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Medicare reimbursement rates for orthopedic trauma have fallen sharply

Change will be necessary to ensure the financial health and success of physicians and hospitals caring for orthopedic trauma patients.

Jeff Lagasse, Associate Editor

The amount Medicare reimburses for orthopedic trauma surgery has fallen by nearly one-third over the past two decades, reports a study in the Journal of Orthopaedic Trauma. When adjusted for inflation, reimbursement for common procedures in this specialty has steadily decreased from 2000 to 2020.

With increasing volumes and the costs associated with medical practice, Kenneth A. Egol and colleagues in the Department of Orthopedic Surgery at NYU Langone Health in New York said that change will be necessary to ensure the financial health and success of physicians and hospitals caring for orthopedic trauma patients.

Using publicly available data from the Centers for Medicare and Medicaid, the authors examined reimbursement trends for the 20 most commonly billed surgical-procedure codes in orthopedic trauma from 2000 to 2020 – the majority of which are traumatic bone fractures requiring surgical repair with some type of hardware, known as internal fixation. Costs were adjusted for inflation to 2020 dollars, based on the Consumer Price Index.

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Over that time, the CPI – a widely used measure of inflation – increased by 52.8%. Meanwhile, average Medicare reimbursement for the 20 orthopedic trauma surgery procedures rose by only 4.9%, failing to keep up with increases in the cost of living.

WHAT'S THE IMPACT?

After correction to 2020 dollars, average reimbursement for healthcare procedures for orthopedic trauma decreased by 30%. Annual data showed a steady decline of 1.5% per year.

The trends varied by procedure type, with foot and ankle procedures demonstrating the sharpest drop in reimbursement at 42.6%. Decreases were 31.9% for hip fracture surgery (often a lifesaving procedure), 30.9% for lower extremity long bone procedures and 23.7% for shoulder and upper extremity procedures.

Medicare reimbursements are calculated using "Relative Value Units" (RVUs) for individual procedures, an arbitrary multiplier that is supposed to reflect the value of the physician's work, practice expenses and malpractice coverage. Average total RVUs for the 20 procedures increased 4.4% from 2000 to 2020. The majority of the increase was in malpractice RVUs, with a small decrease in practice expense RVUs – despite evidence showing that practice costs have increased in recent years.

The U.S. healthcare system has seen major changes in policies and payment structures throughout the last several decades, including Medicare. With the aging of the population, there will be increased demand on the Medicare system to fund orthopedic trauma surgery and fracture care in older Americans.

Orthopedic surgery has been a major focus of Medicare payment reforms, with experiments including bundled payment programs for joint replacement surgery.

"[T]he decisions made by the Centers for Medicare and Medicaid Services have had a large-scale impact on reimbursement, influencing both the public and private healthcare sectors," according to the authors.

They conclude: "Increased awareness and consideration of these trends will be important for policymakers, hospitals and surgeons in order to assure continued access to high quality surgical orthopedic trauma care in the United States." They hope the findings will serve as a springboard for efforts to develop sustainable policies to provide fair reimbursement for essential trauma surgery for the growing population of older adults covered by Medicare.

THE LARGER TREND

Planned knee and hip replacement procedures continue to climb in cost and volume, particularly among younger Americans, according to a 2019 review of medical claims data from 2010-2017 by the Blue Cross Blue Shield Association.

Knee replacements were up by 17% and hip replacements up 33%. Costing more than $25 billion in 2017, planned orthopedic surgeries account for 47% of total orthopedic spending, reflecting a 44% increase since 2010.

During the same time period, the average price of knee and hip procedures increased by 6% and 5%, respectively.

Meanwhile, CMS' push to move procedures from inpatient to less expensive outpatient care continues, with revenue at risk for lucrative joint replacement starting in 2021. The agency is slowly phasing out the inpatient-only list over the next three years and is adding more services to the ambulatory surgical center list. There are around 1,400 total codes on the list right now that are expected to be phased out by 2024.

For 2021, CMS has added 11 new procedures to the ASC list, including musculoskeletal services and total hip replacement.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com