in to fill the gap, wagering the long-term savings from preventive care justifies the upfront cost. That would leave a patchwork of state policies on primary care pay and an uncertain landscape during a critical year of health law implementation.

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