Fate of health law's Medicaid expansion hinges on how much doctors get paid

The success of the healthcare reform law's massive Medicaid expansion could hinge on new regulations that are expected as early as next week.

While the 20 million people who will gain subsidized coverage on the new insurance exchanges have gotten most of the attention, President Obama's health law also expands Medicaid and the Children's Health Insurance Program to 17 million low-income families starting in 2014. Medicaid, however, is already straining to care for the more than 58 million already in the program because it doesn't pay doctors enough to participate.

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The law's expansion “could generate unsustainable pressure on Medicaid's already taxed network of primary care providers,” the nonprofit Center for Health Care Strategies warned in a report last year.

To alleviate some of the pressure ahead of the law's expansion, House Democrats included in their version of the bill a provision requiring states to pay primary care physicians no less than 100 percent of Medicare payment rates in 2013 and 2014 for primary care services. The temporary increase would be fully funded by the federal government.

Republicans say the temporary expansion is a “bait and switch” that either hides the true cost of the Medicaid expansion if Congress ends up extending the rate bump indefinitely or promises millions of people coverage that will turn out to be worthless if patients can't find a doctor.

“There will be calls to extend this after 2014,” a House Republican staffer told The Hill. “And if we extend it, shouldn't that have been calculated into the overall cost of the bill, or is that just another budget gimmick? And if we don't extend it, who's going to take care of the 20 million new Medicaid beneficiaries?”

Even a two-year provision, the Center for Health Care Strategies report concluded, could be beneficial.

“The increased reimbursement,” the report said, “could be a powerful tool for bolstering the delivery system, enhancing access, and improving the quality of primary care for current and new beneficiaries.”

The nonpartisan Congressional Budget Office has estimated that the two-year provision would cost the federal government $8.3 billion. Average Medicaid rates for primary care services were only 66 percent of Medicare rates in 2008, according to the Kaiser Family Foundation, with wide variations among states (New York and Rhode Island Medicaid rates were only 36 percent of Medicare, while Alaska paid rates that were 40 percent higher than Medicare).

The provision could end up costing more than that if the upcoming federal regulation broadens the definition of primary care, however. While congressional intent clearly focused on internists and general practitioners, said a health policy analyst who is tracking the issue, other doctors are lobbying the Department of Health and Human Services to also be covered by the regulation.

“The big fight is over who counts for primary care,” the analyst said. “And what's happening is you have ... all of these specialties saying hey, I'm primary care too, because they want the rate bump too.”

Expanding the primary care definition would cost the federal government more money, the source said, but on the flip side Obama administration regulations so far have largely kept the healthcare industries who supported the law happy.

In any case, it's not clear regulators have much leeway.

A spokeswoman for the American Congress of Obstetricians and Gynecologists told The Hill the group hasn't written to the Department of Health and Human Services because “it's pretty clear who qualifies for the bonus, but we want Congress to amend the statute to get us included.”