|Medicaid Physician Fees Grew 15 Percent From 2003 To 2008
Between 2003 and 2008, Medicaid physician fees rose 15.1
percent, closing a portion of their historic gap with Medicare
physician payment rates, according to a study by researchers from the
"Medicaid has historically paid physicians less than
both private insurers and Medicare for the same services, contributing
to reduced physician participation in Medicaid in some areas and
raising concerns over access to care for enrollees," said Lead Author
Stephen Zuckerman, a senior fellow at the Urban Institute’s
Health Policy Center. "These concerns were a primary reason that state
Medicaid programs increased physician fees during the late 1990s and
"State revenue declines during the current economic
crisis heighten the need to monitor this issue since many states sought
to reduce Medicaid spending growth during past recessions through
provider payment cuts," added Zuckerman. This new study, conducted by
Zuckerman and Urban Institute coauthors Aimee Williams and Karen
Stockley, provides the first national and state-by-state update of
Medicaid physician fees since 2003.
Their research was conducted in partnership with the
Kaiser Family Foundation’s Commission on Medicaid and the
Uninsured and the California HealthCare Foundation.
Although findings are based only on Medicaid
fee-for-service physician reimbursement, nearly two-thirds of program
spending still occurs in the fee-for-service setting, where elderly and
disabled enrollees with the greatest health needs primarily receive
Across all states and categories of physician services,
Medicaid physician fees increased 15.1 percent between 2003 and 2008,
representing an average annual growth rate of 2.6 percent. Over the
same period, the Consumer Price Index (CPI) increased 20.3 percent (3.4
percent annually) and the medical care services component of the CPI
– which includes physician services – increased 28.1
percent (4.6 percent annually). Among all categories of Medicaid
physician fees, only fees for primary care services kept pace with
All but two states – Minnesota and New York
– increased their Medicaid physician fees during the 2003-08
study period. However, fees increased by less than the rate of general
inflation in 25 states, and fees increased by less than 5 percent over
these five years in 8 states: Alabama, Alaska, Arkansas, California,
Florida, Hawaii, West Virginia and Wisconsin.
In absolute terms, levels of Medicaid physician fees
varied widely in 2003, and that variation remained fairly constant over
the following five years.
In 2008, Medicaid physician fees in six states and the
District of Columbia were more than 10 percent below the average across
all states. These states included those with the two largest Medicaid
programs – California and New York – as well as Florida,
Maine, New Jersey and Rhode Island. New Jersey’s Medicaid program
paid the lowest physician fees, at 58 percent of the national average.
Medicaid physician fees still lag behind the fees paid
to doctors by the Medicare program. However, this gap closed slightly
between 2003 and 2008, as Medicare physician fees fell even more in
real-dollar terms than did Medicaid fees. In 2008, Medicaid physician
fees were 72 percent of Medicare fees, up from 69 percent in 2003. The
ratio of Medicare physician payments to payments from private health
plans has remained fairly stable since 2003, which suggests that
Medicaid physician fees may have also increased relative to physician
fees from private payers.
The increase in Medicaid fees relative to Medicare fees
resulted from changes in reimbursement for two types of services:
primary care and obstetrics. Medicaid payments to physicians for
primary care services increased from 62 percent of Medicare fees in
2003 to 66 percent of Medicare fees in 2008.Medicaid fees for
obstetrical services increased from 84 percent of Medicare fees in 2003
to 93 percent of Medicare fees in 2008. Medicaid physician fees for all
other types of physician services remained at about 73 percent of
Medicare levels over the 2003-2008 period.
The study was published on the Health Affairs Web site.
Address: Urban Institute, 2100 M St. NW, Washington DC 20037; (202) 833-7200, www.urban.org.