CMS Medicaid Payment Rule

CMS held a call on the Medicaid PCP payment rule on Wednesday, December 12, 2012.  The following summary of that call.


They will issue more guidance within a month as Q/As at

Physician Self-Certification:

To qualify for payment physician has to self certify, indeed, but responsive to the many questions they received on this issue (and most of the questions they received were on this singular issue), CMS explained they view the requirement as a two step process. First one must self-attest but then (as the second step) one has to support the self-attestation. So they suggest that they are not really defining it as ‘self-certification’ in a conventional sense. Further, no one can attest on behalf of the physician – physicians are required to do that on their own.

E&M Codes Identified in the NPRM:

Final rule now clarifies that states are not required to provide payments for codes in that range that are not otherwise eligible for payment under their state plan. Also clarifies that the 2009 base payment amount for codes added to the E&M range since 2009 and currently reimbursed by the state will be zero. Additionally recognizes that some states allow providers to bill using local codes – higher payment will be available for services billed using these codes if the state as part of the required state plan provides a crosswalk of those codes to the specified E&M codes (so they can continue to use the local codes, but they have to provide a crosswalk that will be approved or rejected by CMS as part of the SPA approval process).

Additional Parameters of Payment:

Final rule defines 2009 base Medicaid state plan rate as excluding performance based supplemental payments such as bonus, Pay for Performance, and incentive payments since they are not part of the fee schedule payments. However, it makes clear that volume based payments such as those made to physicians associated with certain academic medical centers must be acknowledged as part of the base rate. As required by statue, the final rule continues to provide for 100% FMAP on the differential between the 2009 Medicaid state plan rate and the applicable 2013 and 2014 Medicare rates. States that have lowered their rates since 2009 will receive federal match at the regular FMAP for the difference between the 2009 rate and the existing lower state plan rate. There are no waivers or exceptions possible.

Identification of the 2013/ 2014 Medicare Fee Schedule Amount:

CMS just published the final rule establishing the Medicare rates for CY 2013. Under current law, the Medicare conversion factor is expected to be $25 unless Congress intervenes to adjust the conversion factor upward. The conversion factor currently is $34. In 2009, the conversion factor was $36, therefore it appears that states will be expected to pay rates in 2013 for codes identified in the final rule that are developed using the 2009 conversion factor and 2013 RVUs.

The final rule no longer requires that states make all Medicare service and locality adjustments although they can do so if they wish. States can choose to pay all services as the Medicare office rate (non facility rate) as opposed to paying at facility rate when service is provided in a hospital setting. Can also choose to pay each E&M code at a rate that represents the Medicare mean over all counties rather than pay the Medicare rate applicable to specific geographic location. Continues to permit state flexibility in determining whether to and how often to update rates to conform to changes in Medicare physician fee schedule. Rule also clarifies that higher payment may be made as adjustments to rates or if in a lump sum basis – no less frequently than quarterly and these additional reconciling amounts methodologies will be specified to the state plan. Rule continues to require payment for codes not reimbursed by Medicare using a CMS developed fee schedule that will be based on the recommended RVUs and the CMS published conversion factor.


Final rule continues to require that states submit SPAs to implement the payment increase but now indicates that CMS will provide a template. The rule now indicates that SPAs will be required to specify (1) whether the state will make a site-of-service adjustment or reimburse all codes at the Medicare rate applicable to the office setting, (2) whether the state will make all Medicare locality adjustments or use a statewide rate per code that reflects the mean value over all counties of the Medicare rates (3) the manner in which states will make higher payment (whether as a fee schedule or aggregate supplemental payment ) and (4) the codes which will be paid by the state at the higher rate and the codes that have been added to the fee schedule since 2009. If the state does not use HIP AA compliant codes, the SPA must provide a crosswalk to the covered E&M codes.

The final rule confirms that the State plan requirement applies – meaning the SPA may be effective of the first day of the calendar quarter in which it is submitted, so states will have until March 31, 2013 to submit their SPAs Then CMS will have 90 days to review the SPAs and approve, deny or request additional information. 100% FFP will not be available for eligible primary care vaccine administration until the SPA is approved. CMS will work with states to expedite approval of the SPA. CMS will also provide a template to facilitate this requirement. No payment will be dispersed until the SPA is approved but, again, CMS believes the template will greatly expedite the development of the SPAs. MDES (the system that states report Medicaid expenditures) has been modified so that it has separate lines to report services eligible for the 100% match. There is also separate reporting for FFS payment and managed care payment.

Program Evaluation:

Rule requires that states submit to CMS at such time/in such form that CMS specifies information relating to participation by eligible physicians and use of E&M codes described in regulation as of 7/1/09 and for CY 2013. This data will help evaluate the impact of the rule on access to services.

Managed Care (Camille Dobson, Senior Policy Advisor for MMC):

For states that use a managed care delivery system, CMS revised section 438804 from the NPRM to require states to submit and receive approval from CMS for two methodologies (1) for identifying the 2009 base line rate for primary care services that were in capitation payments at that time and the differential in capitation rates between that amount and what they are paying in 2013 or 2014 that is eligible for 100% FFP. CMS made this revision because they determined, after receiving comments, that it was important to have a separate explanation of the 2009 base year rate for primary services since there are states that had populations or services that were not in managed care in 2009. In order to better evaluate the amount of difference in the payments that were eligible for 100% of FFP, they are now working with states on how to do this – as well as with Deloitte, which whom they have contracted for technical assistance.

The second change from NPRM is that the timeline is extended for submitting those methodologies and receiving CMS approval – thru end of first quarter of 2013 (original deadline was 1/1/13). This also synchs-up with the timeframe for submission of the SPA. CMS staff in regional offices will review and approve both of those methodologies to ensure states are using the most accurate and reasonable data available to accurately identify the amount eligible for the 100% federal match. Once those methods are approved, CMS will follow rapidly (hopefully) with approval of managed care contract amendments and rate setting documentation that reflect those managed care methodologies. Once states receive approval of contracts AND rates, payments will be made retroactively to 1/1/13 to the health plans. CMS gave flexibility to the states on how to disseminate payments to primary care providers, recognizing the number of different delivery systems that exit in managed care plans but they are clear that the benefit of the increased payment must go to the provider. Much like FFS: documentation must be provided by the plans to the state that the requirements of the rule are carried out. CMS is not specifying how that documentation or reporting must occur but states are required to specify that in their health plan contracts to substantiate that the primary care rate was delivered to eligible providers. Plans must also make available to the state for verification of payments for any audits or reconciliation processes and also for the evaluation component.


Section 1202 of ACA specifically identifies vaccines as being included in the payment increase – they are an integral part of the practice of primary care providers. More importantly, the inclusion aligns payment structure for vaccines and will hopefully result in increased provider participation and access to pediatric vaccines for children in Medicaid. Payments will be made at the lesser of the VFC regional vaccine for children or the Medicare physician fee schedule rate. Because the coding change for vaccines took place in 2009, states will have compute the vaccine administration code value – the formula to do this was included in the final rule. However, if states can show to state plan what was paid for vaccine administration codes on 7/1/09 – states can use that rate and will not have to develop another. The SPA template includes a section on vaccine administration and each state mush complete this template before it can receive increased payments. Coding change also added a code for additional components in a combination vaccine. The VFC program only allows a single payment for each shot administered and so the VFC doesn’t pay for this additional code. Here, the VFC rules also apply to the final rule.

The final rule also included an updated fee schedule for the VFC program. It has not been updated since 1994. There were no other changes to VFC program, so states continue to have the flexibility to determine their state’s regional maximum fee.


Any additional questions should be directed to


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