New initiative targets Medicaid's 2014 primary care rate increase

Six state Medicaid programs are currently coming up with strategies to maximize the benefits of the mandated primary care rate increase, as participants in Leveraging the Medicaid Primary Care Rate Increase, an initiative from the Hamilton, NJ-based Center for Health Care Strategies (CHCS).

The rate increase is an opportunity for states to bolster primary care, support payment reforms, and enhance beneficiary access to primary care, but it also presents significant operational challenges, according to Tricia McGinnis, senior program officer in charge of CHCS's initiative. The six participating states are Arkansas, Colorado, Minnesota, New York, Oregon, and Rhode Island.

"This initiative is designed to help participating states make the most of this opportunity," she says. "It will help them implement the increase in the most operationally efficient manner."

These steps will occur:

• CHCS will work with participants to incorporate the increase into payment reform initiatives, such as episode of care payments, value-based payments, and global payments to Accountable Care Organizations.

• Once CMS releases a Notice of Proposed Rule Making, participants will provide CMS with constructive feedback on the operational feasibility of the regulations, potential barriers to implementation, and how regulations can strengthen the positive effect of the increase on Medicaid primary care.

• CHCS will work with CMS and state participants to assess the impact of the rate increase on patient access, quality and utilization.

Avoid problems with access

"If states are unable to leverage the increase to expand primary care access, access issues could arise in 2014 as the number of Medicaid beneficiaries increase under health reform," says Ms. McGinnis. She gives these recommendations:

• States should position the Medicaid rate increase to support broader policy objectives around payment reform and primary care access expansion.

"The rate increase can be used to support improvements in the quality of care for existing as well as new beneficiaries," says Ms. McGinnis.

• To avoid confusion, states should notify physicians about the rate increase, and provide information on which provider specialty types and codes are eligible for the increase and which are not.

• States should devise strategies to measure the effect of the rate increase, and make the business case to sustain it beyond 2014.

"If states are not operationally prepared to implement the increase on Jan. 1, 2013, they are likely to see an increase in claims disputes from their primary care physicians," she says.

Expectations are higher

The federal primary care funds should be used to improve value "rather than pushing more dollars through our broken, procedure-based 'pay for volume' system," says Jed Ziegenhagen, rates and analysis director of Colorado Medicaid, noting that federal funding of primary care is limited to eight quarters.

"We hope to build a reimbursement system that demonstrates the value of increased primary care reimbursement plainly enough that it supports retaining the increased funding, even when enhanced federal funding disappears," says Mr. Ziegenhagen, adding that he expects to see better outcomes and reductions in the total cost of care.

William Golden, MD, MACP, medical director of Arkansas Medicaid and professor of Medicine and Public Health at the University of Arkansas for Medical Sciences in Little Rock, says the state is doing a "major evaluation" of how it pays for health care, with a specific emphasis on episodes of care.

"Our Medicaid program is currently solvent for at least another year or two, which is an unusual condition for a lot of Medicaid programs," says Dr. Golden. This has allowed for a statewide payment reform initiative to be implemented across all payers, including private payers like Blue Cross and Blue Shield Companies and United Healthcare.

"We want to come up with a coordinated scheme to try to bend the cost curve, not necessarily in terms of payment rates, but in terms of innovations in payments," he says.

Medical homes and using health professionals to the maximum of their professional capacities are two options, says Dr. Golden. While only 20% of physicians provide 80% of the primary care in Medicaid in many states, about 40% of physicians are providing the primary care in Arkansas.

"That is actually a pretty good ratio," says Dr. Golden, adding that primary care rates were once at parity with Medicare but have slowly deteriorated. "The increase in primary care reimbursement gives us a chance to increase the expectations for accountable care," he adds.

Results have been less than expected for some metrics, he explains, such as preventive management of chronic care conditions. "While we are offering higher rates for primary care, we would also like to increase our expectations, particularly with [electronic medical records] and other kinds of 'meaningful use' activities," he says.

Dr. Golden's expectation is that better primary care will result in fewer admissions, less duplication of testing, more judicious use of antibiotics and X-rays, and in general, less management of acute care and more long-term management of chronic diseases.

"We are also looking at better care at night and weekends. A lot of practices just have an answering machine saying, 'We're not here, we'll be back on Monday,'" he says. "We're going to be looking at greater access to after-hours care."

More support for reform

Minnesota is in the midst of several payment and care delivery reform initiatives, all designed to support the primary care infrastructure, reports Jeff Schiff, MD, MBA, medical director for Minnesota Health Care Programs. "By participating in the collaborative, we hope to develop policy to support and strengthen these initiatives," he says.

These include the Minnesota Health Care Home program, participation in the Advanced Primary Care Demonstration, and the Health Care Delivery System Demonstration, a Medicaid Accountable Care Organization model that provides alternative payment arrangements for providers, says Dr. Schiff.

"Minnesota also has an active cross-payer quality measurement system that supports and enhances these efforts," he says. "These initiatives are being implemented across both fee-for-service and managed care programs."

Most enrollees in Medicaid/Children's Health Insurance Program and MinnesotaCare, a 1115 waiver program, are in managed care, reports Dr. Schiff, and with the enactment of 2011 legislation individuals with disabilities will also be primarily enrolled in managed care.

The two major goals, says Dr. Schiff, are to build primary care provider capacity in health care home programs, and to integrate primary care, behavioral health services and services provided by community organizations.

"We hope to support the infrastructure to report out to providers on the quality and utilization of care they provide to state public program participants," adds Dr. Schiff.

Contact Dr. Golden at (501) 526-6633 or, Ms. McGinnis at (609) 528-8400 or, Dr. Schiff at (651) 431-2479 or, and Mr. Ziegenhagen at (303) 866-3200 or