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From Health Law Daily, July 17, 2014

Comparison suggests private insurance pays better

By Bryant Storm, JD

Medicaid fee for service (FFS) and managed care payments to physicians for office visits and emergency care were found to be lower than payments made by private insurance for the same services, according to a report released by the Government Accountability Office (GAO). The GAO review evaluated the relationship between payments made by Medicaid FFS, managed care, and private insurance for physician evaluation and management (E/M) services prior to 2013, when mandatory Medicaid payment increases went into effect under the Health Care and Education Reconciliation Act of 2010 (HCERA) (P.L.111–152). The GAO report revealed that the study was conducted to address a serious lack of data regarding how FFS and managed care payments compare with those made by private insurance and with one another (GAO Report, No. GAO-14-533, July 15, 2014).

Study. The GAO compared 2009 and 2010 data from 40 states regarding E/M services provided by physicians to adults in specific settings, including offices, hospitals, and emergency departments. The method used by the GAO involved calculating the percentage difference in the median payment between payers for each service in each state. The study used 2010 data to understand payment comparisons because of mandatory payment increases brought on by the HCERA.

HCERA. HCERA was passed as an amendment to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Among several other provisions, in section 1202, HCERA required that Medicaid payments for E/M services during calendar years 2013 and 2014 not be less than Medicare payments would be for those same E/M services. The study looked at data prior to 2013 to acknowledge that the HCERA altered the way Medicaid historically made payment calculations.

Findings. The study revealed that payments for E/M services, whether through FFS or managed care, were typically lower than payments for the same services by private insurers. Specifically, the GAO found:

  • “Under Medicaid FFS, payments for E/M services were 27 to 65 percent lower than private insurance in 31 of 40 states. Among the remaining 9 states, 3 states had Medicaid FFS payments between 72 and 74 percent lower than private insurance, and 6 states had Medicaid FFS payments that ranged from 23 percent lower to 12 percent higher than private insurance.”

  • “Under Medicaid managed care, payments for E/M services were 31 to 65 percent lower than private insurance in 18 of 23 states. Among the remaining 5 states, 1 state had Medicaid managed care payments 72 percent lower than private insurance and 4 states had Medicaid managed care payments between 8 and 20 percent lower than private insurance.”

Between Medicaid FSS and Medicaid managed care payments, the study found that managed care payments were generally equal to or higher than FFS payments for the same services.

Method. The GAO acknowledged that the study was not perfect because it did not: (1) evaluate every state, provider, or E/M service; (2) account for cost variances due to physician specialty, geographic area, and care quality; or (3) factor in beneficiary cost sharing. Despite the imperfections in the study’s method, the GAO reported that the data was sufficient to support its findings.

MainStory: TopStory MedicaidPaymentNews ManagedCareNews

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