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

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.

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.

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. That’s a lot of new patients who will need doctors.

Research has found, predictably enough, that doctors are more likely to accept new Medicaid patients when their payment rates are higher. And so the Affordable Care Act included a provision aimed to entice doctors to stick with the program and add newly insured patients as Medicaid 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. But 2014 is almost over.

The 42 percent figure is 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.

“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.”

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 where, before Obamacare, paidprimary doctors were paid 85 percent of the Medicare rate, or Mississippi, which paid 90 percent.

The states with 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.

The worry among Medicaid advocates is that lower payment rates will translate into fewer doctors being willing to see patients. For instance, a recent New York Times article cites 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:

Those are the reasons for concern — but there are also reasons to think things might go okay, too. The end of the pay increase just means rates go back to the path they were on before the 2013 bump. And studies done during that time found 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.

There were, after all, 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. Medicaid advocates hope that these doctors will stick around after the pay increase disappears, too.