Does Medicaid pay enough for common surgeries?

(Reuters Health) – Medicaid, the U.S. health program for the poor, pays far less for common surgical procedures in many states than does Medicare, the federal insurance plan for the elderly, according to a new study.

Some of the discounts are so steep that they may threaten access to care, the authors argue.

Medicaid is the biggest public health program in the U.S. and currently accounts for about $1 out of every $6 spent on medical care. Medicaid expenditures also represent almost half of all federal funds spent by states.

When Medicaid fees are too low relative to payments from Medicare, doctors may refuse to treat Medicaid patients, potentially making it much harder for poor people to get treatment, argue Dr. Charles Mabry of the University of Arkansas in Little Rock and colleagues in the Journal of the American College of Surgeons.

“Lack of proper payment can cause some Medicaid patients to have needed surgical procedures delayed,” Mabry told Reuters Health by email. “Our hope was that by researching and publishing on these wide variations in payment, it would spur states to rethink the methodology for how they determine payment.”

Even though the federal government picks up part of the tab for care, Medicaid payment rates as well as enrollment eligibility and covered benefits are determined by individual states.

To assess the degree of variation between Medicare and Medicaid payments for surgery, Mabry and colleagues calculated how much fees varied for some of the most common procedures done by general surgeons in nearly every state across the country. The analysis excluded only Kansas and Tennessee.

The largest discount they found was in New Jersey, which paid $1,011 less for surgery to remove all or part of the small intestine through Medicaid than the amount paid by Medicare for the same operation.

At the other extreme, the biggest premium was in Alaska, which paid $1,382 more for insertion of a tunneled central venous port under Medicaid than Medicare would pay for the procedure. These ports are often used to administer chemotherapy and other intravenous medicines, to get frequent blood samples, or to provide nutrition to patients.

When they looked at mastectomies, often done for women with breast cancer, Medicaid paid $226.47 in Connecticut, 69 percent less than the $725.35 Medicare payment for the same procedure in the same state.

For an enterectomy, typically done to remove a tumor or obstruction in the small intestine, New Jersey’s Medicaid payment of $332 was 75 percent less than the $1,343.16 payment under Medicare.

A minimally invasive gallbladder surgery that includes insertion of a small tube to help drain bile commands a Medicaid payment of $343.20 in Missouri, 51 percent less than the $697.23 Medicare amount.

To fix a ventral hernia, a bulge through an abnormal opening in the wall of the abdominal muscles, Medicaid in New Hampshire pays $300, 61 percent less than the $762.28 Medicare payment in the state.

The analysis has several limitations, including the narrow focus on a handful of surgical procedures and the reliance on published payment schedules in each state, which may not necessarily reflect what surgeons actually get paid, the authors note. The analysis also lacked data on certain bulk payments or additional funds paid by Medicaid that might minimize the apparent discounts in some cases.

The paper didn’t examine how access to care might be adversely affected by steep discounts in Medicaid payments relative to Medicare or private insurance. But, the authors conclude, it’s likely some people struggle to find surgeons or experience delays in care as a direct result of low fees that motivate doctors to refuse Medicaid patients.

One woman with sickle-cell disease and Medicaid coverage is a case-in-point for Dr. Constantine Manthous, who retired from Yale University and works in private practice in New London, Connecticut.

He recalled meeting her after she had spent a decade in a wheelchair because she couldn’t find a surgeon to repair her hip. She didn’t receive surgery until the hip fell out of its socket, requiring constant hospitalization and morphine.

“By that time she was so ill she died of late complications from the decade delay,” Manthous, who wasn’t involved in the study, said by email. “You and I would have gotten the hip immediately.”

SOURCE: Journal of the American College of Surgeons, online January 13, 2016.

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