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MACPAC Examines Primary Care Payment Issues

By Rebecca Adams, CQ HealthBeat Associate Editor

June 17, 2013 -- The problems in implementing a two-year increase in Medicaid payments for primary care providers raises questions "as to whether an extension of the policy is warranted," the Medicaid and CHIP Payment and Access Commission said in its June report.

The health care law (PL 111-148, PL 111-152) requires rates for primary care providers to equal at least the level of the Medicare reimbursement for those providers in 2013 and 2014. This requirement had been projected to raise Medicaid rates by an average of 73 percent in 2013.

The provision was supposed to take effect on Jan. 1. But by late May, only four states had actually started giving providers the higher rates.
The report outlined several challenges in implementing the increase. Commission staff interviewed officials from October 2012 through January 2013 in six states: Alabama, California, Indiana, Massachusetts, Oregon and Rhode Island.

"States must make administrative changes in order to comply with these requirements—changes that are not easy to make, particularly within the short time frame between the publication of the final rule and the effective date of the provision," said the report. "The requirement that the payment increase also apply to managed care represents an additional layer of complexity."

To implement the payment hike, state officials were supposed to file a state plan amendment with the Centers for Medicare and Medicaid Services (CMS) by March 31. By last week, federal reviewers had approved state plan amendments in nearly half the states, said the report. The deadline for the rest of the reviews is the end of this month.

At the time of the interviews, the biggest challenges reported by the officials included:

  • Identifying providers and making changes to claims processing systems. The changes needed "are not routine," the report noted, and states will bear some of the costs since the expenses are matched at a state's regular federal matching rate. Those rates vary, but average 57 percent of costs. The data systems changes include the ability to note which providers are eligible, pay higher rates to those who qualify, and track the money so that it can be reported to CMS.
  • Acting quickly despite late information from CMS. "Publication of the final rule on November 6, 2012, gave states little time to be ready for making increased payments on January 1, 2013," said the report.
  • Adjusting managed care payments. Many states use managed care plans for their Medicaid population. To meet the requirements of the law, states have to adjust their capitation methodologies, which is a complex task for several reasons, including the fact that managed care plans may use different payment codes than those used in Medicare. The changes also were expected to trigger a reopening of negotiations between states and managed care plans over contracts.

"In the months ahead, the commission will continue to monitor implementation and will be looking at efforts of state, federal, and academic evaluators to see what can be learned to inform future work," said the report.

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