You Are In For A 5% Raise. No Kidding.

By  |  January 1, 2013 | 

On average, as of 2012, Medicaid pays 58% of primary care Medicare fees.  Variability exists amongst the states:

Starting now, Medicaid to Medicare parity regulation–stemming from the ACA–kicks in and inpatient E&M codes qualify (99231-33 et al.).  Limitations exist, and not all practitioners meet eligibility, but as generalists in a primary care niche, hospitalists get the nod.  We now get Medicare rates.

Assuming 15% of your revenue accrues from Medicaid, more for urban, rural and safety-net institutions and less if you practice in a suburban, community hospital setting, expect a bump of 5-10% total revenue the next two years.  The average encounter hike U.S. wide will be 73%.

A state by state breakdown of rate increases below:

Our SHM Public Policy Committee assembled a FAQ on the subject.  The short length and crisp presentation will aid in your understanding of the update.

Some notes and thoughts:

  • The feds compensate the difference between 2009 state Medicaid and 2012 Medicare rates.
  • I make the assumption congress stifles the SGR ogre  for another year (promises kept), and Medicare rates remain the same after the sequester-cum-budgetary fix.   Regardless, parity still applies, albeit it under a potentially lower baseline if any adjustments occur.
  • Inpatient practitioners cannot select their patients.  The ER calls, we admit. However, ambulatory subspecialists we may refer to still will not accept Medicaid patients at discharge.  The increases apply to primary care physicians only.  The quagmire of outpatient dermatology, oncology, surgical subspecialty, etc., continues.
  • Midlevel providers (NP/PA) qualify if they operate under MD/DO supervision.
  • The increase remains active in 2013-14 exclusively.  However, depending on the response–particularly in the outpatient domain, expect a policy relook come next year. In a revenue neutral environment, continuation of pay increases cannot persist unless the government shifts the burden (pay cuts) to other specialties or targets other programs.
  • I am uncertain how capitated and managed Medicaid state programs will calculate rates. Non-FFS payment engenders fuzzy math and opaqueness.  You can glean the challenge:

“CMS review and approval, must be based on “rational and documented data and assumptions,” and can consider data availability, administrative burden, and costs, but should “produce a reliable and accurate result to the fullest extent possible.”  CMS will provide a framework for states to use in developing the methodologies, and CMS will use the approved methodologies in the review and approval of MCO contracts and rates.”

(eessh.  Good luck with that)

  • Caucus with your billing folks and administrators!  Make them aware of the need to adjudicate 2013 fees and share the links above.

Finally, an opportunity to speak at length on pay parity (and other subjects) will present at SHM’s 2013 annual meeting.  Legislative day in DC means Capitol Hill.  Join us!!!

UPDATE: More here.


  1. […] Health reform is also leading us towards models of high-quality, patient-centered care. As we begin a New Year, David Wilson of Innovative Health Media says now is the time to look at a new paradigm shift occurring in health care. High costs and new research have prompted this shift toward a system more focused on patient education and prevention than ever before. Meanwhile, David Harlow of the HealthBlawg writes about a recent study that suggests that patient-centered care, including improved communication, can improve outcomes, reduce readmissions and thereby improve hospital finances, and Dr. Jaan Sidorov of the Disease Management Care Blog reviews a recently published article that tackles an underestimated challenge for accountable care organizations: the need for an organized approach to communication, including educating docs to give up on their informal ways of doing things. Bringing it back to money for just a moment, Brad Flansbaum explains what parity in Medicaid and Medicare payment rates means for hospitalists at the Hospitalist Leader. […]

  2. […] 3, 2013 by Brad Flansbaum Posted on The Hospitalist Leader on 01/01/2013 On average, as of 2012, Medicaid pays 58% of primary care Medicare fees. […]

  3. […] on The Hospitalist Leader on […]

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About the Author: Brad Flansbaum

Brad Flansbaum
Bradley Flansbaum, DO, MPH, MHM works for Geisinger Health System in Danville, PA in both the divisions of hospital medicine and population health. He began working as a hospitalist in 1996, at the inception of the hospital medicine movement. He is a founding member of the Society of Hospital Medicine and served as a board member and officer. He speaks nationally in promoting hospital medicine and has presented at many statewide meetings and conferences. He is also actively involved in house staff education. Currently, he serves on the SHM Public Policy Committee and has an interest in payment policy, healthcare market competition, health disparities, cost-effectiveness analysis, and pain and palliative care. He is SHM’s delegate for the AMA House of Delegates. Dr. Flansbaum received his undergraduate degree from Union College in Schenectady, NY and attended medical school at the New York College of Osteopathic Medicine. He completed his residency and chief residency in Internal Medicine at Long Island Jewish Medical Center in New York. He received his M.P.H. in Health Policy and Management at Columbia University. He is a political junky, and loves to cook, stay fit, read non-fiction, listen to many genres of music, and is a resident of Danville, PA.


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