Pay More for Medicaid and NJ’s Primary-Care Doctors Add Patients, Study Says

Andrew Kitchenman | January 22, 2015 | Health Care
Garden State shows one of highest increases in physician availability when reimbursement rates are raised, new report reveals

Medicaid Reimbursements
Paying primary-care doctors the same rate as they are paid for Medicare enlarged the pool of physicians willing to treat Medicaid patients — particularly in New Jersey — according to a newly released study.

But the ACA program that raised Medicaid rates on a trial basis for two years is unlikely to be renewed by the Republican Congress. So if New Jersey is to continue paying doctors more for Medicaid, the money would most likely have to be paid through state funds.

New Jersey had one of the largest increases in the percentage of medical practices that were available for Medicaid residents of the 10 states studied by researchers with the University of Pennsylvania, according to an article published in the New England Journal of Medicine yesterday.

The study provides fuel for future policy discussions on whether the state or federal government should increase fees for treating Medicaid patients.

Funded by the Robert Wood Johnson Foundation, the study examined a two-year federal program under the Affordable Care Act to increase the fees that doctors are reimbursed for Medicaid — the largest healthcare program for low-income people — to the same level as Medicare, the primary healthcare program for seniors.

Each state splits Medicaid funding with the federal government and sets its own reimbursement levels. New Jersey primary-care providers are paid only half as much for Medicaid as for Medicare, the sixth-lowest ratio in the country (behind Rhode Island, New York, California, Michigan, and Florida), according to the Kaiser Family Foundation.

However, under the ACA, the federal government paid the entire amount to equalize Medicare and Medicaid payments to primary-care physicians for 2013 and 2014. This year, states have responded in different ways to the end of the higher reimbursements. While at least 15 states decided to continue to at least partially fund higher fees, New Jersey was not among them.

In the study, callers posing as new patients sought appointments at doctor’s offices that accept Medicaid patients in late 2012 and early 2013, and again in mid-2014. In New Jersey, 70.6 percent of callers were able to set appointments in the earlier period (before doctors received higher fees), compared with 81.5 percent in the later period. Overall in the 10 states studied, access improved from 58.7 percent to 66.4 percent.

Study lead author Daniel Polsky said officials in New Jersey may want to reconsider whether to fund increased Medicaid reimbursements, in light of the study results.

“States were trying to make decisions with no hard evidence as to whether the policy worked or not,” said Polsky, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania. “Before we didn’t have that evidence and now we do, and I think that should be factored into the decision-making.”

Polsky cautioned that he isn’t in a position to say that New Jersey should spend more on higher fees, since he doesn’t know all of the other competing budgetary demands in the state. But he also noted that the entire fee-increase program was less expensive nationally than originally forecast, costing $7.1 billion compared with a projected $11.9 billion.

Polsky added that the availability of doctors in New Jersey was high at the same time that the state added hundreds of thousands of newly enrolled Medicaid patients. This may indicate that the Medicaid eligibility expansion isn’t causing problems with access, he said. Some critics of the ACA had predicted — including governors in states that haven’t expanded Medicaid — access problems.

Some doctors and policy experts had questioned whether the fee increase would succeed in its intended goal of increased access to primary care, but the study appears to show strong evidence that it was successful.

Rutgers Center for State Health Policy Director Joel Cantor said two factors had increased pessimism about the fee increase: 1) doctors didn’t actually receive higher payments until well after the launch of the program and 2) doctors knew that the payments would be phased out after two years. He described the study results as a “surprise.”

“It sure looks like behavior changed,” Cantor said.

Cantor said there was some information in the study that may actually undercut the case for raising Medicaid fees in New Jersey: the relatively high access to doctors in the state before the fees were raised. The 70.6 percent of New Jersey callers who were able to schedule appoints before the fee increase was the third highest of the 10 states in the study.

“New Jersey has to weigh whether this is the highest priority in spending money, since we were doing well before,” he said.

Cantor said this study may be more telling than an earlier survey that found that New Jersey ranks last in the country in the percentage of doctors who accept Medicaid patients. It’s more important to know whether Medicaid patients who call doctors who accept Medicaid can actually schedule appointments, Cantor said. And by that measure, New Jersey is doing well.

Cantor added that study doesn’t address whether there is a primary-care shortage in New Jersey, since shortages are experienced most strongly at a local or regional level, rather than at a statewide level.

Sen. Joseph F. Vitale (D-Middlesex), chairman of the Senate Health, Human Services and Senior Citizens Committee, said he was pleased with the study results.

“With lower reimbursement rates, we’ll find ourselves where we were before — with a two-tier system with access to care,” Vitale said. He added that as long as there are unequal reimbursements, there would be unequal access to care and the state should look to increase fees “as we can afford to.”

Vitale also noted that those who predicted that the fees wouldn’t have an impact were proven wrong.

“Those providers that did accept the higher rate and participated at a greater level should be acknowledged for that,” Vitale said.

Katherine Hempstead, director of the Plainsboro-based Robert Wood Johnson Foundation’s work on health insurance coverage, said the foundation was pleased to fund a study that simulated the experience of patients.

“This is really where the rubber meets the road,” she said. “It provides information that’s really not available elsewhere.”

While she said it was “common sense” that doctors would respond to higher fees by increasing the number of Medicaid patients they took, “it’s still surprising and refreshing to see those common-sense ideas confirmed by the evidence.”

Disclosure: The Robert Wood Johnson Foundation provides funding for NJ Spotlight’s health coverage.