Fig. 1 Average percent change in adjusted Medicare physician reimbursement for primary total hip and knee arthroplasty
Source: Haglin et al., “A 20-year Analysis of Geographic Variability in Medicare Physician Reimbursement for Total Hip and Knee Arthroplasty”

AAOS Now

Published 9/2/2021
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Rebecca Araujo

Geographic Variability Seen in Medicare Reimbursement for Joint Replacement

A study of changes in Medicare reimbursement for arthroplasty procedures in the United States since 2000 found large geographic variability arising over that period. The study, on display as a poster today and tomorrow in Academy Hall, notes that current payment models within orthopaedic surgery have rapidly changed in recent years, particularly with Medicare reimbursement.

“There has been increased interest in the variance that exists within Medicare reimbursement for arthroplasty across the United States,” presenting author Jack Haglin, MD, of Mayo Clinic in Phoenix, Ariz., told AAOS Now Daily Edition. “Such reimbursement is influenced by the geographic practice cost index (GPCI), which varies by region and acts as a location-corrective multiplier for physician reimbursement. The GPCI multiplier has been a target of legislative reform; however, little study exists regarding its specific impact on physician reimbursement for arthroplasty.”

Fig. 1 Average percent change in adjusted Medicare physician reimbursement for primary total hip and knee arthroplasty
Source: Haglin et al., “A 20-year Analysis of Geographic Variability in Medicare Physician Reimbursement for Total Hip and Knee Arthroplasty”
Fig. 2 Heatmap of unadjusted mean reimbursement amount by state for year 2020
Source: Haglin et al., “A 20-year Analysis of Geographic Variability in Medicare Physician Reimbursement for Total Hip and Knee Arthroplasty”

The investigators used the Physician Fee Schedule Look-Up Tool to identify reimbursement amounts for inpatient total joint arthroplasty (TJA) across the United States in 2000. Values were collected by locality, and averages were analyzed on a state-by-state basis. Data from 2000 were adjusted for inflation and then compared to averages in 2020.

During that 20-year period, average reimbursement for TJA decreased by 40.9 percent nationwide, from $2,368.43 to $1,399.61. As seen in Fig. 1, the largest mean decreases in reimbursement were found in Hawaii (–45.1 percent), California (–44.7 percent), and Michigan (–44.6 percent). Alaska, Montana, and Wyoming did not see such dramatic reductions (–34.8 percent, –35.8 percent, and –37.6 percent, respectively).

As seen in Fig. 2, the highest reimbursements in 2020 were in Alaska ($1,799.08), New York ($1,620.71), and Florida ($1,549.56). Those rates were significantly higher than the averages in the three lowest-reimbursed states: Nebraska ($1,260.02), Mississippi ($1,268.64), and Arkansas ($1,270.20).

The extent of variability in reimbursement amounts “really is surprising and unexpected,” said Dr. Haglin, pointing to the more than $500 difference in reimbursement between Nebraska and Alaska. “This variance is poorly defined in the literature, and this difference may likewise be surprising to surgeons in these states,” he said.

The variability in changes in reimbursement since 2000 may indicate larger and undetected administrative factors affecting physician payment. “As the GCPI is not regularly updated in many states, this may imply that the legislation for location correction may be outdated in some localities,” said Dr. Haglin.

The study was limited by use of publicly available data, which is reliant on proper coding and recording. The authors believe errors of that kind were minimal. Another limitation is the averaging of reimbursement data across entire states. Further study is needed to analyze trends within states.

The results also point to a need for consideration of socioeconomic factors that may be missing from the current dataset. “Given the results of this study, further analyzing of this data along with true and current cost-of-living indexes is necessary,” said Dr. Haglin. “Much of the geographic reimbursement correction is based on old census data from 2010 or earlier, and future study is necessary to ensure that local reimbursement trends are appropriate given the true and current happenings of that local population.”

The study will be presented as P0580 today and tomorrow in Academy Hall from 7 a.m. to 5 p.m.

Dr. Haglin’s coauthors of “A 20-year Analysis of Geographic Variability in Medicare Physician Reimbursement for Total Hip and Knee Arthroplasty” are David V. Ivanov, MD, and Derek F. Amanatullah, MD, PhD.

Rebecca Araujo is the associate editor of AAOS Now.