TMA Letter on Medicaid Fees to Budget Conferees

April 26, 2013

The Honorable Tommy Williams, Chair     The Honorable Jim Pitts, Chair
The Honorable Robert Duncan     The Honorable Myra Crownover
The Honorable Juan “Chuy” Hinojosa     The Honorable John Otto
The Honorable Jane Nelson     The Honorable Sylvester Turner

I am writing on behalf of the Texas Medical Association and the 47,000 physicians and medical students it represents to urge you to take bold action to fix a major problem in Texas Medicaid: utterly inadequate physician payment rates.

Over the past several months, there has been considerable attention paid to Texas’ “broken” Medicaid system, with particular interest in the plummeting physician Medicaid participation rate and the impact that exodus is having on patients’ ability to obtain timely, medically necessary care.

According to TMA’s 2012 physician survey, only 31 percent of physicians accept all new Medicaid patients, a 36-point drop since 2000, when 67 percent of physicians reported their willingness to accept all new Medicaid patients. While another 26 percent of physicians report accepting Medicaid with limits, this number is troublingly low too because of the growing number of low-income Texans who rely on Medicaid for their health care coverage. Indeed, the Texas Health and Human Services Commission (HHSC) estimates that Medicaid enrollment will reach 4.2 million by state fiscal year 2015 even if Texas declines to expand coverage as authorized under federal law. As you well know, a Medicaid card without a physician to provide care is no real access at all.

Last summer, TMA convened a Physicians’ Medicaid Congress to identify ways to stop hemorrhaging physician participation. The Congress received hundreds of ideas, many of them focused on streamlining Medicaid administrative processes and improving due process for physicians accused of Medicaid fraud or abuse. Thanks to your support, legislation is moving in both chambers to address those issues. However, grossly inadequate payment was the single overriding reason physicians cited for why they or their colleagues limit or no longer participate in Medicaid. The Congress heard overwhelmingly that physicians support Medicaid as a means to provide health care to vulnerable, low-income Texans. Physicians want to participate. Yet, as owners of small businesses, facing ever more costly and demanding federal and state regulatory burdens, many just cannot afford to stay in a program that pays less than half their costs.

Consider the attached chart comparing Medicaid, commercial, and Medicare payments for various physician services. Medicaid payments for the most commonly performed services range from 48 percent to 94 percent of Medicare and 42 percent to 75 percent of commercial insurance payments. These rates are hardly enticing to physicians who may want to sign up for Medicaid, particularly when they can barely keep up with demand for their services from better paying privately insured patients.

The last significant Medicaid payment increase occurred in 2007 [1] . Yet, even that sizeable increase did not apply to all physicians or services. Further, despite the much-needed gains made in 2007, Medicaid physician fees have not been exempted from recent cuts. Within the past two years, the Medicaid physician fee schedule received a 2-percent across-the-board cut; physicians who care for dual-eligibles – frail seniors and people with disabilities who qualify for both Medicare and Medicaid – saw their fees plunge 20 percent in 2012. At the same time, over the past five years, physician practice costs have risen roughly 15 percent[2] . With already-inadequate fees declining and practice costs rising, it is easy to see why fewer physicians sign up.

This year, as a result of the Patient Protection and Affordable Care Act (ACA), payments for primary care services provided by primary care physicians -- – pediatricians, family physicians, general internists and the subspecialists affiliated with one of those three specialties -- will rise to Medicare parity for two years, ending Dec. 31, 2015 [3] .  Obstetricians/gynecologists, who typically act as PCPs for their pregnant Medicaid patients, were not included in the ACA provision. But the House budget allocates funding to increase their Medicaid payments to Medicare parity too.

Without your help, physicians not affected by the ACA-related rate increase will receive no payment update at all.  That threatens to leave significant holes in the Medicaid physician network, which would delay – or effectively deny – desperately needed medical care for Texans. Thus, TMA calls upon you to increase Medicaid payments to Medicare parity for all physicians and services and to maintain the rate increases through the biennium.

We know our request entails significant new costs. But fixing a Medicaid system widely acknowledged to be in need of significant repair will require bold action by Texas leaders.  Regardless of whether Texas expands Medicaid or achieves any other reforms through a Medicaid waiver, millions of poor patients –your constituents – will continue to rely on Medicaid for their medical care. To be sure, other Medicaid reforms are needed too, including improving patient outcomes and increasing use of preventive care, promoting greater patient accountability through use of copayments, and implementing payment reforms to promote better quality. All reforms TMA supports.

Like a run down house in need of repair, you’ve got to pick up a hammer and start somewhere. Increasing Medicaid payment rates to Medicare parity is the nail that needs to be hit first.

Thank you for your timely consideration.


Michael Speer, MD
Texas Medical Association

cc:   The Honorable Rick Perry
    The Honorable David Dewhurst
    The Honorable Joe Straus

 [1] Fees were increased in 2007 as part of the Frew consent decree.  

[2] The Medicare Payment Advisory Commission (MedPAC) estimates that physician practice costs increase about 3 percent annually.

[3The rate increase will apply only to evaluation and management services and vaccine administration codes for eligible primary care physicians participating in Medicaid fee-for-service or HMO networks. HHSC anticipates implementation in the fall, with payments retroactive to Jan. 1, 2014 for qualified physicians.


Last Updated On

January 06, 2020