Healthcare cost implications of Medicaid managed care

Background: Medicaid, either traditional or managed care, is almost always the lowest payer in the market, the latter being the most restrictive payer of all. Hospitals in turn shift their unreimbursed costs to private payers through increased charges levied on commercial insurers for privately insured patients. Using claims data from a national 600+ member hospital organization from January 1 2006 through December 31 2010, we test the following hypothesis for 3 high-cost, high volume procedures (CABG surgery, coronary angioplasty, and hip replacement): There is a direct positive association between Medicaid managed care penetration rate in a state and charges levied on privately insured patients for the same procedure adjusted for patient and hospital characteristics, hospital competition, and geographic region. Objective: To assess the association between Medicaid managed care penetration rates and prices charged to private insurance for each of the above 3 procedures, adjusted for patient demographics, comorbidities , and to assess the magnitude of association between prices and Medicaid managed care penetration. Methods: We conduct a retrospective analysis of secondary claims data of all Medicaid and privately insured patients treated at the hospitals during the study period. The dependent variable is Total Patient Charges for the procedure. The key independent variable of interest is the state Medicaid managed care penetration rate. States are categorized as ‘1' – low Medicaid managed care, 0-59% of all Medicaid in the state, 2' – moderate 60-79%, and ‘3' – high Medicaid managed care, > or = to 80%;. Multiple regression analysis with fixed effects for geographic region will be used, controlling for patient demographics, comorbidity (Elixhauser index). Herfindahl-Hershman index of hospital competition (Metropolitan Statistical Area level), hospital teaching status, hospital size, and Medicare region.

Results: Data cleaning and analyses are underway. Conclusion: Findings will provide empirical evidence of the burden of costs faced by the privately insured population when public payers reduce reimbursements.