Managed Care

Medicaid fees rise, but still below Medicare

A recent study conducted by the Urban Institute and the Center for Studying Health System Change suggests that despite recent gains in Medicaid physician payments from 1998 through 2003, the relative attractiveness of Medicaid payments has not improved much. Published in the June issue of Health Affairs, the study reports that on average, Medicaid fees rose 27.4 percent. Medicaid fees grew at nearly twice the inflation rate, as measured by the Consumer Price Index, but remained well below the rates paid by Medicare. Thirty states raised their fees at or above the rate of inflation, including 10 that raised physician fees by more than 35 percent. The District of Columbia, on the other hand, reported a 2 percent decline. Georgia, Kentucky, Maine, and South Dakota reported minimal change.

Primary care services accounted for most of the change. On average, primary care fees grew 41 percent over that period. Physician fees for obstetrical services and other services, such as hospital visits, rose about 11 percent.

The researchers attribute the increased payments to the strong fiscal situation states enjoyed at the end of the 1990s. John Holahan, director of health policy research at the institute, says that even though there were increases in payment to physicians from Medicaid, attitudes toward Medicaid are fairly well entrenched and fiscal good times have receded.


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