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Docs might get Medicaid rate increase

J.K. Wall
December 9, 2009
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Indiana doctors may finally get their increased Medicaid payments.

An actuarial report prepared by the local office of Milliman Inc., a Seattle-based benefits consulting firm, projects that the state of Indiana would need to hike its Medicaid payments by a third in order to entice more doctors into the program.

The state would need the additional doctors because federal health reform bills call for raising eligibility requirements for Medicaid, effectively bringing far more Hoosiers into the program.

Indiana now cuts off adults from the Medicaid program if they earn more than about $5,500 per year and live in a family of four. The state has much higher income caps to allow disabled and older adults, pregnant women and children whose parents are poor to enroll in Medicaid. But the federal legislation would make all families of four eligible for Medicaid if their annual income is $29,000 or less.

The federal government would pick up the tab for that expansion for the first three years and then pay 95 percent of it after that. But Milliman figures the state would still need to pay an extra $118 million a year to doctors.

The Indiana Medicaid program currently pays about 60 percent of the rate paid by the federal Medicare program, according to Milliman. The state would need to raise its rates to 80 percent to entice enough doctors to participate.

Even at those rates, Medicaid payments would be about one-third lower than what doctors typically receive from private health insurers.

Doctors in Indiana received no increase in Medicaid payments from 1994 until a small boost passed in 2007. Many doctors refuse to see Medicaid patients because the payments rates are so low.

Milliman suggests the state would need far more doctors because nearly 500,000 more Hoosiers would be covered by Medicaid after the federally mandated expansion.

“The financial impact of this bill is deeply troubling, especially at a time when state revenues have decreased significantly, expenditures have increased due to enrollment and we can barely afford the program we have,” Anne Murphy, secretary of the Indiana Family and Social Services Administration, wrote in a letter to Sen. Richard Lugar (R-Ind.) and Sen. Evan Bayh (D-Ind.). You can read her letter here.

You can read the Milliman analysis here.

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