Drivers of Medicaid Hospital Costs and Payment Policies
Hospital spending represents a substantial share of overall Medicaid expenditures, and Medicaid hospital spending is particularly under pressure as rising input costs outpace reimbursement and strain state budgets.
The Medicaid & CHIP Payment & Access Commission (MACPAC) has contracted with AIR to analyze the drivers of Medicaid hospital costs and the payment policies that states use to manage these costs. The project focuses on key factors influencing hospital spending within Medicaid, including labor costs, inflation, utilization rates, and patient acuity.
AIR will conduct a comprehensive literature review and develop a state policy compendium to document and compare hospital payment methodologies across states. The final deliverable will be a comprehensive report synthesizing insights on how states design hospital payment rates and manage Medicaid hospital costs, intended to inform MACPAC’s policy recommendations.
