News: Study observes Medicaid, commercial reimbursement disparity along racial lines
A new study commissioned by Manatt Health suggests that health systems who disproportionately serve historically marginalized populations (HMP) are reimbursed less than health systems serving primarily non-minority populations.
The study examined health systems in Arkansas, Massachusetts, and Virginia. During the course of their research, the researchers observed two key trends:
- Hospitals that disproportionately serve HMPs were “more reliant on Medicaid as a payer,” resulting in reduced levels of reimbursement (the average share of Medicaid patients at HMP-majority hospitals was 16%-28% higher than that of other hospitals).
- In Arkansas and Massachusetts, HMP-majority hospitals received lower commercial payments compared to non-majority HMP hospitals.
“Together, a disproportionate reliance on Medicaid as a payer and lower payment rates for commercially insured patients contributed to hospitals disproportionately serving HMPs receiving lower overall levels of reimbursement,” the authors of the study observed. “On average across our three states of focus, hospitals disproportionately serving HMPs received 87% of the overall reimbursement as other hospitals when accounting for both these hospitals’ payer mix and lower commercial payment rates.”
These disparities, however, are not set in stone—they are easily altered, so the study argues. There are a number of policy options available to policymakers who seek to rectify these chronic racial disparities:
- Interventions outside of the commercial market: Raising Medicaid payment rates; increased transparency for provider payment rates; targeted provider investments; equity-focused health plan incentives and requirements.
- Commercial market interventions: Addressing payment equity through state cost growth benchmarking programs; addressing payment disparities as a factor in insurance rate review; all-payer rate setting.
Editor’s note: To read the Manatt Health report, click here.