Final rule establishes Medicaid payment parity with Medicare for primary care

A final rule released Nov. 1 by the Centers for Medicare & Medicaid Services (CMS) establishes parity in payments with Medicare levels in 2013 and 2014 for physicians serving Medicaid beneficiaries and who practice in family medicine, general internal medicine, pediatric medicine and related subspecialists. The payment increase goes into effect in January.

The final rule comes just days before voters will decide who will be the next president, and the outcome may determine the future of the Patient Protection and Affordable Care Act (ACA).

The rule raises rates to make sure doctors are paid the same for treating Medicare and Medicaid patients and does not raise costs for states, according to Health & Human Services Secretary Kathleen Sebelius.

“The healthcare law will help physicians serve millions of Americans across the country. By improving payments for primary care services, we are helping Medicaid patients get the care they need to stay healthy and treat small health problems before they become big ones,” she said in an announcement.

At a recent conference, Matt Salo, executive director of the National Association of Medicaid Directors, commented on the traditionally low reimbursements for Medicaid providers, saying, “Even when times are good we try to pay providers too little.”

In addition to payment improvements, the ACA includes numerous efforts designed to bolster primary care and strengthen the primary care workforce, including an expansion of medical residency positions for primary care physicians, new investments in physician assistant and nurse practitioner training, and an unprecedented expansion of the National Health Service Corps, which provides scholarships and loan repayments to primary care providers who practice in underserved areas.

The final rule also explains how CMS and states will work together to make the increased payments operational. CMS provides multiple options for states to allow for flexible implementation in fee-for-service and managed care settings. The rule permits states to either “lock” rates at the level of the Medicare physician fee schedule in effect at the beginning of 2013 and 2014, or modify the rates in alignment with all updates by Medicare.

The increased payments also apply to services reimbursed by Medicaid managed care plans. States must incorporate the increased payment into contracts with such entities, according to the final rule.