Impact of The Affordable Care Act on Physician Reimbursements

By October 26, 2015Articles, Health

The Patient Protection and Affordable Care Act (PPCA or commonly called ACA), passed by the Obama Administration in 2010, creates several key changes within the American health care system that addresses health care affordability and availability in order to include national coverage. The Affordable Care Actincludes “guaranteed issue” and “community rating” requirements, and individual mandates. These reforms compel insurers to provide coverage to any person regardless of their current and pre-disposing medical health conditions, and prohibit insurers from charging patients different coverage premiums for similar conditions. The individual mandate, which requires individuals to have health insurance coverage or else incur an IRS fee, ensures that more individuals, both young and old, are obliged to obtain some form of coverage. States may set up health insurance exchanges under the Affordable Care Actallowing Americans within theirstate insurance exchange to obtain ideal coverage plans from competing private health care providers. Americans in states that have chosen not to elect a state exchange may sign up under the federal exchange to acquire coverage. While the new legislation most immediately and obviously impacts patients, the change it creates in the overall American health care system affects another key player in health care- the physicians.

As a result of the passing of the Affordable Care Act, physicians can expect to see a boom in the number of patients they care for. Especially with the recent Supreme Court ruling in King v. Burwell allowing for tax credits on both state and federal exchanges, more individuals have access to coverage and health services. The exchanges remove a major obstacle in acquiring insurance coverage for patients and allow for more patients to seek out primary care physicians. Additionally, a new Affordable Care Actrevision, effective January 1, 2014, required insurers to cover ten specific services, referred to as “essential health benefits”, and sixty-three different preventive services. These newly-covered services include maternity care, mental health services, medications, rehabilitation services, chronic disease management, blood pressure and mammography screenings, a variety of immunizations, childhood behavioral and autism screenings, and access to contraception [1].As a result of such widespread coverage, physicians do not have to collect out-of-pocket payments directly from patients and will instead receive them as reimbursements from health plans. Due to the ACA’s individual mandate and expansion of covered services, physicians can expect to see a rise in their reimbursements due to a greater influx of patients, especially those of the younger generation, seeking them out for their services.

Along with an increase in the number of reimbursements, physicians also saw a rise in reimbursement rates from the ACA during 2013 and 2014. To entice physicians to accept patients who have insurance under Obamacare’s new exchanges, legislators added a provision to raise reimbursement rates. With the ACA promoting primary care as one of its main goals, primary care physicians’ Medicaid reimbursement rates in 2013 and 2014 were raised to match Medicare rates [5]. Furthermore, primary care doctors and general surgeons received a 10% percent bonus for opening or continuing to practice in medically underserved communities. Furthermore, Medicare primary care physicians received a 10% bonus for primary services from 2011 through 2015 [4]. For reference, Medicare, the federal health coverage provided for seniors, offers physicians a reimbursement rate of approximately 80% of what private health insurance pays. Medicaid, which provides coverage for low-socioeconomic individuals who qualify, reimburses physicians a much lower rate of about 56% [3]. The Affordable Care Actfocused on providing greater availability to primary care. Physicians who supported the ACA saw a large increase in their reimbursement rates, leading to an overall higher revenue.

However, this “two-year bribe” to enlist the support of physicians for the new Medicaid insurance plans had expired on January 1, 2015 [3]. As a result, the Medicaid reimbursement rates for physicians have decreased in 2015. An Urban Institute report has estimated a 42.8% reduction in Medicaid reimbursement rates for physicians as a result of the readjustments to pre-2013. The magnitude of the reduction depends on whether or not states have decided to extend the Medicaid primary fee bump using their own state funds. Due to ongoing budgetary concerns, many states were unable to use their own funds to extend the fee increase policy [3]. This has resulted in a variation of reimbursement rates across states. Alabama, Colorado, Iowa, Maryland, Mississippi, and New Mexico have elected to continue paying primary care services at the Medicare level. Conversely, Alaska, Connecticut, Delaware, Hawaii, Maine, Michigan, Nebraska, Nevada, and South Carolina are paying Medicaid fees at higher rates, but are not necessarily at the same level of Medicare rates. At least 24 states have chosen to revert back to their lower pre-2013 rates [2]. Ultimately, the foreseeable problem from the fee cuts is that doctors will be reluctant to accept patients under Medicaid due to the lower rates, potentially resulting in accessibility problems for patients.

With the differences in high and low reimbursement rates between states, there is an opportunity here for legislators to evaluate the effect of increased primary care rates. By comparing the data from states that have continued to increase rates versus data from states that have reverted to their pre-2013 rates, we can learn how changes in physician reimbursement affect accessibility to patient health care. Looking forward, legislators can utilize the examination of the different rates to provide information on the effects of the proposed fee bump policy, ultimately using previous precedents to determine whether or not the fee bump should be continued, standardized, or eliminated across all states. We need to consider and address the role policy plays in physician’s decision to support the ACA, while keeping in mind the Affordable Care Act’s ultimate goals to provide easier access and more availability to primary care services.


[1] Bendix, Jeffrey. “Affordable Care Act Affects Reimbursements.” Medical Economics: Health Law & Policy. Medical Economics. 25 July 2012. Web. 22 Oct. 2015.

[2] “An Update on the Medicaid Primary Care Payment Increase.” MacPac: Publications. MacPac. Mar. 2015. Web. 18 Oct. 2015.

[3] Matthews, Marrill. “Doctors Face A Huge Medicare And Medicaid Pay Cut In 2015.” Forbes: Healthcare, Fiscal, and Tax. Forbes. 5 Jan. 2015. Web. 22 Oct. 2015.

[4] “Obamacare and Doctors.” Obamacare Facts. Obamacare Facts. n.d. Web. 21 Oct. 2015

[5] Page, Leigh. “8 Ways That the ACA Is Affecting Doctors’ Incomes.” Recruiting Physicians Today 21.5 (2013). New England Journal of Medicine. Web. 18 Oct. 2015.

[6] Zuckerman, Stephen., Skopec, Laura., McCormack, Kristen. “Reversing the Medicaid Fee Bump: How Much Could Medicaid Physician Fee for Primary Care Fall in 2015?” Urban Institute Research. Urban Institute. 10 Dec. 2014. Web. 20 Oct. 2015.