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Obamacare cuts Medicaid doctor pay 42 percent in 2015. Here's why.

(Shutterstock)

Thousands of Medicaid doctors are bracing for a tough start to 2015: a 42 percent pay cut.

The Affordable Care Act temporarily boosted payment rates for primary care doctors who see Medicaid patients in 2013 and 2014. The idea was to make sure doctors kept participating in Medicaid — which typically has low reimbursement rates — even as the program expanded to cover millions more Americans this year.

That earlier Obamacare pay raise was big, averaging out to a 73 percent increase for primary care doctors across the country. But it was also temporary, lasting only two years, and is set to run out on December 31. That means, beginning January 1, 2015, Medicaid doctors will earn less each time they see a patient — or, they could decide to pull out of the program altogether. Nobody is totally sure which way doctors will go.

Here's a quick guide to why the raise happened, why it's running out, and what it means for the future of Obamacare.

1) Obamacare raised Medicaid's primary care payments in 2013 and 2014

It's long been true of the American health care system that Medicare (the federal insurance program that covers the elderly) pays doctors more than Medicaid (the state-federal insurance program that covers the poor).

On average, Medicaid paid doctors about two-thirds of what Medicare pays — although, as this map shows, there's lots of variation across the country.

medicaid ratio

(Kaiser Family Foundation)

Even though Medicaid paid less, it has usually done a pretty good job making sure patients can get in to see primary care doctors. But there was a worry that, after Obamacare, that might not be the case. Medicaid is one of the two big programs the law relies on to expand health insurance coverage (the other is the marketplaces). Forecasters had estimated that 13 million additional people would join the program in Obamacare's first decade, and 7 million of those people would sign up in the first year.

Research has found that doctors are more likely to accept new Medicaid patients when their payment rates are higher. And the Affordable Care Act included a provision that aimed to entice doctors to sticking with — or perhaps joining — the program as it expanded to cover millions more Americans.

Beginning in 2013, the law bumped Medicaid primary care doctors' reimbursement rates up to match those of Medicare (specialists did not get any increase). The law funded the increased payments through the end of 2014, setting up a looming cliff that we're now approaching.

2) Doctors will see a 42 percent pay cut in 2015

urban medicaid

(Urban Institute)

That's an estimate from the Urban Institute, which ran the numbers on how payment rates will change in 2015.

The decline will vary a lot from state to state. That's because each state sets its own payment rates for primary care doctors. In a state like California, for example, which tended to pay Medicaid doctors very low rates, Obamacare has doubled their fees. But in North Carolina, where the two programs fees were more similar, the pay rate increase was much smaller.

3) The federal government will not extend the pay cut

Mostly because it's expensive: the two years of the pay-bump cost the federal government $11 billion.

Medicaid advocacy groups have lobbied Congress a bit to extend the pay cut for at least two years now. And Sens. Patty Murray (D-WA) and Sherrod Brown (D-OH) did introduce legislation that would extend the pay bump until 2016.

"We’re ready to lobby for what’s right to improve the situation," Roland Goertz, chair of the Academy of Family Physicians, had said in 2012 about extending the pay cut. "We’re ready to go to the mat for what works, and we need to be going in this direction."

But the issue hasn't gotten traction; the Murray-Brown bill has languished in committee since its introduction this past summer. And that means, barring any last minute miracle, Medicaid payment rates will decline in many states — but not all — on Thursday.

4) Fifteen states are stepping in to extend the payment raise

medicaid plan to continue

(Kaiser Family Foundation)

Medicaid is a joint federal-state program, with the two governments splitting the bill for patients' coverage. And, according to the Kaiser Family Foundation, 15 states will step in and provide funding to either fully or partially continue the payment increase.

What's notable about this map, however, is that the states stepping in tend to be those that were already paying Medicaid doctors pretty well in the first place. They are places like New Mexico that, before Obamacare, paid primary doctors 85 percent of the Medicare rate, or Mississippi, which paid 90 percent.

The states that have a much bigger gap between Medicaid and Medicare payments, like California, are not generally not stepping in to avert the payment cut. This is probably due to the fact that fixing the bigger gaps is so much more expensive.

5) Nobody knows what this will mean for Medicaid patients' access to care

The worry among Medicaid advocates is that lower payment rates will translate into fewer doctors being willing to see patients. This is a articulated in a recent New York Times article, citing data from Ohio:

A survey by the Ohio State Medical Association found that some Ohio doctors began accepting Medicaid patients because of the rate increase in 2013. Ohio doctors who were already participating in the program said they had accepted more Medicaid patients after the rate increase. And almost 40 percent of Ohio doctors indicated that they planned to accept fewer Medicaid patients when the extra payments lapsed.

Previous studies have shown that states that pay more for primary care in Medicaid do have more doctors accepting new patients. This chart from Health Affairs shows the correlation:

medicaid accepting

(Health Affairs)

Those are the reasons for concern — but there are also reasons to think things might go okay, too. Medicaid patients tend to have just as good access to primary care as patients in private coverage. One 2012 study commissioned by the federal government found that Medicaid patients are equally as likely to have had a routine check-up in the past year as those with private insurance. The real challenges in access tend to happen when patients seek speciality care.

And it's worth keeping in mind there were thousands of doctors who saw Medicaid patients prior to the Affordable Care Act's pay bump. These are people who, even before they got a big raise, thought it made sense to see these patients at lower rates. That gives decent reason to think that these doctors will stick around after the pay increase disappears, too.