Provider Payments Under Aa Medicaid Per Capita Cap

In a February 24th blog post, we described Medicaid block grants and per capita caps in terms of A x B = C to demonstrate how those payment policies work. 'A' is the amount a state is paid per beneficiary, 'B' is the number of beneficiaries in a given state, and 'C' is the total state payment from the federal government. We have since been asked by numerous providers to describe the nuts and bolts of how a per capita cap, the current Medicaid financing structure in the proposed American Health Care Act, would work. For the Medicaid provider, the nuts and bolts of how they are paid would change very little while the amount they are paid might change a lot.

How are Medicaid providers paid today? The following description is a simplification into one paragraph that epic tomes could describe. The state, or its managed care plan, and providers agree upon a payment rate. The providers send a bill for a service to the state or managed care plan. The provider gets paid. The state then compiles all the payments for services onto a form which it sends to CMS. CMS then pays the state for those total compiled claims based the state's federal match.

Yes, we do understand that every sentence in that paragraph could come with an asterisk and note that could go on for pages. But this is the general form.

How would Medicaid providers get paid in a future Medicaid with per capita caps as described in the House proposal? The state, or its managed care plan, and providers would still agree upon a payment rate. The providers would still send a bill for a service to the state or managed care plan. The provider would get paid. The state would provide a form describing all the beneficiaries covered to CMS. CMS would then pay the state for those beneficiaries based on a formula proposed in the bill and the state's federal match.

So if you are a Medicaid provider, on the surface, nothing changes. You will negotiate a rate with the state or a managed care plan. You will provide the service. You will get paid for the service provided.

Where everything may change is the pressure on the state to reduce the payment to the provider. Under current law, whatever the state negotiates with the provider, the...