Increased Medicaid Payment for Primary Care


On November 1, 2012, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to implement a provision of the Affordable Care Act that provides increased payments to certain primary care physicians for specified Medicaid primary care services.  Under this provision, certain physicians who provide eligible primary care services will be paid the Medicare rates in effect in calendar years (CY) 2013 and 2014 instead of their usual state-established Medicaid rates, which may be lower than federally established Medicare rates.  The payment increase applies to primary care services delivered by a physician with a specialty designation of family medicine, general internal medicine, or pediatric medicine or related subspecialists.  States will receive 100 percent federal financial participation (FFP) for the difference between the Medicaid state plan payment amount as of July 1, 2009, and the applicable Medicare rate. 

The rule provides information about how CMS and states will work together to make the increased payments operational.  The rule includes information about the identification of eligible providers and services and how to meet the statutory requirements when making these payments for services provided through managed care. The rule also provides important information on how this policy applies to the Vaccines for Children (VFC) program, which has its own statutory requirements for billing and payment, and updates the administration fees that may be billed under VFC based on medical inflation rates.

Qualifying Providers

Through the Affordable Care Act, primary care services eligible for the higher Medicaid payment must be delivered by a physician who specializes in family medicine, general internal medicine, or pediatric medicine. This rule specifies that certain physician subspecialists (for example, pediatric cardiologists) who are board certified in those specialties or provide primary care within the overall scope of those categories also qualify for the enhanced payment. The rule also clarifies that the higher payment will be made for primary care services rendered by practitioners—including, for example, nurse practitioners—working under the personal supervision of any qualifying physician.

Implementing the Increased Payments in Fee for Service and Managed Care

The rule provides multiple options for states to allow for flexible implementation in fee-for-service and managed care settings. The rule permits states to either “lock” rates at the level of the Medicare physician fee schedule in effect at the beginning of 2013 and 2014 or modify the rates in alignment with all updates by Medicare.  For operational ease, it does not require states to make site of service adjustments, permitting them instead to make payments at the Medicare rate applicable to the office setting.  It also permits states to either pay in accordance with all Medicare locality adjustments within the state or to develop a rate for each code based on the mean Medicare rate over all counties in the state to be paid on a statewide basis.  The regulation provides that all of the requirements related to the increased payments apply to services reimbursed by Medicaid managed care plans.  States must incorporate the increased payment into contracts with such entities. 

Interaction with the Vaccines for Children Program

The rule provides for payment of vaccine administration fees under the VFC program at the lesser of the VFC regional maximum administration fee (the VFC “ceiling”) or the Medicare rates in 2013 and 2014.  This is consistent with VFC program rules which limit payments to the VFC ceiling, which is the state’s regional maximum amount, and to one payment per vaccine administered.  Because the VFC ceiling rates were issued on an interim basis in 1994 and have never been updated, the rule also updates these rates using the Medicare Economic Index, which is a measure of medical practice cost inflation.

The rule can be found at

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