MEDICAID PHYSICIAN-PAYMENT REFORM - USING THE MEDICARE FEE SCHEDULE FOR MEDICAID PAYMENTS

Objectives. The purpose of this article is to provide estimates of the costs of basing Medicaid physician payment levels on the new resource -based Medicare Fee Schedule. Two possible policy options are consider ed: setting all Medicaid physician fees at the Medicare Fee Schedule l evel and setting only office visit fees at the new Medicare levels. Me thods. Data on Medicaid physician fees, use patterns, and the Medicare Fee Schedule are used to develop state-level estimates of expenditure changes under each option. Results. Setting Medicaid rates at the Med icare Fee Schedule level could increase expenditures by $3.2 to $4.1 b illion nationally; the other option would result in substantially lowe r increases in expenditures. Because of the current variations in Medi caid physician fees and in the breadth of eligibility across states, t he cost of adopting the Medicare Fee Schedule varies considerably amon g states. Conclusions. Adopting the new Medicare Fee Schedule for Medi caid payments, proposed by policy-makers as a way tb increase access t o appropriate medical care, could double physician expenditures in som e states. Adoption of more limited versions of the fee schedule might achieve some access gains at lower costs.