The Affordable Care Act (ACA) amended the Social Security Act to require State Medicaid agencies to pay for certain primary care services at rates equivalent to the higher of Medicare rates in effect in CYs 2013 and 2014, or at the rates that would be applicable using the CY 2009 Medicare physician fee schedule conversion factor.  It also provided for 100 percent Federal Financial Participation (FFP) for the difference between the amount a state is required to pay under the new law and the Medicaid State Plan rate that was in effect on July 1, 2009.  The ACA mandated that these rates apply to both payments by fee-for-service Medicaid and Medicaid managed care organizations to physicians with specialty designations of family medicine, internal medicine and pediatrics.  With the expansion of Medicaid looming, the government hopes these higher payments will entice primary care physicians to participate in the Medicaid program.  The final rule published November 6, 2012, in the Federal Register specifies which services and physicians qualify for the higher payment and the method for calculating such payments.  The final rule also updates the maximum administration fee that providers may charge a child’s parents or legal guardian for vaccines administered under the Vaccines for Children (VFC) program.  

With respect to the statutory higher payments for primary care services, CMS clarifies that the higher payment is not applicable to physicians reimbursed through a Federally Qualified Health Center (FQHC), Rural Health Clinic (RHC), health department/clinic encounter or visit rate, or a nursing facility per diem rate.  The agency also permits higher payments for services performed by advance practice clinicians under the personal supervision of physicians and requires that states reimburse advance practice clinicians in CYs 2013 and 2014 in the manner in which the state reimbursed such services as of July 1, 2009.   This means that if the state reimbursed advance practice clinicians at a percentage of the physician fee schedule on July 1, 2009, then it should continue to do so.  CMS also establishes how the higher rates will be calculated and finalizes the proposed list of codes to which the higher statutory payment applies.  As there are codes on the list that some states and managed care organizations do not cover, the agency clarifies that state Medicaid agencies are reimbursed at the higher statutory rate for codes that are covered under the State’s Medicaid Plan or included in a managed care contract.  States and Medicaid managed care organizations are not required to cover services that were not previously otherwise covered.

With respect to the VCF program, the final rule also adopts the proposed updates to the maximum administration fees that States may permit providers to charge.  Providers continue to have flexibility to determine the administration fee as long as it does not exceed the state’s maximum administration fee and the provider does not deny a vaccine to an eligible child due to the inability to pay the administration fee.  A state is not required to update the maximum administration fee that a provider may charge in its state in light of the final rule, but it must submit an amendment to its State Plan if it chooses to do so.

Click here to view a copy of the final rule