Health Practitioner Bonuses and Their Impact on the Availability and Utilization of Primary Care Services. C. Impact of the Increase in Medicaid Reimbursement Rate Relative to the Medicare Rate


The availability of primary care is particularly important for public payer programs, such as Medicaid and Medicare. Historically, Medicaid has been the lowest payer for primary care services relative to Medicare, paying just 66 percent of Medicare rates on average.26 Cunningham et al. (2009) report that fewer physicians accept new Medicaid patients in response to the low Medicaid reimbursement rates in several states. Zuckerman et al. (2009) describe that in 2008 average primary care physician fees under Medicaid ranged from 57 percent of the national average in Rhode Island to 226 percent of national average in Alaska. They also find that after a strong Medicaid fee growth during 1998-2003, Medicaid fees fell relative to inflation during 2003-2008. Despite the slowdown in overall fee growth, Medicaid fees for primary care services kept pace with inflation. ACA increases Medicaid reimbursement rates for certain services provided by primary care physicians to 100 percent of Medicare rates in 2013 and 2014. Given the variability of Medicaid payments across states, this could be a substantial boost in payments for physicians in some states and less so in others.

The findings in this section focus on the comprehensive effect of a relative rate increase, both on services provided and patient’s utilization of those services. While evidence is mixed, the literature indicates significant effects of increased Medicare reimbursement on both the provision and utilization of primary care services. Reported elasticities range between 0.41 in national estimates to -0.06 in some state level analyses. This broad range suggests varying evidence and a need for greater examination given the importance of this question.

26 Small, D.M. and T. McGinnis, (2012): “Leveraging the Medicaid Primary Care Rate Increase: The Role of Performance Measurement”: Center for Health Care Strategies, Inc.

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