Evaluating the Impact of the Medicaid Primary Care Payment Bump Using Medical Claims Data

One of the provisions of the Affordable Care Act increased Medicaid payment rates to (higher) Medicare levels for select primary care services and specialties using federal funds.  This “payment bump” was designed to improve access for Medicaid enrollees; all else equal, higher rates were expected to incentivize some non-participating physicians to start seeing Medicaid patients and encourage already-participating physicians to accept new patients and provide more care. The bump was one component of a broad set of changes introduced by the ACA and was intended as a transitional policy designed to improve access through the then-nationwide expansion of Medicaid eligibility in 2014.

We used 2012-2014 IMS medical claims from a panel of primary care physicians to evaluate the impacts of the payment bump. We used regression models to estimate the relationship between the bump and impacts on a set of outcome measures related to whether physicians accept Medicaid patients (the ‘extrinsic margin’) and on a set of outcome measures describing the services that physicians provided to Medicaid patients (the ‘intrinsic margin’). Our models allow for differential impacts across physician characteristics (e.g., specialty) and across state characteristics including managed care penetration, payment bump implementation approach, and the pre-policy gap between Medicaid and Medicare rates. We also focused on differential impacts over time – and especially over the January 2014 expansion of Medicaid in some states. We estimated the average marginal effect of switching the estimated policy coefficients “on” in months affected by the payment bump across all physicians and across subgroups of physicians by characteristic and practice state. 

We found that the payment increase had generally positive but very small impacts on the proportion of physicians participating in Medicaid, and positive and larger impacts on the intrinsic margin in terms of the service volume and mix that physicians delivered to enrollees after the payment increase was implemented in their state.  We estimated that the payment bump increased the proportion of physicians seeing more than five Medicaid patients each month by a third of one percentage point, and that the bump was associated with a 5 to 6 percent increase in E&M office visits among physicians already participating in Medicaid.  Overall, the impacts of the payment increase were largest in states with relatively low Medicaid rates prior to the increase, for states implementing the increase through a fee schedule adjustment rather than through supplemental payments, and for states with relatively high Medicaid managed care penetration.  Impacts were significantly larger for states expanding Medicaid in early 2014, suggesting an interactive effect between these policies.

Implementation challenges – including delays, difficulty integrating higher payments into managed care arrangements, a short effective policy life, and the need for providers to apply to receive the payment increase – may have limited the impact of this specific policy. Future proposals to increase Medicaid payment rates to improve access can benefit from lessons learned in this policy experiment, including findings from our study on the specific implementation approaches and health care contexts that led to relatively larger impacts.