Medicare Reimbursement for Total Joint Arthroplasty: The Driving Forces.

BACKGROUND: Total joint arthroplasty is a large and growing part of the U.S. Medicare budget, drawing attention to how much providers are paid for their services. The purpose of this study was to examine the variables that affect total joint arthroplasty reimbursement. Along with standard economic variables, we include unique health-care variables. Given the focus on value in the Affordable Care Act, the model examines the relationship of the quality of care to total joint arthroplasty reimbursement. We hoped to find that reimbursement patterns reward quality and reflect standard economic principles.
METHODS: Multivariable regression was performed to identify variables that correlate with Medicare reimbursement for total joint arthroplasty. Inpatient charge or reimbursement data on Medicare reimbursements were available for 2,750 hospitals with at least 10 discharges for uncomplicated total joint arthroplasty from the Centers for Medicare & Medicaid Services (CMS) for fiscal year 2011. Reimbursement variability was examined by using the Dartmouth Atlas to group institutions into hospital referral regions and hospital service areas. Independent variables were taken from the Dartmouth Atlas, CMS, the WWAMI (Washington, Wyoming, Alaska, Montana, Idaho) Rural Health Research Center, and the United States Census.
RESULTS: There were 427,207 total joint arthroplasties identified, with a weighted mean reimbursement of $14,324.84 (range, $9,103 to $38,686). Nationally, the coefficient of variation for reimbursements was 0.19. The regression model accounted for 52.5% of reimbursement variation among providers. The total joint arthroplasty provider volume (p < 0.001) and patient satisfaction (p < 0.001) were negatively correlated with reimbursement. Government ownership of a hospital (p < 0.001) and higher Medicare costs (p < 0.001) correlated positively with reimbursement.
CONCLUSIONS: Medicare reimbursements for total joint arthroplasty are highly variable. Greater reimbursement was associated with lower patient volume, lower patient satisfaction, a healthier patient population, and government ownership of a hospital. As value-based reimbursement provisions of the Affordable Care Act are implemented, there will be dramatic changes in total joint arthroplasty reimbursements. To meet these changes, providers should expect qualities such as high patient volume, willingness to care for sicker patient populations, patient satisfaction, safe outcomes, and procedural demand to correlate with their reimbursement. CLINICAL RELEVANCE: Practicing orthopaedic surgeons and hospital administrators should be aware of discrepancies in inpatient reimbursement for total joint arthroplasty from Medicare. Furthermore, these discrepancies are not associated with typical economic factors. These findings warrant further investigation and collaboration between policymakers and providers to develop value-based reimbursement.