States Cut Medicaid Pay to Physicians: Where Your State Stands

November 9, 2011

So far, 22 states have enacted Medicaid physician pay cuts since the start of fiscal year 2011.

Nearly every state is implementing cost-cutting measures to balance out a decline in federal funding to Medicaid programs. Naturally, physicians pay rates for Medicaid services are on the chopping block.

In fact, since July 1, 2010 (the start of fiscal year 2011), 22 states have already slashed those rates.

That’s according to a report released by the Kaiser Commission on Medicaid and the Uninsured, an organization which analyzes healthcare coverage for low-income Americans, and Health Management Associates, an operator of acute-care hospitals located throughout rural America.

According to the report, which surveyed Medicaid officials in all 50 states and Washington, D.C., “States must balance the goal of controlling costs through provider rate cuts with the need to comply with the federal requirement to ensure that provider rates are sufficient to maintain adequate provider participation and access to services for enrollees.”

But that’s a hard line for states to straddle. According to a recent USA Today editorial, Medicaid is typically the largest or second largest item in most state budgets and costs rose during the recession as more people lost their jobs - and subsequently their income - and qualified for coverage.

That, combined with the fact that the pool of federal stimulus money to fund state Medicaid programs is drying up, is challenging the states.

Though the majority of states are pursuing long-term efforts to reduce Medicaid spending - such as increasing Medicaid managed care programs, moving long-term care to community-based care models, and streamlining enrollment procedures - this isn’t enough to result in immediate spending reductions, according to the report.

As a result, states are implementing additional cost-cutting initiatives, such as restricting Medicaid benefits, implementing new and higher copayments for beneficiaries, and/or enacting provider rate restrictions.

Unfortunately for physicians, the latter is the most commonly reported strategy. So where does your state stand when it comes to provider rate cuts?

If you’re practicing in Alaska, you’re in luck. According to the report, it is the only state to increase Medicaid pay rates for both primary-care physicians and specialists in fiscal year 2012 (which began July 1, 2011).

The outlook is less attractive if you’re practicing in states such as Arizona, California, Colorado, Maryland, or South Carolina. These states were among those who cut Medicaid pay to both primary-care physicians and specialists in both fiscal years 2011 and 2012.

Here are more of the findings:

Primary-Care Physicians
• In fiscal year 2011, five states increased Medicaid primary-care physician pay: Kansas, Mississippi, Nebraska, North Dakota, and Washington.
• In fiscal year 2011, 10 states (and the District of Columbia) cut Medicaid pay to primary-care physicians: Missouri, New York, Texas, Virginia, Wisconsin, Arizona, California, Colorado, Maryland, and South Carolina.
• In fiscal year 2012, 10 states cut Medicaid pay to primary-care physicians: Georgia, Ohio, South Dakota, Washington, Arizona, California, Colorado, Maryland, and South Carolina.
• Five states cut Medicaid pay to primary-care physicians in both fiscal years 2011 and 2012: Arizona, California, Colorado, Maryland, and South Carolina.

Specialists:
• In fiscal year 2011, 13 states (and the District of Columbia) cut pay to specialists: Minnesota, North Dakota, New York, Texas, Virginia, Wisconsin, Arizona, California, Colorado, Connecticut, Maryland, South Carolina, and Washington.
• Five states increased pay in fiscal year 2011: Kansas, Louisiana, Mississippi, Nebraska, and North Dakota.
• In fiscal year 2012, 14 states cut pay to specialists: Georgia, Nebraska, North Carolina, Ohio, Oregon, South Dakota, Tennessee, Arizona, California, Colorado, Connecticut, Maryland, South Carolina, and Washington.
• Seven states cut pay in both fiscal years 2011 and 2012: Arizona, California, Colorado, Connecticut, Maryland, South Carolina, and Washington.

Source: American Medical News with data provided by Health Management Associates