Health care reform would push state to hike Medicaid pay to docs

December 12, 2009

Indiana doctors may finally get their increased Medicaid payments.

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

The program would need to attract more doctors because the federal health reform bills call for allowing many more people into the Medicaid program.

Indiana now cuts off adults from the Medicaid program if they earn more than $5,513 a year and have a family of four. The federal legislation would raise the limit in all states to $29,327 a year.


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

The Indiana Medicaid program currently pays doctors 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, Milliman concluded.

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 increase in 2007. Many doctors refuse to see Medicaid patients because the payment 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,” wrote Anne Murphy, secretary of the Indiana Family and Social Services Administration, in a letter to Indiana senators Richard Lugar and Evan Bayh.



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