Tag Archive | reimbursement

The Economics of Revision THA for Fractures: Sustainable?

At the risk of  economic oversimplification, it is difficult to sustainably provide a service when payment for it is less than the cost to perform it. But that is one reality exposed by Hevesi et al. in the May 15, 2019 issue of The Journal. Using National Inpatient Sample and ACS-NSQIP data, the authors compared the average costs and 30-day complication rates for revision total hip arthroplasties (THAs) performed for 3 different indications—fractures, wear/loosening, and instability—at both a local and national level. They found that the average hospitalization costs associated with a revision THA related to a fracture were 33% to 48% higher (p < 0.001) than the cost of revision THAs related to wear or instability.

However, the authors emphasize that all 3 of these indications for revision THA are reimbursed at the same rate based on Medicare Diagnosis-Related Group (DRG) codes. DRGs take into account patient comorbidities to determine reimbursement levels—but they do not adjust payments for THA revision according to indication. Hevesi et al. note that the only DRG reimbursement level that would cover the average cost of a revision THA for a fracture would be one performed on a patient with severe medical comorbidities or a major complication. Not surprisingly, patients who underwent a revision THA to treat a fracture were found to have a higher age and more medical comorbidities than those undergoing a revision for wear or instability.

The authors use this data to make a very compelling case that DRGs for revision THA should be changed so they are indication-specific, taking into account the underlying reason for the revision. They observe that “a DRG scheme that does not distinguish between indications for revision THA sets the stage for disincentivizing the care of fracture patients and incentivizing referrals to other facilities.” Those “other facilities” usually end up being large tertiary-care centers, which the authors claim “perform a higher percentage of the costlier revision THA indications.”

This problem of reimbursement inequality is not unique to revision THAs and requires further investigation in many fields. Unless “the system” addresses these subtle but important differences, tertiary referral centers may be inundated with patients who need procedures that cost more to perform than the institutions receive in reimbursement—an unsustainable scenario.

Chad A. Krueger, MD
JBJS Deputy Editor for Social Media

A Closer Look at Discrepancies in Medicaid Reimbursements

In the February 7, 2018 issue of The Journal, Lalezari et al. provide a detailed analysis of the variability in state-based Medicaid reimbursements to physicians for 10 common orthopaedic procedures, including hip and knee replacement and 5 spinal surgeries. The discrepancies in reimbursements between states, even bordering states in the same geographic region, are substantial and do not seem to follow any pattern. This phenomenon of reimbursement variability has been mentioned in podium presentations and some less comprehensive reports in the past. However, the authors of this study used a careful, methodological approach to accurately report these differences in a manner that is easy for readers to understand.

There is simply no way to rationalize this degree of variation in Medicaid reimbursement; the magnitude cannot be explained by differences in workload or practice costs because Lalezari et al. adjusted for cost of living and relative value units (RVUs). Nor does Medicaid-reimbursement variability seem to be related to Medicare reimbursement rates, as some states had Medicaid reimbursements that were higher than Medicare reimbursements for all procedures analyzed.

The orthopaedic community should not react directly to the reimbursement discrepancies presented in this article. Rather, orthopaedic surgeons, health system administrators, and patients alike should bring the variability of Medicaid reimbursements to the attention of state and federal policy makers.

Alas, I am not optimistic that this issue will gain a lot of traction given the long list of healthcare-related issues currently on the desks of state and federal lawmakers. Moreover, as the authors mention, these state-based reimbursement rates are likely related to many variables, and Lalezari et al. further observe that “health policy intended to improve access to specialty care should not solely focus on physician reimbursement.” However, consistent communication with elected officials to help explain the impact that these variable rates can have on patient care, accompanied by updated studies like this one every 2 to 4 years, would seem to be a rational response to these data.

Marc Swiontkowski, MD
JBJS Editor-in-Chief