Comparison of Medicaid Payments Relative to Medicare Using Inpatient Acute Care Claims from the Medicaid Program:...

Area of Science:

• Health economics
• Healthcare policy
• Public health

Background:

• Medicaid fee-for-service (FFS) inpatient hospital payments are a critical component of healthcare access for vulnerable populations.
• Understanding payment disparities between Medicaid and Medicare is essential for evaluating healthcare system efficiency and equity.

Purpose of the Study:

• To compare the reimbursement rates of Medicaid fee-for-service (FFS) inpatient hospital claims against what Medicare would have paid for the same services.
• To analyze the factors influencing the payment gap between Medicaid and Medicare for inpatient hospital care.

Main Methods:

• Utilized Medicaid and Medicare claims data for analysis.
• Employed Medicare's Medicare Severity Diagnosis Related Group (MS-DRG) grouper and inpatient prospective payment system (IPPS) pricer to standardize payment calculations.
• Compared actual Medicaid FFS payments to Medicare's expected payments for identical inpatient hospital claims.

Main Results:

• In fiscal years 2010 and 2011, average Medicaid inpatient hospital payments were 68.8% and 69.8%, respectively, of what Medicare would have reimbursed.
• The inclusion of supplemental Medicaid payments, such as disproportionate share hospital (DSH) and graduate medical education (GME) payments, substantially reduced the observed payment differential.

Conclusions:

• Medicaid inpatient hospital payments are consistently lower than Medicare's expected payments.
• The disparity in payments varies significantly based on state-specific Medicaid programs, patient length of stay, and the inclusion of non-claim-based payments.