by Brad Flansbaum

Posted on The Hospitalist Leader on 01/01/2013

On average, as of 2012, Medicaid pays 58% of primary care Medicare fees.  Variability exists amongst the states:

Starting now, Medicaid to Medicare parity regulation–stemming from the ACA–kicks in and inpatient E&M codes qualify (99231-33 et al.).  Limitations exist, and not all practitioners meet eligibility, but as generalists in a primary care niche, hospitalists get the nod.  We now get Medicare rates.

Assuming 15% of your revenue accrues from Medicaid, more for urban, rural and safety-net institutions and less if you practice in a suburban, community hospital setting, expect a bump of 5-10% total revenue the next two years.  The average encounter hike U.S. wide will be 73%.

state by state breakdown of rate increases below:

Our SHM Public Policy Committee assembled a FAQ on the subject.  The short length and crisp presentation will aid in your understanding of the update.

Some notes and thoughts:

  • The feds compensate the difference between 2009 state Medicaid and 2012 Medicare rates.
  • I make the assumption congress stifles the SGR ogre  for another year (promises kept), and Medicare rates remain the same after the sequester-cum-budgetary fix.   Regardless, parity still applies, albeit it under a potentially lower baseline if any adjustments occur.
  • Inpatient practitioners cannot select their patients.  The ER calls, we admit. However, ambulatory subspecialists we may refer to still will not accept Medicaid patients at discharge.  The increases apply to primary care physicians only.  The quagmire of outpatient dermatology, oncology, surgical subspecialty, etc., continues.
  • Midlevel providers (NP/PA) qualify if they operate under MD/DO supervision.
  • The increase remains active in 2013-14 exclusively.  However, depending on the response–particularly in the outpatient domain, expect a policy relook come next year. In a revenue neutral environment, continuation of pay increases cannot persist unless the government shifts the burden (pay cuts) to other specialties or targets other programs.
  • I am uncertain how capitated and managed Medicaid state programs will calculate rates. Non-FFS payment engenders fuzzy math and opaqueness.  You can glean the challenge:

“CMS review and approval, must be based on “rational and documented data and assumptions,” and can consider data availability, administrative burden, and costs, but should “produce a reliable and accurate result to the fullest extent possible.”  CMS will provide a framework for states to use in developing the methodologies, and CMS will use the approved methodologies in the review and approval of MCO contracts and rates.”

(eessh.  Good luck with that)

  • Caucus with your billing folks and administrators!  Make them aware of the need to adjudicate 2013 fees and share the links above.

Finally, an opportunity to speak at length on pay parity (and other subjects) will present at SHM’s 2013 annual meeting.  Legislative day in DC means Capitol Hill.  Join us!!!

UPDATE: More here.

Patricia Salber MD, MBA (@docweighsin)
Patricia Salber, MD, MBA is the Founder and Editor-in-Chief of The Doctor Weighs In. She is also the CEO of Health Tech Hatch, the sister site of TDWI that helps innovators tell their stories to the world. She is also a physician executive who has worked in all aspects of healthcare including practicing emergency physician, health plan executive, consultant to employers, CMS, and other organizations. She is a Board Certified Internist and Emergency Physician who loves to write about just about anything that has to do with healthcare.


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