Significant variations by state in Medicaid reimbursements for orthopaedic procedures

The findings were published in the Journal of Bone and Joint Surgery.

In this study, Pozen and colleagues sought to quantify this reimbursement variation for commonly performed inpatient orthopaedic procedures. Pozen explains that State Medicaid programs may set their own reimbursement rates to providers (or to managed care plans, who negotiate with providers).

The 10 most commonly performed inpatient orthopaedic procedures, as ranked by the Healthcare Cost and Utilization Project (HCUP) National Inpatient Sample, were identified for study. Medicaid reimbursement amounts for those procedures were benchmarked to state Medicare reimbursement amounts in 3 ways: (1) ratio, (2) dollar difference, and (3) dollar difference divided by the relative value unit (RVU) amount. Variability was quantified by determining the range and coefficient of variation for those reimbursement amounts.

The range of variability of Medicaid reimbursements among states exceeded $1,500 for all 10 procedures. The coefficients of variation (a higher coefficient indicates greater variability) ranged from 0.32 for hip hemiarthroplasty to 0.57 for posterior or posterolateral lumbar interbody arthrodesis, compared with 0.07 for Medicare reimbursements for all 10 procedures. Adjusted as a dollar difference between Medicaid and Medicare per RVU, the median values ranged from -$8/RVU for total knee arthroplasty to -$17/RVU for open reduction and internal fixation of the femur.

The researchers concluded that variability of Medicaid reimbursement for inpatient orthopaedic procedures among states is substantial. This variation becomes especially remarkable given recent policy shifts toward focusing reimbursements on value. Pozen notes, “We found substantial variability across states in the rates of several common orthopedic procedures that could not be explained by factors such as differences in the cost of living. Such variability raises a question about whether reimbursement reflects the value of care provided, and it also imperils access for Medicaid beneficiaries in states with low reimbursement rates.”

Lalezari, R. M., Pozen, A., and Dy, C. J. (2018). State Variation in Medicaid Reimbursements for Orthopaedic Surgery. The Journal of Bone and Joint Surgery, 100(3), 236-242. doi:10.2106/jbjs.17.00279