Reinvigorate the Medicaid Physician Network

Physicians value Medicaid, a program that benefits the health and financial security not only of more than 4 million recipients but also of all Texans by bringing federal tax dollars back to the state – monies that underpin the state’s health care system and the thousands of jobs associated with it. 

TMA supports extending Medicaid to low-income adults, which Texas could do while saving money. [1]

Despite Medicaid’s importance to our state, too often the program gets labeled as “broken,” in part because of a flagging physician network. But what’s broke can be fixed. A trio of legislative reforms enacted in 2019 will help eliminate red tape and administrative hassles that drive physicians out of Medicaid. However, improving access to care must be more than paper deep. It also requires paying competitively.

Unacceptably low Medicaid payments rates – determined by the legislature – directly correlate with an inadequate physician network. Yet Texas has not enacted a meaningful, enduring physician rate increase in more than a decade. For example, Medicaid pays $37 for a routine pediatric office exam ($33 for that child’s parent). If the same physician saw the child’s grandmother, however, Medicare would pay $73[2] for the same service, while a commercial health plan would pay $87[3] regardless of the patient’s age. Some lawmakers argue Medicaid managed care organizations (MCOs) must solve the problem. While it is true MCOs have discretion to pay physicians more (or less), the amount they pay is ultimately tied to the fee schedule set by the state.  

COVID-19 has deeply impacted the financial viability of physician practices. Without help, the upheaval could become an “extinction-level event” as practices close, merge with hospital systems, or sell to private equity firms, resulting in higher costs and less innovation, just the opposite of Texas Medicaid’s leading-edge efforts to promote more accountable care. The deterioration of the states’ Medicaid physician network harms the whole community by taking away jobs.  

Lawmakers must find a solution. Using the state’s value-based payment framework, Texas can increase physician payments while improving health equity, outcomes, and cost-effectiveness. To pay for it, Texas should consider allocating a portion of the MCO experience rebates (profits above a preset limit) that the MCOs already must remit to the state. Likewise, any savings from extending Medicaid coverage should be used to improve physician Medicaid payments.

In 2021, budget writers will face difficult choices. An easy choice is protecting the health of all Texans and the physicians who care for them. 

TMA’s Legislative Recommendations

  • Reinvigorate the Medicaid physician network by rewarding value-driven initiatives that improve health outcomes; promote sustainable, accountable, and cost-effective care; reduce health disparities; address social drivers of health; and strengthen rural, border, and underserved physician networks.
  • Oppose reductions to Medicaid and Children’s Health Insurance Program (CHIP) physician payments.
  • Oppose cuts to Medicaid and CHIP benefits, services, or eligibility.

Download TMA's legislative one pager on Improve Patient Access to Health Care 



[2] Medicare physician payment rate for the Rest of Texas geographic locality, which encompasses San Antonio, South Texas, and nonmetro counties and is the lowest amount paid by Medicare.

[3] Texas Medicaid establishes rates for each service billed by physicians. However, Medicaid managed care organizations may contractually establish different payment rates, which are proprietary. TMA estimated the average commercial payment based on analysis from the Medicare Physician Payment Advisory Committee.

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Last Updated On

January 30, 2021

Originally Published On

January 05, 2021