Medicare Payments to Hospitals and Physicians for Total Hip and Knee Arthroplasty Declined From 2009 to 2019

Blackburn, Collin; Du, Jerry Y.; Marcus, Randall E.

doi:10.1016/j.arth.2022.10.002

Cited by 5 publications

(4 citation statements)

References 23 publications

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“…These results are consistent with our previous PFR investigation of 2004-2012 data years, 5 a subsequent similar analysis of 2007-2014 data years by other researchers using a different data source, 9 and analyses of specific hospital-based services and diagnoses. 10,11 Another report on aggregate health care expenditures using sources such as the National Health Expenditure Accounts has pointed to overall spending increases during the same period for both inpatient and professional services, but these topics were not investigated in the manner presented here; that is, this study examined professional fees specific to hospital-based care. 12,13 This study had several limitations.…”

Section: Discussionmentioning

confidence: 98%

Professional Fees for U.S. Hospital Care, 2016–2020

Peterson,

Xu,

Grosse

et al. 2023

Medical Care

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Background: The latest comprehensive diagnosis-specific estimates of hospital professional fees relative to facility fees are from 2004 to 2012. Objective: Update professional fee ratio (PFR) estimates to improve cost analysis opportunities with hospital discharge data sources and compare them with previous PFR estimates. Subjects: 2016–2020 MarketScan inpatient admissions and emergency department (ED) treat and release claims. Measures: PFR was calculated as total admission or ED visit payment divided by facility-only payment. This measure can be multiplied by hospital facility costs to yield a total cost estimate. Research Design: Generalized linear regression models controlling for selected patient and service characteristics were used to calculate adjusted mean PFR per admission or ED visit by health payer type (commercial or Medicaid) and by selected diagnostic categories representing all clinical diagnoses (Major Diagnostic Category, Diagnostic Related Group, and Clinical Classification Software Revised). Results: Mean 2016–2020 PFR was 1.224 for admissions with commercial payers (n = 6.7 million admissions) and 1.178 for Medicaid (n = 4.2 million), indicating professional payments on average increased total payments by 22.4% and 17.8%, respectively, above facility-only payments. This is a 9% and 3% decline in PFR, respectively, compared with 2004 estimates. PFR for ED visits during 2016–2020 was 1.283 for commercial payers (n = 22.2 million visits) and 1.415 for Medicaid (n = 17.7 million). This is a 12% and 5% decline in PFR, respectively, compared with 2004 estimates. Conclusions: Professional fees comprise a declining proportion of hospital-based care costs. Adjustments for professional fees are recommended when hospital facility-only financial data are used to estimate hospital care costs.

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Section: Discussionmentioning

confidence: 98%

Professional Fees for U.S. Hospital Care, 2016–2020

Peterson,

Xu,

Grosse

et al. 2023

Medical Care

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“…In conclusion, the downward trend in physician reimbursement for orthopedic TJA procedures continues to be alarming [ 1 , [4] , [5] , [6] , 10 , [21] , [22] , [23] , [24] , [25] ]. We forecast that as early as 2030, orthopedic surgeons will be reimbursed $13.93/h for primary THA and $14.97/h for primary TKA (in 2023 USD).…”

Section: Discussionmentioning

confidence: 99%

“…Using a narrower focus, orthopedics has experienced more drastic cuts to both total and physician reimbursement than many other specialties [ [1] , [2] , [3] ]. Since 2009, Medicare has reduced its total spending on elective primary total joint replacement (TJA) by more than $1 billion annually [ 4 ]. From 2000 to 2015, orthopedic surgeons lost an average of 29% of their total reimbursement rates, with price per work relative value unit (wRVU) decreasing by an average of 39% [ 5 ].…”

Section: Introductionmentioning

confidence: 99%

The Trend of Medicare Reimbursement for Total Joint Arthroplasty: Using Mathematical Models to Predict Possible Per-Hour Rate Out to 2030

Catton,

Puddy,

Tyagi

et al. 2024

Arthroplasty Today

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“…Payers of healthcare services are making substantial efforts to reduce the national financial burden of orthopaedic surgery, and many hospitals face substantial downward price pressure [34]. Inflation-adjusted payments from Medicare to hospitals for total joint arthroplasty have declined by more than 10% over the past decade [5]. These trends are driven by a combination of declining hospital payments and expanding alternative reimbursement schemes such as the Bundled Payments for Care Improvement [10] and the Comprehensive Care for Joint Replacement [11] initiatives.…”

Section: Introductionmentioning

confidence: 99%

Elective THA for Indications Other Than Osteoarthritis Is Associated With Increased Cost and Resource Use: A Medicare Database Study of 135,194 Claims

Blackburn,

Du,

Marcus

2023

Clin Orthop Relat Res

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Background Under Medicare’s fee-for-service and bundled payment models, the basic unit of hospital payment for inpatient hospitalizations is determined by the Medicare Severity Diagnosis Related Group (MS-DRG) coding system. Primary total joint arthroplasties (hip and knee) are coded under MS-DRG code 469 for hospitalizations with a major complication or comorbidity and MS-DRG code 470 for those without a major complication or comorbidity. However, these codes do not account for the indication for surgery, which may influence the cost of care. Questions/purposes We sought to (1) quantify the differences in hospital costs associated with six of the most common diagnostic indications for THA (osteoarthritis, rheumatoid arthritis, avascular necrosis, hip dysplasia, posttraumatic arthritis, and conversion arthroplasty), (2) assess the primary drivers of cost variation using comparisons of hospital charge data for the diagnostic indications of interest, and (3) analyze the median length of stay, discharge destination, and intensive care unit use associated with these indications. Methods This study used the 2019 Medicare Provider Analysis and Review Limited Data Set. Patients undergoing primary elective THA were identified using MS-DRG codes and International Classification of Diseases, Tenth Revision, Procedure Coding System codes. Exclusion criteria included non-fee-for-service hospitalizations, nonelective procedures, patients with missing data, and THAs performed for indications other than the six indications of interest. A total of 713,535 primary THAs and TKAs were identified in the dataset. After exclusions were applied, a total of 135,194 elective THAs were available for analysis. Hospital costs were estimated using cost-to-charge ratios calculated by the Centers for Medicare and Medicaid Services. The primary benefit of using cost-to-charge ratios was that it allowed us to analyze a large national dataset and to mitigate the random cost variation resulting from unique hospitals’ practices and patient populations. As an investigation into matters of health policy, we believe that assessing the surgical cost borne by the “average” hospital was most appropriate. To analyze estimated hospital costs, we performed a multivariable generalized linear model controlling for patient demographics (gender, age, and race), preoperative health status, and hospital characteristics (hospital setting [urban versus rural], geography, size, resident-to-bed ratio, and wage index). We assessed the principal drivers of cost variation by analyzing the median hospital charges arising from 30 different hospital revenue centers using descriptive statistics. Length of stay, intensive care use, and discharge to a nonhome location were analyzed using multivariable binomial logistic regression. Results The cost of THA for avascular necrosis was 1.050 times (95% confidence interval 1.042 to 1.069; p < 0.001), or 5% greater than, the cost of THA for osteoarthritis; the cost of hip dysplasia was 1.132 times (95% CI 1.113 to 1.152; p < 0.001), or 13% greater; the cost of posttraumatic arthritis was 1.220 times (95% CI 1.193 to 1.246; p < 0.001), or 22% greater; and the cost of conversion arthroplasty was 1.403 times (95% CI 1.386 to 1.419; p < 0.001), or 40% greater. Importantly, none of these CIs overlap, indicating a discernable hierarchy of cost associated with these diagnostic indications for surgery. Rheumatoid arthritis was not associated with an increase in cost. Medical or surgical supplies and operating room charges represented the greatest increase in charges for each of the surgical indications examined, suggesting that increased use of medical and surgical supplies and operating room resources were the primary drivers of increased cost. All of the orthopaedic conditions we investigated demonstrated increased odds that a patient would experience a prolonged length of stay and be discharged to a nonhome location compared with patients undergoing THA for osteoarthritis. Avascular necrosis, posttraumatic arthritis, and conversion arthroplasty were also associated with increased intensive care unit use. Posttraumatic arthritis and conversion arthroplasty demonstrated the largest increase in resource use among all the orthopaedic conditions analyzed. Conclusion Compared with THA for osteoarthritis, THA for avascular necrosis, hip dysplasia, posttraumatic arthritis, and conversion arthroplasty is independently associated with stepwise increases in resource use. These cost increases are predominantly driven by greater requirements for medical and surgical supplies and operating room resources. Posttraumatic arthritis and conversion arthroplasty demonstrated substantially increased costs, which can result in financial losses in the setting of fixed prospective payments. These findings underscore the inability of MS-DRG coding to adequately reflect the wide range of surgical complexity and resource use of primary THAs. Hospitals performing a high volume of THAs for indications other than osteoarthritis should budget for an anticipated increase in costs, and orthopaedic surgeons should advocate for improved MS-DRG coding to appropriately reimburse hospitals for the financial and clinical risk of these surgeries. Level of Evidence Level IV, economic and decision analysis.

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Medicare Payments to Hospitals and Physicians for Total Hip and Knee Arthroplasty Declined From 2009 to 2019

Cited by 5 publications

References 23 publications

Professional Fees for U.S. Hospital Care, 2016–2020

Professional Fees for U.S. Hospital Care, 2016–2020

The Trend of Medicare Reimbursement for Total Joint Arthroplasty: Using Mathematical Models to Predict Possible Per-Hour Rate Out to 2030

Elective THA for Indications Other Than Osteoarthritis Is Associated With Increased Cost and Resource Use: A Medicare Database Study of 135,194 Claims

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