Medicaid Payments and Access to Care

By Sara Rosenbaum, J.D.
The New England Journal of Medicine, December 18, 2014

With more than 66 million beneficiaries, Medicaid is the United States’ largest insurer, and its impact on health insurance coverage, access to care, and the health of the poor has been substantial. But historically, Medicaid has faced a major challenge — a relatively low rate of physician participation. In its March 2011 report to Congress, the Medicaid and CHIP (Children’s Health Insurance Program) Payment and Access Commission (MACPAC, Congress’s Medicaid advisory panel) pointed out that the Medicaid population disproportionately resides in medically underserved communities with serious shortages of primary care providers and that the problem of isolation is confounded by low physician-participation rates.

Extensive research suggests that many factors contribute to low physician participation: complex program requirements, payment delays, and concerns about managing the care of patients with high levels of health and social risk. But research also shows that low fees play a key role and that substantial payment increases may be needed to alter physicians’ behavior. In a study conducted for the Kaiser Family Foundation, the Urban Institute estimated that in 2012, Medicaid physician fees averaged about 66% of Medicare payments and that the Medicaid–Medicare pay disparity was widening.

For good reason, primary care tends to be the first area of focus in any discussion of access in Medicaid. With a pronounced and growing shortage of primary care professionals — a shortage that’s estimated to reach 30,000 by 2015 — depressed Medicaid participation among available physicians is a major cause for concern. In the case of primary care, mitigation strategies exist. Safety-net providers such as community health centers play a vital role in reducing the access gap in the communities they serve.

Specialty care arguably presents the more serious Medicaid access problem, especially since there is no obvious mitigation strategy for it comparable to that offered by community health centers. The Commonwealth Fund reports that low payment rates are the principal cause of reduced specialist participation.

Among the hot-button issues that define the tense federal–state Medicaid relationship, no issue has historically been hotter than access to care, because of fierce state resistance to federal oversight of provider payment. This tension has led Congress to gradually strip most provider-payment provisions out of the Medicaid statute. But one basic legal principle remains: the so-called equal-access provision, which specifies that as a condition of federal funding, states’ Medicaid provider payments must be “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

The Department of Health and Human Services (HHS), however, has never implemented this provision through regulations.

Under the Affordable Care Act, Congress funded a 2-year pay increase for Medicaid primary care services in order to boost primary care payment rates to Medicare levels. In its Kaiser study, the Urban Institute estimated that the pay bump would increase fees by 73%. But the increase, which took effect in 2013, expires at the end of 2014, with no renewal in sight. News reports suggest that nearly all states plan to roll back primary care payments to 2012 levels, despite anecdotal evidence reported by some states of increases in provider participation.

Faced with payment rates that in some cases may be dangerously low, beneficiaries and providers have turned to litigation. A fundamental question, however, is whether providers and beneficiaries can go to court when provider payments may be too low to ensure appropriate access to care. In 2012, in Douglas v. Independent Living Center of Southern California, which involved a challenge to deep rate cuts enacted by California’s legislature, the Supreme Court deflected this question. Now, however, the issue is back; this term, the Court will hear Armstrong v. Exceptional Child Center, Inc., which again raises the question of whether beneficiaries and providers can protest low Medicaid payments in court. Douglas involved a rate cut; Armstrong, in contrast, involves a state’s refusal to pay properly. The situation here is one of a state’s failure to pay a provider an HHS-approved rate, with no HHS effort to enforce its own requirements.

Observers do not expect another deflection; in his Douglas dissent, Chief Justice John Roberts made clear his objection to court involvement in Medicaid-access cases, arguing that HHS — not the courts — should be the sole enforcement authority.

The Armstrong situation may be more serious than that in Douglas. Douglas involved an ongoing and active federal review, however slow it may have been. In Armstrong, the federal government has chosen to play no affirmative role whatsoever.

There is a deeper issue here, of course: getting the federal government to do what it is supposed to do. That means issuing the long-delayed access regulations, providing technical assistance to states, and maintaining active and ongoing oversight of state program management. Medicaid beneficiaries deserve no less.

http://www.nejm.org/doi/full/10.1056/NEJMp1412488

Medicaid has traditionally underpaid physicians for their health care services. That has resulted in low participation rates, especially by specialists, which, in turn, threatens health care access for Medicaid patients. The Medicaid statute requires that states’ Medicaid provider payments must be “sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” Failure of our government to enforce this equal-access provision will now be heard by the Supreme Court.

The Affordable Care Act (ACA) greatly expanded eligibility for Medicaid, though the increase was not quite as large as anticipated because of the Supreme Court’s previous ruling allowing states to opt out of the expansion. Nevertheless, in an effort to ensure that enough physicians would participate at a level to assure adequate access for the new Medicaid enrollees, Congress included a temporary provision in ACA that would increase primary care payments to Medicare levels. Next week, that increase ends, and most states will revert to pre-ACA payment levels.

Most states are shifting their Medicaid patients into managed care organizations for the purpose of reducing their spending for this program. With the low payment rates, it is difficult to see how these organizations can afford to finance their patients’ care except by significantly reducing the frequency and intensity of services delivered. This is not a population that has been receiving an excess of health care services. Quite the contrary, they were already doing without services that they should have. These further reductions likely will be able to be measured by an increase in suffering and death.

Although Chief Justice Roberts has already indicated that he does not believe this is a matter for the courts, even if there is a ruling that the equal-access provision must be enforced, it is likely that only nominal adjustments will be made and that Medicaid will continue to be critically underfunded.

Instead of tweaking Medicaid, we need to enact an improved Medicare for all that would include implicitly an equal-access provision that applies to everyone.