CMS Publishes Final Rule on Medicaid Payments for Primary Care

The Centers for Medicare and Medicaid Services (CMS) published a final rule in the Federal Register on November 6, 2012 on increases in Medicaid payment rates for primary care in calendar years 2013 and 2014 mandated under section 1202 of the Affordable Care Act (ACA). The final rule will be effective January 1, 2013. Section 1202 seeks to improve Medicaid recipients’ access to primary care practitioners before and during state Medicaid eligibility expansions in 2014. One hundred percent Medicaid federal financial participation (FFP) will be available in 2013 and 2014 on increases in Medicaid primary care payment rates up to Medicare Part B rates. The final rule applies to primary care physicians with specialty or sub-specialty designations in family medicine, general internal medicine, or pediatric medicine when such physicians deliver services under evaluation and management (E&M) codes 99201-99499 and CPT vaccination administration codes 90460, 90461, and 90471-90474. It also includes primary care delivered by medical professionals such as nurse practitioners under the personal supervision of a qualifying physician. It applies to primary care billed to Medicaid fiscal agents as well as primary care billed to Medicaid managed care organizations (MCOs). States must develop reasonable methods of calculating the portion of MCO capitation rates attributable to primary care in order to qualify for 100 percent FFP.


Medicare Part B assigns relative value units (RVUs) to physician service procedure codes and applies site of service adjustments, geographic price code indices, and a global conversion factor to compute Medicare rates. State Medicaid agencies use fixed rates, negotiated fees, and/or variations on the Medicare payment system, but usually pay much lower rates for primary care than Medicare.


One hundred percent FFP will be calculated on Medicaid rate increases by comparing a State’s actual Medicaid payments in 2013 and 2014, up to the Medicare payment limit, with the Medicaid payments that would have been made for the same services under Medicaid rates in effect under the State’s Medicaid plan as of July 1, 2009. Volume-based Medicaid supplemental payments will be counted in the calculation but performance bonuses will be exempt. Qualifying physicians must self attest to specialty or subspecialty designations and self attest that at least 60% of the codes that they have billed for Medicaid recipients in a recent prior period were for qualifying primary care services. States may include Medicare Part B site of service adjustments and county-specific geographic adjustments in their calculations or use Medicare office site rates and statewide averages of the geographic adjustments. States may administer the Medicaid payment increases on a claim-by-claim basis or on a quarterly lump sum basis. CMS estimates that the FFP on the Medicaid rate increases in 2013 will be $5.8 billion, based on current differences between Medicare and Medicaid rates. Medicare primary care rates could increase by 3 to 7 percent in 2013, if Congress once again overrides a Medicare reduction prescribed by the 1997 Balanced Budget Act.