New York budget increases Medicaid fees for physicians

Physicians who treat Medicaid patients in New York state are getting a second significant increase in Medicaid fees later this year thanks to a state budget that invests tens of millions of dollars toward primary and preventive care.

Physician fee-for-service Medicaid pay will reach about 70% of Medicare rates effective Dec. 1. Rates were about 40% of Medicare before the Legislature appropriated $188 million over the last two years to boost physician and nurse practitioner pay, said Liz Dears, senior vice president of governmental affairs at the Medical Society of the State of New York. That first pay raise took effect Jan. 1. Physicians seeing Medicaid patients in federally designated health professional areas also became eligible for an additional 10% fee increase.

The changes are designed to emphasize primary and preventive care over inpatient care and are part of a $132 billion fiscal 2010 budget adopted April 3. The budget, which covers spending beginning April 1, authorizes Medicaid fee-for-service incentives and managed care payments for physicians, hospitals and community clinics that meet medical home standards to be defined this year. It also offers Medicaid care coordination fees to doctors who manage patient care in parts of the state without Medicaid managed care programs.

"These initiatives are critical to ensure that every New Yorker has access to a primary care physician and a patient-centered medical home ... particularly in low-income, underserved and rural areas of the state," said Vito Grasso, executive vice president of the New York State Academy of Family Physicians.

Other health care entities didn't fare as well in the 2010 budget. It includes $2.3 billion in health care-related cuts and new revenues, including tax increases on health plans, reduced Medicaid fees for nursing homes and reduced inpatient fees for hospitals, among other actions.

"Health care providers supported the investments in primary care ... and we understood the economic situation would require some cuts," said Daniel Sisto, president of the Healthcare Assn. of New York State. "However, this budget goes far beyond what was necessary or appropriate, threatening the safety and well-being of millions of New Yorkers who rely on the health care delivery system."

Hospitals will see their inpatient Medicaid fees cut by $225 million, according to the New York State Dept. of Health. Most of this money will be reallocated to hospital clinics, community clinics and doctors. But the budget also provides nearly $270 million for teaching hospitals to care for uninsured patients.

Health plans fared even worse in the budget. It increased taxes on health insurers by $738 million to help fund graduate medical education and other programs, Dears said.

Neither health plans nor their customers can afford these taxes, said Deborah Fasser, spokeswoman for the New York State Conference of Blue Cross and Blue Shield Plans. "Businesses will have to choose between raising an employee's contributions to the company's health plan or eliminating health insurance as a benefit. ... The result will be fewer New Yorkers with health insurance."

Many in managed care

Although the Medicaid fee increases are unprecedented, they won't directly impact many physicians around the state because many Medicaid enrollees are in managed care plans.

Medicaid and Family Health Plus -- a state program that offers health coverage to lower-income families not eligible for Medicaid -- have a combined 4.1 million enrollees. Of those, 2.7 million are in managed care, said New York State Dept. of Health spokeswoman Diane Mathis.

The vast majority of Medicaid patients in New York City are likely enrolled in managed care plans, said Mark Krotowski, MD, president-elect of the New York State Academy of Family Physicians. About 20% of the patients at his solo practice in Brooklyn are in Medicaid managed care.

Drew Merritt, MD, a family physician in semi-rural Marcellus, N.Y., said the first Medicaid fee increase for office visits effective Jan. 1 -- up about $6 to $36 -- isn't really going to impact his practice. He would continue seeing the 5% of his patients who are on Medicaid even if the pay stayed the same.

Despite the mitigating factors, the fee increases are significant because they're the largest in decades, Dears said. "It's not 100% of Medicare, but we're headed in the right direction."