Condor Capital Management’s Take on Changes Coming to Medicaid Reimbursement Rates in 2015
MARTINSVILLE, N.J., Apr. 20, 2015 (GLOBE NEWSWIRE) — After being enacted into law in 2010, the Patient Protection and Affordable Care Act has profoundly affected the U.S. healthcare system. Doctors, businesses, patients, and insurance carriers alike have had to adjust and adapt to the challenging and ever-changing landscape of the regulatory overhaul commonly referred to as “Obamacare.” For medical practitioners in particular, one of the more important topics relates to the Act’s impact on Medicaid according to Ken Schapiro of Condor Capital Management.
Prior to 2013, Medicaid reimbursement rates were conventionally low for primary care physicians and therefore, the economics of treating Medicaid covered patients proved to be extremely unbalanced. As a result, many lower level income patients struggled to find participating medical offices that were convenient and would treat them under the program.
However, within the past two years, there have been a number of provisions implemented in the Affordable Care Act in order to increase the number of primary care physicians participating in the nation’s Medicaid program. One provision in particular, called the “Medicaid fee/pay bump,” allocated $5.6 billion in federal funds to new and existing physicians providing health services to Medicaid enrollees. Although this incentive of increased reimbursement to qualified providers around the country came with a caveat, it was only temporary.
From January 1, 2013 to December 31, 2014, state Medicaid agencies, with the help of the federal government, were required by law to reimburse primary care providers at rates comparable with that of Medicare. The Urban Institute reported that practitioners around the country saw rate increases of 73% on average. These pay bumps were meant to increase overall support for both Medicaid and the Affordable Care Act, as well as to increase overall healthcare accessibility for Medicaid patients.
Under this provision, the federal government covered 100% of the reimbursement increases, which was relative to the amount states were paying physicians at the end of 2009. However, at the beginning of 2015, states became fully responsible for extending the rate increases, without federal assistance. As expected, most states (including New Jersey) have shown little to no interest in expanding the rate increases beyond 2014 based on Schapiro’s findings.
So what exactly does this mean for primary care physicians? According to the Urban Institute, of the states that have no intentions of extending rate increases, physicians who have received enhanced payments can expect to see Medicaid reimbursement fall by an average of 43%. Furthermore, in states such as New Jersey, New York, and Rhode Island, where rates increased by 50% or more, doctors can expect more pronounced cuts.
The most recognizable problem, relating to large physician fee cuts, is that the Affordable Care Act increased number of Medicaid eligible patients. Within the framework of the legislation, eligibility for Medicaid was expanded in order to cover individuals with incomes up to 133% of the federal poverty line. Due in large part to this structural change, Medicaid enrollment has increased by 17.5% since 2013, according to the Health and Human Services Department. According to the White House, more than 20% of Americans now have Medicaid coverage. Therefore, not only will it be difficult for Medicaid-covered patients to find offices that accept their insurance, office wait times will likely increase as a consequence of the growth in enrollees as well.
How exactly state governments and Medicaid agencies are handling this developing issue has shown to differ across states. Nicole Brossoie, a spokesperson for the New Jersey Department of Health Services, explained that New Jersey had no intention of extending the enhanced rates from the onset of the provision. Although early evidence suggested that the temporary fee bumps were a success and improved Medicaid patients’ access to primary care, states and many participating medical offices will likely be incapable of handling the financial burden alone.
Given the unique and complex set of needs of medical professionals, it is important for them to work with financial advisors who have the experience and knowledge in navigating such financial landscapes.
Condor Capital Wealth Management
Founded in 1988, Condor Capital Management is an employee-owned, SEC-registered investment advisor based in Martinsville, N.J. employing 16 professional and support staff. Since Condor is a fee-only investment management firm, its fees are based on portfolio size, not sales commissions or number of trades. For more information on Condor Capital Wealth Management, please visit www.condorcapital.com or call 732-356-7323.