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 \u3c 0.001) and patient satisfaction (p \u3c 0.001) were negatively correlated with reimbursement. Government ownership of a hospital (p \u3c 0.001) and higher Medicare costs (p \u3c 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

Geographic and Age-Based Variations in Medicare Reimbursement Among ASSH Members.

Background: The purpose of this study was to investigate how American Society for Surgery of the Hand (ASSH) members\u27 Medicare reimbursement depends on their geographical location and number of years in practice. Methods: Demographic data for surgeons who were active members of the ASSH in 2012 were obtained using information publicly available through the US Centers for Medicare and Medicaid Services (CMS). Hand-surgeons-per-capita and average reimbursement per surgeon were calculated for each state. Regression analysis was performed to determine a relationship between (1) each state\u27s average reimbursement versus the number of ASSH members in that state, (2) average reimbursement versus number of hand surgeons per capita, and (3) total reimbursement from Medicare versus number of years in practice. Analysis of variance (ANOVA) was used to detect a difference in reimbursement based on categorical range of years as an ASSH member. Results: A total of 1667 ASSH members satisfied inclusion in this study. Although there was significant variation among states\u27 average reimbursement, reimbursement was not significantly correlated with the state\u27s hand surgeons per capita or total number of hand surgeons in that given state. Correlation between years as an ASSH member and average reimbursement was significant but non-linear; the highest reimbursements were seen in surgeons who had been ASSH members from 8 to 20 years. Conclusions: Peak reimbursement from Medicare for ASSH members appears to be related to the time of surgeons\u27 peak operative volume, rather than any age-based bias for or against treating Medicare beneficiaries. In addition, though geographic variation in reimbursement does exist, this does not appear to correlate with density or availability of hand surgeons

Technological adoption in health care

This paper addresses the impact of payment systems on the rate of technology adoption. We present a model where technological shift is driven by demand uncertainty, increased patients’ benefit, financial variables, and the reimbursement system to providers. Two payment systems are studied: cost reimbursement and (two variants of) DRG. According to the system considered, adoption occurs either when patients’ benefits are large enough or when the differential reimbursement across technologies offsets the cost of adoption. Cost reimbursement leads to higher adoption of the new technology if the rate of reimbursement is high relative to the margin of new vs. old technology reimbursement under DRG. Having larger patient benefits favors more adoption under the cost reimbursement payment system, provided that adoption occurs initially under both payment systems. JEL codes: I11, I12, Q33

Hospital Financing and the Development and Adoption of New Technologies

We study the influence of different reimbursement systems, namely Prospective Payment System, Cost Based Reimbursement System and Mixed Reimbursement System on the development and adoption of different technologies with an endogenous supply of these technologies. We focus our analysis on technology development and adoption under two models: private R&D and R&D within the hospital. One of the major findings is that the optimal reimbursement system is a pure Prospective Payment System or a Mixed Reimbursement System depending on the market structure.Prospective Payment System; Cost Based Reimbursement; R&D

A comparison of reimbursement recommendations by European HTA agencies : Is there opportunity for further alignment?

Introduction: In Europe and beyond, the rising costs of healthcare and limited healthcare resources have resulted in the implementation of health technology assessment (HTA) to inform health policy and reimbursement decision-making. European legislation has provided a harmonized route for the regulatory process with the European Medicines Agency, but reimbursement decision-making still remains the responsibility of each country. There is a recognized need to move toward a more objective and collaborative reimbursement environment for new medicines in Europe. Therefore, the aim of this study was to objectively assess and compare the national reimbursement recommendations of 9 European jurisdictions following European Medicines Agency (EMA) recommendation for centralized marketing authorization. Methods: Using publicly available data and newly developed classification tools, this study appraised 9 European reimbursement systems by assessing HTA processes and the relationship between the regulatory, HTA and decision-making organizations. Each national HTA agency was classified according to two novel taxonomies. The System taxonomy, focuses on the position of the HTA agency within the national reimbursement system according to the relationship between the regulator, the HTA-performing agency, and the reimbursement decision-making coverage body. The HTA Process taxonomy distinguishes between the individual HTA agency's approach to economic and therapeutic evaluation and the inclusion of an independent appraisal step. The taxonomic groups were subsequently compared with national HTA recommendations. Results: This study identified European national reimbursement recommendations for 102 new active substances (NASs) approved by the EMA from 2008 to 2012. These reimbursement recommendations were compared using a novel classification tool and identified alignment between the organizational structure of reimbursement systems (System taxonomy) and HTA recommendations. However, there was less alignment between the HTA processes and recommendations. Conclusions: In order to move forward to a more harmonized HTA environment within Europe, it is first necessary to understand the variation in HTA practices within Europe. This study has identified alignment between HTA recommendations and the System taxonomy and one of the major implications of this study is that such alignment could support a more collaborative HTA environment in Europe.Peer reviewedFinal Published versio

Technological adoption in health care

This paper addresses the impact of payment systems on the rate of technology adoption. We present a model where technological shift is driven by demand uncertainty, increased patients' benefit, financial variables, and the reimbursement system to providers. Two payment systems are studied: cost reimbursement and (two variants of) DRG. According to the system considered, adoption occurs either when patients' benefits are large enough or when the differential reimbursement across technologies offsets the cost of adoption. Cost reimbursement leads to higher adoption of the new technology if the rate of reimbursement is high relative to the margin of new vs. old technology reimbursement under DRG. Having larger patient benefits favors more adoption under the cost reimbursement payment system, provided that adoption occurs initially under both payment systems.Health care, technology adoption, payment systems

A Case Study of an Agency\u27s Three Family Preservation Contracts

This article presents a case study of a nonprofit child welfare agency that delivered family preservation services under three different purchase-of-service (POS) contracts. The research specifically focuses on how certain POS contract provisions and reimbursement rates influence the delivery of family preservation services. The three contacts examined differed on criteria, such as reimbursement mechanism, service volume, definition of clientele, and reimbursement rate. The study found that as reimbursement rates decline and as administrative costs increase, the service provider struggled with cash flow, staffing, fundraising, and service provision, among other things. It is concluded that contract-related resources, policies, and procedures impact provider agencies in multiple, significant ways that are critical to the provision of services and the accomplishment of positive client outcomes

The relationship of drug reimbursement with the price and the quality of pharmaceutical innovations

This paper studies the strategic interaction between pharmaceutical firms' pricing decisions and government agencies' reimbursement decisions which discriminate between patients by giving reimbursement rights to patients for whom the drug is most effective. We show that if the reimbursement decision preceeds the pricing decision, the agency only reimburses some patients if the private and public health benefits from the new drug diverge. That is, when (i) there are large externalities of consuming the drug and (ii) the difference in costs between the new drug and the alternative treatment is large. Alternatively, if the firm can commit to a price in advance of the reimbursement decision, we identify a strategic effect which implies that by committing to a high price ex ante, the firm can force a listing outcome and make the agency more willing to reimburse than in the absence of commitment

Reimbursement Roulette: The Baucus Bill’s Too Playful Approach to “Play-or-Pay” in Health Care Reform

Two of the three leading health care reform proposals being considered by Congress—the House “Tri-Committee” health care reform legislation and the Senate Health, Education, Labor, and Pensions (HELP) Committee’s reform legislation—include sensibly designed “play-or-pay” provisions that require employers to pay an assessment if they do not offer insurance to some or all of their employees. The third leading health care reform proposal—the bill proposed by Sen. Max Baucus and currently under consideration by the Senate Finance Committee—also includes a play-or-pay requirement, but it is poorly designed and would be unfair to employers, harmful to employees, and impose wasteful expenses on taxpayers.health care

Why licensing authorities need to consider the net value of new drugs in assigning review priorities: Addressing the tension between licensing and reimbursement

Pharmaceutical regulators and healthcare reimbursement authorities operate in different intellectual paradigms and adopt very different decision rules. As a result, drugs that have been licensed are often not available to all patients who could benefit because reimbursement authorities judge that the cost of therapies is greater than the health produced. This finding creates uncertainty for pharmaceutical companies planning their research and development investment, as licensing is no longer a guarantee of market access. In this study, we propose that it would be consistent with the objectives of pharmaceutical regulators to use the Net Benefit Framework of reimbursement authorities to identify those therapies that should be subject to priority review, that it is feasible to do so and that this would have several positive effects for patients, industry, and healthcare systems