Public Policy

Experts Urge Extension to Medicaid's Parity Program


On the last day of 2014, a provision of the Affordable Care Act (ACA) that increased payments to some physicians providing primary care services to the country’s poorest patients expired. The Medicaid payment parity program, under section 1202 of the ACA, increased to Medicare levels Medicaid reimbursement for primary care services rendered by internists, pediatricians, family medicine physicians, some subspecialists, and hospitalists in all states in 2013 and 2014.

A bill introduced in 2015, the Ensuring Access to Primary Care for Women and Children Act—sponsored by Sherrod Brown (D-Ohio) and Patty Murray, (D-W. Va.) in the Senate and Kathy Castor (D-Fla.) in the House—seeks to extend the parity program another two years and expand it to other providers, like obstetricians and nurse practitioners.

The parity program was intended to improve access to healthcare for the millions of Americans newly eligible for Medicaid under the ACA. Currently, one in five Americans is on Medicaid.

Fewer physicians in the U.S. participate in Medicaid than in Medicare or private insurance, and low reimbursement rates are sometimes cited as a cause.1,2 In 2012, fee-for-service Medicaid reimbursement for primary care averaged just 59% of Medicare fee levels nationally, but during the years of increased payment, eligible physicians saw a 73% boost in reimbursement for Medicaid primary care services.1,2

The new bill is similar to one introduced unsuccessfully last year in the Senate, which sought to avoid a lapse in the program. Initially beset by delays, some experts say the program did not last long enough to gather sufficient data or to demonstrate its effectiveness. Others say the short duration of the program prevented new providers from accepting Medicaid patients.3

An extension “would give people the chance to get more data and show the payment increase resulted in a more cost-effective healthcare system,” says Ron Greeno, MD, FCCP, MHM, an SHM board member, chair of SHM’s Public Policy Committee, and chief strategy officer at IPC Healthcare. “Ideally, there would be permanent parity.”

From a healthcare policy standpoint, it seems intellectually inconsistent, and from a public health standpoint, is it really justifiable? At the end of the day, the fundamental question is, do we really want to have two classes of access to American healthcare?

–Dr. Greeno

In February, Dan Polsky, PhD, the Robert D. Eilers professor in healthcare management and economics at the University of Pennsylvania Perelman School of Medicine in Philadelphia, and colleagues published a study in the New England Journal of Medicine that showed an increase in primary care appointments for new Medicaid patients correlating with the temporary increase in reimbursement.4

“We saw a 10% increase in the number of providers willing to see new Medicaid patients,” Dr. Polsky says. “It was an economic behavior test to see how physicians respond to changes in payment rates, because in a lot of states, policy makers are being asked to extend parity, and the typical comment was: ‘We don’t know if it works; it’s not cheap.’”

Indeed, the Congressional Budget Office estimated that the two-year pay increase would cost between $11 and $12 billion.1

“We came up with evidence it works,” Dr. Polsky says.

However, further measures of the parity program’s success remain a challenge, according to the author of a Kaiser Family Foundation brief, because it’s difficult to separate it from other elements of the healthcare law. Studies have also conflicted with regard to the ability of payment boosts to improve access, and the reimbursement increase may not be compatible with a shift away from the fee-for-service model.1

Yet, experts like Dr. Polsky say that to encourage greater participation in Medicaid, some type of parity is needed. “If we’re going to maintain better provider availability, I think you would need something like this,” he says.

For hospitalists, the two-year boost meant the ability to provide better care for hospitalized patients, Dr. Greeno says. Anecdotally, hospitalists reported that it was easier to discharge Medicaid patients to primary care follow-up in the community, he says, and better pay meant better staffing ratios were possible.

As of Jan. 1, 2015, 16 states and the District of Columbia reported that they will continue to reimburse Medicaid primary care services at Medicare levels.2 Dr. Greeno says the disparity between states that reimburse at higher rates for Medicaid and those that won’t could start changing the macroeconomics of medical practice, similar to the situation that occurred when states differentially imposed caps on malpractice liability.

A May 2015 Health Affairs policy brief indicates that, despite the House and Senate bill, Congress is unlikely to act soon on increasing Medicaid reimbursement rates again. Dr. Greeno believes this a mistake.

“From a healthcare policy standpoint, it seems intellectually inconsistent, and from a public health standpoint, is it really justifiable?” he asks. “At the end of the day, the fundamental question is, do we really want to have two classes of access to American healthcare?”

Kelly April Tyrrell is a freelance writer in Madison, Wis.


  1. Paradise J. Henry J. Kaiser Family Foundation. The Kaiser Commission on Medicaid and the Uninsured. Medicaid moving forward. March 9, 2015. Accessed July 7, 2015.
  2. Tollen L. Medicaid primary care parity. May 11, 2015. Health Affairs online. Accessed July 7, 2015.
  3. Medicaid and CHIP Payment and Access Commission (MACPAC). March 2015 report to Congress on Medicaid and CHIP, chapter 8: an update on the Medicaid primary care payment increase. Accessed July 7, 2015.
  4. Polsky D, Richards M, Basseyn S, et al. Appointment availability after increases in Medicaid payments for primary care. N Engl J Med. 2015;372:537-545. doi: 10.1056/NEJMsa1413299.

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