The Effects of the Medicaid Primary Care Rate Increase on Prenatal Care Utilization, Maternal Smoking, and Birth Outcomes

This paper examines the impacts of the Medicaid Primary Care Rate Increase (“fee bump”), enacted through the Affordable Care Act (ACA) in years 2013 and 2014, on prenatal care utilization, maternal smoking, and birth outcomes. The fee bump increased payments for ACA defined primary care services to the same level as Medicare payments for each state, regardless of the state’s initial Medicaid payment rates in 2012, creating variation in Medicaid-to-Medicare relative payment increase across states. The median Medicaid-to-Medicare fee ratio in 2012 across states was 0.7. We estimate difference-in-differences and event study models using birth record data from the National Center for Health Statistics for years 2010 through 2014. We find that an above-median fee bump increased prenatal care utilization among Medicaid beneficiaries by close to one fifth of an extra visit and improved select birth outcomes; for example, premature birth declined by 7.3%. The fee bump also decreased smoking prior to and during pregnancy among Medicaid insured mothers, suggesting that improved health behaviors are an important mechanism explaining the relationship between the primary care fee bump and improved birth outcomes.