Comparison of Medicaid Payments Relative to Medicare Using Inpatient Acute Care Claims from the Medicaid Program: Fiscal Year 2010-Fiscal Year 2011

ObjectiveTo compare Medicaid fee-for-service (FFS) inpatient hospital payments to expected Medicare payments. Data SourcesMedicaid and Medicare claims data, Medicare's MS-DRG grouper and inpatient prospective payment system pricer (IPPS pricer). Study DesignMedicaid FFS inpatient hospital claims were run through Medicare's MS-DRG grouper and IPPS pricer to compare Medicaid's actual payment against what Medicare would have paid for the same claim. Principal FindingsAverage inpatient hospital claim payments for Medicaid were 68.8 percent of what Medicare would have paid in fiscal year 2010, and 69.8 percent in fiscal year 2011. Including Medicaid disproportionate share hospital (DSH), graduate medical education (GME), and supplemental payments reduces a substantial proportion of the gap between Medicaid and Medicare payments. ConclusionsMedicaid payments relative to expected Medicare payments tend to be lower and vary by state Medicaid program, length of stay, and whether payments made outside of the Medicaid claims process are included.