Medicaid Reimbursement for Common Orthopaedic Trauma Procedures Is 16.0% Less Compared With Medicare With Substantial Variability Between States

Objectives: This study seeks to evaluate the variability of Medicaid reimbursement and compare it with Medicare reimbursement using the 20 most commonly billed orthopaedic trauma Current Procedural Terminology (CPT) codes nationwide. The authors anticipate significant variability between states and hypothesize that Medicaid payment will be significantly less than Medicare payment.

Methods: The top 20 most common orthopaedic trauma surgery procedural codes were identified from a previous analysis performed by Haglin et al. The Centers for Medicare and Medicaid Services Physician Fee Schedule was used to determine reimbursement rates from Medicare, and state Medicaid fee schedules were used to determine reimbursement rates for Medicaid. State Medicaid rates were compared with their corresponding Medicare rates to determine a dollar difference. In addition, the dollar difference for each CPT code was divided by its respective physician relative value unit. This was used to acknowledge the possible variability in the complexity of orthopaedic procedures and the related physician effort. The Medicare Wage Index was used to adjust Medicaid rates based on the cost of living for the state as well. Coefficients of variation were calculated to represent overall variability in Medicaid and Medicare reimbursement rates.

Results: The mean reimbursement rates for Medicaid were lower for all 20 procedures compared with Medicare. On average, Medicaid reimbursed 16.0% less than Medicare and 29.6% less when adjusting for cost of living. MCD reimbursed at a higher rate than MCR for all procedures in only 9 states (Alaska, Arizona, Arkansas, Montana, Nebraska, New Jersey, New Mexico, North Dakota, and South Dakota) while 38 states reimbursed at a lower rate than MCR, on average. The coefficient of variation ranged from 0.24 to 0.34 for the Medicaid unadjusted group and from 0.35 to 0.46 for the Medicare Wage Index-adjusted group. By contrast, the Medicare group was consistent at 0.06 for all 20 procedures. The average dollar difference across the 20 CPT codes for Medicaid reimbursement compared with Medicare reimbursement ranged from -$76.89 to -$225.17, and the dollar difference per relative value unit ranged from -$5.96 to -$15.16.

Conclusions: This study found a high amount of variation between state Medicaid reimbursement rates and average rates that were significantly lower than Medicare reimbursement rates for the top 20 most used orthopaedic trauma CPT codes as identified by Haglin et al. The discrepancy in reimbursement was increased when Medicaid rates were adjusted for state cost of living.

Level of evidence: Prognostic, Level III. See Instructions for Authors for a complete description of levels of evidence.