Regional differences in reimbursement rates from Medicare, Medicaid, and FAIR Health across common procedures for neurological surgeons

Objective: FAIR Health-a nonprofit, state-funded database-was created as an independent repository of healthcare claims paid data to address allegations of price fixing. Many insurers have forced physicians to negotiate payments based on Medicare rates, rather than utilizing FAIR Health. The authors' objective was to provide an overview of regional differences in reimbursement rates per several sample neurosurgical Current Procedural Terminology (CPT) codes and to compare Medicare, Medicaid, and usual, customary, and reasonable rates via FAIR Health rate estimates.

Methods: The authors compared FAIR Health rates for three common neurosurgical CPT codes: 61510 (removal of bone from skull for removal of upper brain tumor), 22630 (fusion of lower spine bones with removal of disc, posterior approach, single interspace), and 62223 (creation of a brain fluid drainage shunt, ventriculoperitoneal, ventriculopleural, or other terminus), with Medicare and Medicaid reimbursement to evaluate differences in five different regions in the US.

Results: Medicare and Medicaid reimbursement rates were consistently and significantly lower than FAIR Health in-network rates across all three CPT codes evaluated (p < 0.001 for all). Significant regional differences exist per census data in median age, median income, employment rates, and degree of health coverage (p < 0.001, p = 0.002, p = 0.002, and p = 0.001, respectively). Reimbursement estimates were found to have regional variation: Medicare/Medicaid rates were significantly lower than FAIR Health in-network rates for all codes across regions with a region-based interaction for reimbursement for code 62223 (p = 0.020). Medicare and Medicaid rates did not significantly vary across regions.

Conclusions: Inherent differences exist between cities and states, including median income, employment rates, and health coverage. Despite geographic cost practice indices for Medicare and state-specific production of Medicaid, Medicaid/Medicare reimbursement rates did not vary across regions but were consistently and significantly lower than FAIR Health estimates throughout the US. Locale-specific variation in FAIR Health may further indicate a better accounting of regional differences in cost of practice.