Medicaid Reimbursement Rates FAQs

QUESTION:
Is the reimbursement rate paid by Medicare or Medicaid the same for all Virginia physicians regardless of their geographic region?

ANSWER:
Medicare adjusts its fees by geographic area with one fee paid in some cities and counties located in Northern Virginia and a different fee paid for the rest of the state.  Generally the dividing line is Route 123.

Virginia Medicaid, in its fee-for-service business, has just one statewide fee schedule with no geographic variation.  Accordingly, under its fee for service business, a physician receives the same reimbursement for a 99214 code whether the services are provided in Virginia Beach, Wytheville or Fairfax. 

However, over one-half of all Medicaid and FAMIS recipients are enrolled in one of several private health plans.  These health plans contract directly with providers and, although it is dangerous to make generalizations about multiple plans which all have multiple provider contracts, generally pay as much or more than the fee-for-service Medicaid fee. 

Health plan penetration varies by region of the state and this could contribute to the impression that fees vary by region.  In addition, health plans do not all pay exactly the same fees.  Each one develops its own contracts with providers.  This also may contribute to the impression that fees vary by region. In addition, some variation may exist among plans even within a single region. 

In summary, any apparent variation in Medicaid fees, by geographic region, is not due to a geographic differential intentionally built into the Medicaid fee schedule because no such differential exists.  If such variation occurs, it is a result of the fact that there are several health plans, each contracting separately in the development of its own network of providers.

We wish to thank Patrick Finnerty, director of DMAS for his assistance and contribution of the information necessary to answer the question posed.