Rules for Better Medicaid Payment Reflect AAFP Advocacy

In a victory for the AAFP’s campaign to improve the transparency of Medicaid payment rates, one of the just-issued rules will require state Medicaid programs to publicly post and compare their primary care fee-for-service payment rates to corresponding Medicare FFS payment amounts. As the Academy said in its comments to CMS when the rule was proposed, this published rate comparison will help federal and state policymakers, along with physician practices, more fully understand Medicaid payment rates and identify issues that may contribute to reduced clinician participation and beneficiary access.

That final rule, which takes effect July 1, 2026, says states must

• publish their fee-for-service rates online in a way that allows a user to easily determine the payment amount for each service;

• disaggregate the rates by population served (adult or pediatric), provider type and geographic location (if applicable); and

• submit an enhanced rate analysis when a state proposes to reduce or restructure rates significantly, such as setting rates at less than 80% of Medicare rates.

A Medicaid managed care and Children’s Health Insurance Program final rule, meanwhile, solidifies a number of policies for which the Academy has steadily advocated. In line with the AAFP’s comments to CMS on the rule as proposed, it

• requires states to submit an annual analysis comparing managed care clinician rates to Medicare rates;

• establishes appointment wait-time standards (including a maximum of 15 days for primary care and 10 days for mental health and substance use disorder services);

• requires states that fail to meet access standards to create a remedy plan that includes steps to increase clinician participation, such as increased payment rates, reduced barriers to contracting and improving the speed and accuracy of payment and prior authorization processes;

• allows state Medicaid plans to use state-directed payments for value-based payments to clinicians; and

• establishes state requirements for reporting Medicaid managed care plan quality ratings so they are more transparent to beneficiaries and encourage the use of commonly used quality measures to streamline quality reporting requirements across CMS programs.

The wins come as the Academy again calls on Congress to increase Medicaid primary care payment.

“Medicaid payment is on average 66% of the Medicare rate for primary care services, but it can be as low as 33% in some states,” the AAFP’s April 30 letter reminded lawmakers before urging passage of legislation including

• the bipartisan Kids’ Access to Primary Care Act (H.R. 952), which would apply a Medicare payment rate floor to Medicaid primary care services;

• the Stabilize Medicaid and CHIP Coverage Act (H.R. 5434, S. 3138), which would require state Medicaid and CHIP programs to provide 12 months of continuous coverage for all enrolled individuals; and

• the bipartisan Improving Coordination and Access to Resources Equitably for Youth Act (H.R. 7996, S. 2556), which would allow Medicaid coverage of mental health and primary care services furnished on the same day, as is the law in 27 states.

To further bolster Medicaid and CHIP, the Academy’s letter closed by asking Congress to “improve the denials and appeals processes for Medicaid beneficiaries and ensure patients have timely access to medically necessary care as recommended by their physician” by acting on recommendations published in March by the Medicaid and CHIP Payment and Access Commission. Adopting these guidelines, the AAFP said, would improve patient access to care while combatting physicians’ prior authorization burden.

“An Office of the Inspector General report published in July 2023 found that Medicaid MCOs denied one out of every eight (12.5%) prior authorization requests in 2019 — a rate even higher than in Medicare Advantage (5.7%),” the letter said. “Approximately 2.7 million Medicaid beneficiaries were enrolled in MCOs with prior authorization denial rates greater than 25%. However, minimal data collection on and oversight of these practices is being done by state Medicaid agencies. This is largely because current federal rules do not require states to collect and monitor data needed to assess access to care, monitor the clinical appropriateness of denials, or require that states publicly report information on plan denials and appeals outcomes.”