Will there be enough doctors for Obamacare?

by Michael Ollove, Stateline Staff Writer

The Affordable Care Act will usher at least seven million more Americans into Medicaid next year, but the question of whether enough doctors will be there to welcome them is keeping some state health policymakers up at night.

A report published last year in Health Affairs signaled trouble ahead. According to that study by Sandra Decker, an economist at the National Center for Health Statistics, only two out of three primary care physicians surveyed in 2011 were willing to accept new Medicaid patients. Larger numbers said they would take on new Medicare patients or see new patients with private insurance. Medicare, health care for the elderly, is a purely federal program; Medicaid, which covers many poor people, is a joint state and federal enterprise.

The latest findings are particularly worrisome because they come on top of an existing national shortage of primary care doctors. A report by the Association of American Medical Colleges found that the United States needed 9,000 more primary care doctors than it had in 2010 and projected that the shortfall would grow to nearly 30,000 in 2015, when millions more Americans will have health insurance coverage thanks to President Obama’s Affordable Care Act. (The Agency for Healthcare Research and Quality estimates that in 2010 there were 209,000 primary care physicians in the U.S.)

Poor compensation in relation to other specialties helps explain the primary care shortage.  Money is also a likely explanation for why those who do practice on the front lines of primary medicine are reluctant to take on new Medicaid patients.  On average, Medicaid pays physicians 59 percent of the amount Medicare pays for primary care services. And it’s not as if doctors regard Medicare as extremely generous.

Temporary Fix

The authors of the Affordable Care Act foresaw that there would be a growing shortage of primary care doctors for Medicaid when expansion occurs January 1^st, 2014. That’s why the law includes a provision that raises the Medicaid fees paid to doctors practicing primary care medicine to the same levels Medicare pays for those services. The Medicare-Medicaid match went into effect January 1^st and will remain in effect for two years. Best of all from the states’ point of view, in most cases the federal government will bear the entire cost of that increase. (Most other Medicaid costs involve both state and federal contributions.)

As a result of the provision, Medicaid physician fees for primary care services have climbed an average of 73 percent, according to a report prepared for the Kaiser Family Foundation by the Urban Institute. It is the biggest fee increase in the history of Medicaid.

But whether the pay raise will accomplish what its champions intended is hardly a given. One drawback is its sunset provision in two years. No one knows what will happen at that point. Will states be willing to contribute to the higher pay rates after two years? Will the federal government extend the pay raise?

Maybe not, says Matt Salo, executive director of the National Association of Medicaid Directors. “[The federal government is] going into deficit reduction mode now,” he says. “They’re not going to want to do increased spending.”

So, there is the possibility that in 2015, the primary care rates might drop to the levels that prevailed in past years, and that could affect whether doctors decide to take on new Medicaid patients in the interim. Why increase the number of Medicaid patients in your practice when you suspect your compensation for their care will plunge in 2015?

“If I choose to increase the number of Medicaid patients, and two years down the road that payment drops back to two-thirds, all of a sudden I’m going to have an awful lot of trouble keeping my doors open,” says Reid Blackwelder, a Tennessee family practitioner and incoming president of the American Academy of Family Physicians. That group supported the increased fee provision and is now lobbying to make it permanent.

The way the rate increase works is that the federal government will pay the difference between the Medicaid rates for primary care services that were in effect in each state on July 1^st, 2009 and whatever the Medicare rates for those same services are now. The amount varies greatly from state to state.

In 2012, the Medicaid-to-Medicare ratio ranged from a low of 37 percent in Rhode Island to a high of 134 percent in North Dakota, according to the Kaiser report. California, Florida, Michigan, Missouri, New Hampshire, New Jersey, New York and Rhode Island, where almost four out of every ten Medicaid recipients live, all paid less than 60 percent of Medicare prices. Overall, the report says, nearly half of the states paid Medicaid doctors 75 percent or less of the Medicare rates.

Some States Must Pay

While the price hike is a big help to most states and most physicians, there is a catch for nine states plus the District of Columbia. Because of the recession, each of those jurisdictions reduced their Medicaid physician fees after the July 1^st, 2009, cut-off date. As a result, they will have to make up that difference themselves before Uncle Sam kicks in the additional money.

Arizona, for example, reduced its Medicaid rates by 11 percent after July 1, 2009 and will now have to make up that cut. Monica Coury, a spokesperson for Arizona’s Medicaid program, says that the state share for getting back to the 2009 levels will be just above $100 million over two years. Also irksome, she adds, is the fact that the Obama Administration waited a long time to put out the technical specifications, and Arizona and many other states were not ready to start paying the higher rates on January 1. Physicians in those states will be paid the higher rates retroactively.

Washington D.C. was unlucky in terms of the July 1, 2009, date. Less than three months before that day, the city, on its own initiative, had raised its Medicaid doctor pay to match its Medicare rates. Since then, however, the city has cut the Medicaid rate by 13 percent. Like Arizona, the District will now be on the hook for the difference between the July 1, 2009, primary care Medicaid rates and those rates now.

Will the Fix Work?

But more distressing for health policy makers is that when the District of Columbia first raised its Medicaid rates to match those of Medicare, there was no significant increase in the number of primary care doctors taking Medicaid patients, according to Linda Elam, head of Medicaid services in the District. That suggests the possibility that this new bump up in Medicaid rates may not have the hoped for impact.

“There will always be a set of providers that are not interested in participating in the Medicaid program whatever the incentives,” says Elam.

In contrast, Lawrence Kissner, commissioner for Health and Family Services in Kentucky, says that his state’s Medicaid pay raise in 2005 resulted in a 36 percent increase in the number of primary care doctors accepting Medicaid patients, precisely what the ACA’s authors hope will happen now.

Unfortunately, whether the new raise in rates has the same effect nationally may not be known before 2014, when states will have to decide whether to make the higher rates permanent. “It’s not that easy to monitor Medicaid participation in a short period of time,” says Stephen Zuckerman, a senior fellow at the Urban Institute and co-author of the Kaiser report.

Rebecca Jaffe, a family practitioner in a three-doctor practice in Wilmington, North Carolina, says that for now she’s not going to increase the number of Medicaid patients she accepts. She’s just grateful that the increase in Medicaid rates for the present means she’ll finally be able to replace the clinic’s ancient fax machine.

While the issue of having enough doctors to cover an expanded Medicaid population is serious, many state health policy makers say they have bigger concerns. “Certainly, as is the case in any state, there are docs that will not see Medicaid patients,” says Matt Kennicott, spokesman for the New Mexico Human Services Department. “Our issue, again as is the case in many other states, is that we do not have enough primary care doctors to handle the caseload we presently have.”

Which is why some are puzzled by one of the restrictions of the health law. The rate increase applies to physicians who provide primary and pediatric care services. Only doctors whose practices comprise at least 60 percent primary care will be eligible for the Medicaid pay raise. Not covered, however, are nurse practitioners, who often provide primary care in rural and isolated areas that do not have doctors nearby. Seventeen states allow nurse practitioners to operate independently of the supervision of physicians, but the nurse practitioners in those states will not be eligible to receive higher fees.

“We think it will limit access and does create a discriminatory aspect that shouldn’t be there,” says Jan Towers, a senior policy adviser at the American Association of Nurse Practitioners.

Asked why she thought the nurse practitioners were excluded, Towers gave a simple answer:  money.

Stateline.org is a nonpartisan, nonprofit news service of the Pew Center on the States that reports and analyzes trends in state policy.