Medicaid was authorized by Title XIX of the Social Security Act and signed into law in 1965 alongside Medicare. All states, the District of Columbia, and the U.S. territories have Medicaid programs designed to provide health coverage for children, pregnant women, seniors, and individuals with disabilities (asamonitor.pub/3XnENnZ). Funding has always been a point of contention among states in their efforts to participate in federal expansion initiatives. Per the Kaiser Family Foundation (KFF), the federal share of Medicaid spending was 69% nationally for fiscal year 2021 (asamonitor.pub/3Xj2CNE).

While this allows the federal government to establish broad parameters for all states to follow, each state establishes specific eligibility, benefits, payment policies, and administration, effectively resulting in unique programs from state to state. Given the intricate and diverse nature of Medicaid reimbursement across states, we undertook two exercises to reinforce the variability noted for the membership of ASA. First, we conducted a comprehensive review of publicly available data on the Medicaid conversion factor (CF) for a global perspective, with confirmation of the submitted data by members of the ASA Committee on Economics. We then undertook a supplementary analysis using frequently submitted Current Procedural Terminology (CPT) codes to gauge the expected reimbursement from various regional Medicaid programs.

“The Medicaid program, while designed as a health safety net for economically disadvantaged populations, presents substantial hurdles stemming from its variable administrative heft and low reimbursement rates for anesthesia services.”

Globally, it’s no surprise that Medicaid fails to significantly address longstanding payment disparities with anesthesiology as a specialty. Looking across publicly available Medicaid data, lack of a national policy is obvious. Variabilities in reimbursement, CF, and administration means that little can be extrapolated from one state program to the next. While the average CF for Medicaid somewhat mirrors Medicare, 30 states currently have CFs less than the Medicare conversion factor of $20.7739. The lowest CF we noted in our review of publicly available data was documented at 44.77% of the Medicare CF.

Amid this backdrop of challenges, such as repercussions of the Consolidated Appropriations Act on Medicaid, heightened administrative complexities, persistent state-level budget deficits, and the prevailing trend of Medicaid CFs trailing behind Medicare rates, the outlook for relief for our specialty is daunting.

For our supplementary analysis, we took commonly submitted CPT codes (01210-ORIF hip; 00731-EGD; 01967-labor epidural; 00840-appendectomy) and extrapolated total reimbursement when submitted across three regions of the country (West Coast, Midwest, and Northeast). We based this aggregate sum from FAIR Health, CMS, and our Medicaid CF survey (Figure 1). While we have long known the classic findings associated with differences between commercial payers (FAIR Health) and Medicare, the variability noted for Medicaid based on this exercise was particularly eye-opening.

Figure 1: Regional Variation from FAIR Health, Medicare, and Medicaid for CPT: 01210, 00731, 01967, 00840

Figure 1: Regional Variation from FAIR Health, Medicare, and Medicaid for CPT: 01210, 00731, 01967, 00840

We noticed some inherent issues with Medicaid and its valuation of services that is worth mentioning across the U.S. On average, Medicaid reimbursement for services was $0.37 for every dollar of Medicare reimbursement collected for the same work performed in the Northeast. This pattern of undervaluing services was consistent across the regions reported, with Medicaid reimbursing at about $0.57 for every dollar of Medicare collected in the Midwest and $0.44 for every Medicare dollar along the West Coast. These values exclude payment for placement of epidurals, which requires a separate discussion as Medicaid finances 42% of all births in the U.S.

Figure 2: Medicaid Reimbursement as a Percentage of Medicare and FAIR Health

Figure 2: Medicaid Reimbursement as a Percentage of Medicare and FAIR Health

One would conceivably wonder about Federalism’s limitation and its race-to-the-bottom dynamic when it comes to the laboring parturient. Among our regions, Medicaid reimbursement for labor epidural placement ranged from 3%-10% when compared to commercial payers, which by any metric would be considered paltry.

When looking at how CMS compares to commercial payers through our FAIR Health reimbursement comparison, anesthesia practices need to have an acute awareness of Medicaid’s many valuation flaws. For the CPT codes we utilized for this exercise, practices can expect Medicaid to reimburse at a rough equivalence between 5%-15% of commercial payers. When looking at epidurals, this reimbursement range comes in between 4%-11%. For those practices that are in safety net facilities or in areas where significant Medicaid populations are being served, concessions should be aggressively pursued from hospital partners to ensure viability of anesthesia practices.

The Medicaid program, while designed as a health safety net for economically disadvantaged populations, presents substantial hurdles stemming from its variable administrative heft and low reimbursement rates for anesthesia services (asamonitor.pub/3yXLp2l). The situation is further complicated by the expansion of Medicaid coverage in some states – leading to a scenario where up to 70% of the population relies on government payers, either Medicaid or Medicare – along with active efforts in other states in unwinding populations from the Medicaid program to offset costs to state budgets. This inconsistency raises significant concerns about the program’s long-term viability and its potential alignment with single-payer health care legislation.

Moreover, the inability to modify anesthesia reimbursement rates in line with other medical specialties in some states highlights broader issues of reimbursement variability within the Medicaid system. This not only impacts the ability of anesthesiology professionals to deliver quality care but also exacerbates existing disparities in access to anesthesia services among different socioeconomic groups.

Given these challenges, we can’t reinforce enough the need for continued advocacy efforts to address the inadequacies of Medicaid reimbursement for anesthesia services that, if addressed, could improve access and health outcomes for all populations. It is imperative that policymakers recognize the importance of adequately funding anesthesia services to support the delivery of comprehensive health care to Medicaid beneficiaries and uphold the principles of fairness and equity within the health care system.