Variation in state and federal reimbursement in the United States in the treatment of upper extremity fractures

Abstract

Medicare and Medicaid are 2 of the largest government-run health care programs in the United States. Although Medicare reimbursement is determined at the federal level by the Centers for Medicare & Medicaid Services, Medicaid reimbursement rates are set by each individual state. The purpose of this study is to compare Medicaid reimbursement rates with regional Medicare reimbursement rates for 12 orthopedic procedures performed to treat common fractures of the upper extremity. Twelve orthopedic procedures were selected and their Medicare reimbursement rates were collected from the 2020 Medicare Physician Fee Schedule. Medicaid reimbursement rates were obtained from each state's physician fee schedule. Reimbursement rates were then compared by assessing the ratio of Medicaid to Medicare, the dollar difference in Medicaid to Medicare reimbursement, and the difference per relative value unit. The range of variation in Medicaid reimbursement and Medicare wage index-adjusted Medicaid reimbursement was calculated. Comparisons in reimbursement were calculated using coefficient of variation and Student t tests to evaluate the differences between the mean Medicaid and Medicare reimbursements. Two-sample coefficient of variation testing was used to determine whether dispersion in Medicare and Medicaid reimbursement rates differed significantly. There was significant difference in reimbursement rates between Medicare and Medicaid for all 12 procedures, with Medicare reimbursing on average 46.5% more than Medicaid. In 40 states, Medicaid reimbursed less than Medicare for all 12 procedures. Regarding the dollar difference per relative value unit, Medicaid reimbursed on average $18.03 less per relative value unit than Medicare. The coefficient of variation for Medicaid reimbursement rates ranged from 0.26-0.33. This is in stark contrast with the significantly lower variability observed in Medicare reimbursement, which ranged from 0.06-0.07. Our findings highlight the variation in reimbursement that exists among state Medicaid programs for 12 orthopedic procedures commonly used to treat fractures of the upper extremity. Furthermore, average Medicaid reimbursement rates were significantly lower than Medicare rates for all 12 procedures. Such discrepancies in reimbursement may act as a barrier, impeding many Medicaid patients from accessing timely orthopedic care.