Most Medicaid programs adopt modest 2008 pay boosts for doctors

Washington -- Thirty-three states plan to increase their Medicaid payment rates for doctors in 2008. Many also are poised to expand eligibility and to use the program to cover more of the uninsured.

Next year will mark the third consecutive year during which at least two dozen states raised Medicaid physician reimbursements, according to an annual 50-state survey of Medicaid directors. It was released in October by the Kaiser Family Foundation and Health Management Associates, a health research and consulting firm.

"Really, for the last two years, we've been in a period where states have been catching up [with physician pay]," said Vernon Smith, PhD, one of the survey's authors and a principal with Health Management Associates.

Not all states provided details of their fiscal 2008 physician rate increases to the report's authors. But of the 17 states that did, four increased physician rates by less than 2%, seven ranged between 2% and 4%, and six were above 4%, said Eileen Ellis, a principal with Health Management Associates. Details were not available on whether the increases were across the board or narrowly focused on specific specialties or services.

No states plan to adopt physician pay cuts in fiscal 2008, which continues a trend that began this year. Twenty-one states imposed cuts as recently as 2004.

"States clearly recognize the relationship between provider payment rates and the availability and access to services," Dr. Smith said. "I think that's the primary motivation behind some of the increases we've seen."

Doctors aren't alone in seeing payment boosts. Forty-six states increased their nursing home rates for fiscal year 2008, the report said.

Many states still have room to improve physician reimbursement.

"Medicaid payments are far lower than the cost of providing care in many states," said American Medical Association Board of Trustees Chair Edward L. Langston, MD.

Connecticut stood out in the group of states boosting Medicaid reimbursement rates. The state's General Assembly raised Medicaid pay from about 45% of Medicare to 80% of Medicare -- the largest increase in 20 years, said David Parrella, director of medical care administration for the Connecticut Dept. of Social Services.

The Connecticut State Medical Society supported the measure. "Lawmakers showed us this session that they really wanted to understand the issues affecting doctors, and this is an example of how sitting down and making an effort to understand problems leads to solutions," said CSMS President Angelo S. Carrabba, MD.

Eligibility up, but enrollment down

The survey also found that 31 states have adopted policies to expand Medicaid eligibility for 2008, up from 26 this year. For example, Connecticut expanded general income criteria from 150% of the federal poverty level to 185%, and increased eligibility for pregnant women from 180% of poverty to 250%.

Thirteen states plan to improve benefits next year, down slightly from 16 in 2007, the survey found.

"The message here was clear and unmistakable: Last year, 2007, and this year, 2008, were times to improve coverage and quality in Medicaid," Dr. Smith said.

These policy changes didn't immediately translate into higher enrollment or much higher spending, however. Enrollment decreased by 0.5% in 2007 -- the first drop since 1998 -- due to a better economy and new documentation rules for applicants, Dr. Smith said.

Medicaid spending increased by just 2.9% after last year's record-low 1.3% increase. Expenditure growth remained relatively slight because of the enrollment dip and the takeover of prescription drug services for low-income seniors by Medicare Part D.

The survey found that Medicaid is a factor in state health reforms. Of the 42 states that are planning some sort of health coverage expansion, 38 said they would use Medicaid to support their efforts.

California Gov. Arnold Schwarzenegger, for example, proposed a $14 billion universal care plan that anticipates $4.9 billion in federal funding partly from a Medicaid expansion.

Document rule affecting citizens?

When the survey's authors asked state Medicaid officials why their enrollment was low or flat, some said an improving economy was a factor. But they also mentioned the Medicaid citizenship and identity document requirements implemented in July 2006 as part of the Deficit Reduction Act of 2005, Dr. Smith said.

Before the document rule, 47 states allowed applicants to self-declare their citizenship status. Now Medicaid applicants must submit specific documents, such as a birth certificate or passport, to prove their identity and citizenship.

Forty-five states said the rule led to increased administrative costs, and 37 states said it led to lower enrollment in 2007, the report said.

The Kansas Medicaid program, for example, lost about 20,000 of its 300,000 enrollees in the six months after the rule's implementation, said Andy Allison, PhD, the program's director. Most of these people were eligible citizens, he said.

Additional administrative costs led the state's Medicaid agency to ask the Kansas Legislature for $1 million in additional funding to help process applicants -- a 1.7% increase in the program's $60 million fiscal year 2007 budget.

Dennis Smith, director of the Center for Medicaid and State Operations within the Centers for Medicare & Medicaid Services, said he couldn't draw a direct correlation between lower Medicaid enrollment in the states and the documentation rule.

The data "do not suggest an impact on enrollment," he said. "If a state is experiencing a problem, we want to assist that state to understand all of the tools available to ensure that all eligible citizens are enrolled."

Dr. Allison doubts there has been a mistake in Kansas. Medicaid officials have been able to track enrollment patterns closely because 85% of beneficiaries sign up at a central processing center in Topeka. The enrollment drop corresponded with the rule's implementation, he said.

Martha Roherty, director of the National Assn. of State Medicaid Directors, said the documentation rules are affecting enrollment.

"NASMD members indicate that many qualified eligible citizens are finding it difficult to comply with the new requirements due to their complexity," she said.

The AMA's Dr. Langston said the Association is concerned that the rule could be keeping Medicaid-eligible people from receiving health care.