The Texas Medical Association, seeking a more sustainable Medicaid program to encourage physician participation, recently called on the Texas Health and Human Services Commission (HHSC) to provide a Medicaid fee update to at least Medicare payment parity or better.
The Nov. 12 letter from TMA President G. Ray Callas, MD, to HHSC criticized “the unfortunate and archaic use of a woefully low conversion factor in the resource-based fee methodology used for Texas Medicaid payments” – a calculation significantly below even the 2025 Medicare conversion factor, which the Centers for Medicare & Medicaid Services decreased for the fifth straight year per a final rule issued earlier this month.
“If we do not have Medicaid payment parity [to Medicare] or an increase, we’re going to continue to see less and less physicians [be able to maintain their practices and] take Medicaid, and more importantly, we’ll also see less and less access,” said Dr. Callas. “Then, if Medicaid patients then start using emergency departments as their primary care homes, it’s just a snowball effect for cost.”
TMA encouraged HHSC to instead “modernize the Medicaid fee schedule and provide Texas physicians with an inflationary update,” and to increase Medicaid physician payments “to Medicare parity or better to ensure greater Medicaid program participation by physicians.”
HHSC proposes a conversion factor of $28.0672 for most services provided to children 20 years of age and younger, and $26.7305 for services provided to adults 21 years of age and older. The 2025 Medicare conversion factor, by comparison, is $32.3465.
TMA also expressed concern that freezing anesthesia service rates and reducing payment for physician-administered oncology drugs would compromise cancer patients’ access to crucial care. Those changes would go into effect March 1, prompting the Texas Society of Anesthesiologists and Texas Society of Clinical Oncology to cosign TMA’s letter.
“If [anesthesiologist service rates] don't go up by inflation, then it's actually a decrease,” said Amr Abouleish, MD, an anesthesiologist and professor at The University of Texas Medical Branch at Galveston.
Debra Patt, MD, of Texas Oncology, noted that reduced rates for cancer therapy medication could worsen an already precarious treatment landscape.
“While we're not underwater on all of the drugs, we are underwater on some of them, and it's made some providers in the state not [be able to] provide care for Medicaid patients,” the Austin oncologist said.
The proposed changes have an outsized effect on some of Texas’ already underserved populations. TMA Director of Public Affairs Amanda Kit Tollett noted that rural patients are “more vulnerable to Medicaid rate increases or decreases.” Per HHSC data, as of August 2024 (the latest month available), nearly 4.16 million Texans were enrolled in Medicaid, with about 12% of those from 191 rural counties throughout the state.
Vivek Rao, MD, an Odessa allergist with rural patients living as far as 150 miles from his office, opened his practice in 2006, intending to accept Medicaid patients once established. Yet, even six years in, he determined Medicaid’s low payment rates would put his practice at risk.
“Especially now, with all the commercial plan reimbursement rates coming down and Medicare not keeping up with inflation, if I were to take Medicaid at this current time with what Medicaid pays, I wouldn't be able to survive a year,” he said. “Losing another physician in west Texas would significantly harm the quality and availability of health care, which we truly cannot afford.”
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TMA State Advocacy page to learn about its work heading into the new legislative session.
Phil West
Associate Editor
(512) 370-1394
phil.west[at]texmed[dot]org
Phil West is a writer and editor whose publications include the Los Angeles Times, Seattle Times, Austin American-Statesman, and San Antonio Express-News. He earned a BA in journalism from the University of Washington and an MFA from the University of Texas at Austin’s James A. Michener Center for Writers. He lives in Austin with his wife, children, and a trio of free-spirited dogs.