Medicaid payment inching up

"We're so far behind that now people estimate that Medicaid pays about 60% of the cost of doing business."



Medicaid payment inching up

Physician payment rates are going up in at least 24 states, but there's a lot of lost ground to make up.

Washington -- Next year -- for the second straight year -- at least two dozen states will increase their Medicaid reimbursement rates to doctors, a departure from years of stagnant pay.
These states will provide an average rate increase of 2% to 3% overall, according to Vernon Smith, PhD, one of the authors of an annual 50-state Medicaid survey released in October by the Health Management Associates and the Kaiser Commission on Medicaid and the Uninsured.
At least 24 states are increasing rates in the upcoming fiscal year, with three undecided. In 2004, only nine states increased Medicaid payment rates, Dr. Smith said. Of those nine states, three are increasing rates for 2006 and 2007, two increased rates for 2006 only, and two are increasing rates for 2007 only.
The states upping their rates are generally applying them across the board to all physicians and others, unlike previous years when most targeted the increases, Dr. Smith added. No states were planning Medicaid cuts when the survey was conducted in the summer -- also a first since the initial survey report in 2002.
Still, in many jurisdictions, even a large across-the-board jump isn't enough to compensate for years of level or reduced payment rates.
For example, although Michigan physicians will see a 2% specialty-wide increase and 68% boosts for certain types of preventive care, the raise follows about a decade of Medicaid rates outpaced by inflation and other rising costs, said Paul O. Farr, MD, president of the Michigan State Medical Society. "We're so far behind that now people estimate that Medicaid pays about 60% of the cost of doing business."

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