Examining Medicaid Payment Policy

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March 2011

Like other payers, Medicaid seeks payment policies that promote delivery of efficient, high-quality care. The statute provides states with substantial flexibility in determining provider payment rates and, as a result, states have taken a variety of different approaches to Medicaid payment. This variation raises questions regarding the relationship of payment policies to access and quality, and the potential role for payment innovations that best address efficiency and economy while assuring access to appropriate and high-quality services.

Currently no sources exist that systematically and comprehensively explain how states determine Medicaid payments or evaluate whether payments meet statutory requirements and promote value-based purchasing. In Chapter 5 of its March 2011 report, MAPAC begins to examine whether payment policies account for the complexity of Medicaid enrollees and the Medicaid marketplace, and whether they encourage access and quality while controlling the rate of Medicaid spending. Read more about how Medicaid payment policies affect hospital and physician payment and the federal statutory and regulatory changes that have shaped them.

Publication Type: Reports to Congress

From: March 2011 Report to the Congress on Medicaid and CHIP

Tags: diagnosis-related groups (DRGs), disproportionate share hospital (DSH) payment, fee for service, hospital outpatient services, inpatient services, managed care, payment, physician services, primary care, provider participation, supplemental payments, Upper Payment Limit (UPL), value-based purchasing