Health Policy$ense

Medicaid “Fee Bump” extension proposed in President’s budget

President Obama’s proposed budget, released today, included $6.29 billion to re-institute the “Medicaid fee bump” for primary care services through December 31, 2016. The proposal would increase pay rates to Medicare levels and expand eligibility to obstetricians, gynecologists, and non-physician practitioners, such as physician assistants and nurse practitioners.

The two-year federally financed Medicaid “fee bump” was built into the ACA with the goal of improving primary care availability for the influx of new Medicaid recipients. According to a recent New England Journal of Medicine study by LDI Executive Director Dan Polsky and co-authors at Penn and the Urban Institute – this strategy may have succeeded. The problem of course, is that the provision expired January 1, 2015.

Sixteen states and Washington, D.C. decided to continue the fee increase in 2015 using state funds (at their federal matching rate).  So, while Medicaid recipients in these states will continue to benefit from the policy’s effects, recipients in the other 34 states will not.

Together, states continuing the bump make up only 16.1% of the Medicaid recipient population and account for just 15.9% of all Medicaid spending. To put these numbers in perspective, California alone, a state not continuing the bump, contains a larger share of the Medicaid recipient population than those states combined (16.8%). Two other states not continuing the bump, New York and Florida, together account for a larger share of the spending (17.2%).

When federal policymakers did not extend the fee bump into 2015, they did so without evidence, one way or another, of the policy’s effectiveness.  Now however, they have evidence that the policy resulted in a nearly 8 percentage point increase in availability of primary care appointments for Medicaid recipients.  Its inclusion in this proposed budget (the first step in a long process) suggests that the Administration believes these benefits are worth their cost.