The Price of Otologic Procedures: Variation in Markup by Surgical Procedure and Geography in the United States

Hospitals with decreasing cost-to-charge ratios bill greater surgical charges for similar outcomes

BACKGROUND

The cost-to-charge ratio reflects the markup of hospital services. A lower cost-to-charge ratio indicates lower costs and/or greater charges. This study examines factors associated with cost-to-charge ratio trends to determine whether decreasing cost-to-charge ratio is associated with worse surgical outcomes.

METHODS

The Florida Agency for Healthcare Administration Inpatient database (2018-2020) was queried for common surgical procedures and linked to the Distressed Communities Index, RAND Corporation Hospital data, Center for Medicare Services Cost Reports, and American Hospital Association data. Only hospitals with monotonically increasing or decreasing cost-to-charge ratio were included in the study. Univariable analysis compared these hospitals. Using patient-level data, interpretable machine learning predicted cost-to-charge ratio trend while identifying influential factors.

RESULTS

The cohort had 67 hospitals (27 increasing cost-to-charge ratio and 40 decreasing cost-to-charge ratio) with 35,661 surgeries. Decreasing cost-to-charge ratio hospitals were more often proprietarily owned (78% vs 33%, P = .01) and had greater mean total charges ($134,349 ± $114,510 vs $77,185 ± $82,027, P < .01) with marginally greater mean estimated costs ($14,863 ± $12,343 vs $14,458 ± $15,440, P < .01). Patients from decreasing cost-to-charge ratio hospitals had greater rates of most comorbidities (P < .05) but no difference in mortality or overall complications. Machine-learning models revealed charges rather than clinical factors as most influential in cost-to-charge ratio trend prediction.

CONCLUSIONS

Decreasing cost-to-charge ratio hospitals charge vastly more despite minimally greater estimated costs and no difference in outcomes. Although differences in case-mix existed, charges were the predominant differentiators. Patient clinical factors had far less of an impact.

Mark-Up Trends in Contemporary Medicare Primary and Revision Total Joint Arthroplasty

BACKGROUND

Understanding mark-up ratios (MRs), the ratio between a healthcare institution's submitted charge and the Medicare payment received, for high-volume orthopaedic procedures is imperative to inform policy about price transparency and reducing surprise billing. This analysis examined the MRs for primary and revision total hip and knee arthroplasty (THA and TKA) services to Medicare beneficiaries between 2013 and 2019 across healthcare settings and geographic regions.

METHODS

A large dataset was queried for all THA and TKA procedures performed by orthopaedic surgeons between 2013 and 2019, using Healthcare Common Procedure Coding System (HCPCS) codes for the most frequently used services. Yearly MRs, service counts, average submitted charges, average allowed payments, and average Medicare payments were analyzed. Trends in MRs were assessed. We evaluated 9 THA HCPCS codes, averaging 159,297 procedures a year provided by a mean of 5,330 surgeons. We evaluated 6 TKA HCPCS codes, averaging 290,244 procedures a year provided by a mean of 7,308 surgeons.

RESULTS

For knee arthroplasty procedures, a decrease was noted for HCPCS code 27438 (patellar arthroplasty with prosthesis) over the study period (8.30 to 6.62; P = .016) and HCPCS code 27447 (TKA) had the highest median (interquartile range [IQR]) MR (4.73 [3.64 to 6.30]). For revision knee procedures, the highest median (IQR) MR was for HCPCS code 27488 (removal of knee prosthesis; 6.12 [3.83-8.22]). While no trends were noted for both primary and revision hip arthroplasty, median (IQR) MRs in 2019 for primary hip procedures ranged from 3.83 (hemiarthroplasty) to 5.06 (conversion of previous hip surgery to THA) and HCPCS code 27130 (total hip arthroplasty) had a median (IQR) MR of 4.66 (3.58-6.44). For revision hip procedures, MRs ranged from 3.79 (open treatment of femoral fracture or prosthetic arthroplasty) to 6.10 (revision of THA femoral component). Wisconsin had the highest median MR by state (>9) for primary knee, revision knee, and primary hip procedures.

CONCLUSION

The MRs for primary and revision THA and TKA procedures were strikingly high, as compared to nonorthopaedic procedures. These findings represent high levels of excess charges billed, which may pose serious financial burdens to patients and must be taken into consideration in future policy discussions to avoid price inflation.

The Markup on Orthopaedic Services: An Analysis of 2014-2019 Medicare Data and the Potential for Surprise Billing

BACKGROUND

Markups on charges for medical services have the potential to result in "surprise billing," especially for out-of-network and uninsured patients. Although previously analyzed in other surgical subspecialties, the distribution and level of cost-to-charge ratios (CCRs) for orthopaedic services have yet to be studied. Therefore, our analysis sought to evaluate the CCRs for orthopaedic surgery services provided to Medicare beneficiaries throughout the United States.

METHODS

Orthopaedic services provided to Medicare Part B beneficiaries between 2014 and 2019 were identified in the Physician & Other Practitioners database of the Centers for Medicare & Medicaid Services (CMS). CCRs, representing the ratio between the actual payment provided by CMS and the charge submitted by the provider, were calculated for each service. Descriptive statistics were calculated for CCRs at the national, state, and service-code levels. The coefficient of variation (CoV) was utilized to evaluate variability in CCRs across services and states. Additionally, Mann-Kendall tests were performed to evaluate trends in CCRs for included services over the time frame.

RESULTS

Our analysis included an annual mean of 47,247,928 services provided by a mean of 23,185 orthopaedic surgeons over the study period. In the non-facility setting, there was a decrease in median CCRs for orthopaedic surgery services (0.29 to 0.27; p = 0.024). No changes were demonstrated for facility-based services. Service codes related to trigger finger procedures (0.18 to 0.17; p = 0.004), physical therapy (0.40 to 0.36; p = 0.035), and new patient visits (0.52 to 0.46; p = 0.035) demonstrated significant decreases in median CCRs. Only shoulder arthroscopy demonstrated a significant increase in median CCR (0.09 to 0.10; p = 0.003). High dispersion in CCRs was demonstrated for 16 (80%) of the 20 evaluated services. Wide variations in CCRs were demonstrated across individual states (median, 0.57; interquartile range width, 0.53).

CONCLUSIONS

Our analysis demonstrated low and variable CCRs for commonly performed orthopaedic services in the U.S. These findings serve to inform and help improve related price transparency policies. Additionally, our analysis encourages increased efforts at preventing these low CCRs from limiting care in vulnerable populations.