State variation in medicaid reimbursements for orthopaedic surgery

Background: Medicaid reimbursements are determined by each state and are subject to variability. We sought to quantify this variation for commonly performed inpatient orthopaedic procedures. Methods: 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. Results: The range of variability of Medicaid reimbursements among states exceeded $1,500 for all 10 procedures. The coefficients of variation ranged from 0.32 (hip hemiarthroplasty) to 0.57 (posterior or posterolateral lumbar interbody arthrodesis) (a higher coefficient indicates greater variability), 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 2$8/RVU (total knee arthroplasty) to 2$17/RVU (open reduction and internal fixation of the femur). Conclusions: 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.