Retention of the Affordable Care Act’s Medicaid Primary Care Parity: Crafting Reimbursement Policies to Optimize Access to Care

Abstract

Medicaid primary care parity was a provision of the Affordable Care Act which mandated that all U.S. states raise their Medicaid reimbursement rates for primary care physicians to Medicare levels. Importantly, the difference in rates would be entirely covered by federal funds. However, the policy was designed to only last two years and was discontinued on January 1, 2015. Nevertheless, individual states were given the opportunity to retain the policy, except states that elected to retain parity would now have to utilize state finances to make up the rate disparity at the normal Federal Medical Assistance Percentages. As of today, only 15 states and Washington, D.C. have decided to extend parity. This is in spite of the fact that concerns about access to primary care for Medicaid beneficiaries occur in states throughout the nation. This thesis thus investigates why only a minority of states elected to retain parity by specifically exploring the factors that individual states considered during their parity retention decision-making processes. As explained in Chapter Two, this thesis utilizes a case study of five states that retained parity and six states that did not retain the policy. The five parity retention states examined were Alabama, Alaska, Colorado, Connecticut, and Maryland, while the six non-parity retention states investigated were California, Indiana, Montana, Rhode Island, Tennessee, and Virginia. In addition, this thesis explored the central question via three distinct approaches: a literature review of the parity retention decision-making process, an analysis of public data on how states viewed parity retention decisions, and interviews with state health policy experts that each were intimately involved with their respective state’s decision-making process. Chapter Three features the literature review and demonstrates that parity is a relatively understudied policy. Chapters Four and Five present the results for the parity retention and non-parity retention case study states, respectively. Specifically, three outcomes are presented in each chapter for the individual states based on both the public data analysis and the expert interviews: the factors that were influential in the decision-making process, the relative importance of the influential factors, and parity’s effects on access to primary care. All of these results were also aggregated together for each of the two categories of case study states in order to better understand the outcomes for parity retention states as a whole and non-parity retention states collectively. Significant factors in the decision-making process explicated to be of high relative importance for both sets of states included state financial status, while factors indicated by both categories to be of low comparative influence included PCPs per capita and delays during parity’s implementation. A critical difference, however, was that the parity retention states considered political ideology to be of low comparative importance, whereas the non-parity retention states conversely viewed political ideology as being of high relative significance. Moreover, while the parity retention states aggregately benefitted slightly more from parity in terms of improvements in access, both sets of states generally observed minimal increases in access to primary care due to parity. Finally, Chapter Six analyzed why each set of states encountered its respective results for both the influential factor and access outcomes, and also explicates the critical policy lessons that are derived from this thesis. These policy lessons include that federally-funded parity should have been implemented for longer than two years, had clear federal eligibility guidelines released far ahead of the policy’s projected start date, and given individual states the option to accept or decline the policy.