Hospital Medicare Payments Dwarf Surgical, Add to Price Hikes

March 22, 2021 - Even as length of stay decreased for hip fracture patients, the disparity between Medicare reimbursements to hospitals and reimbursements to surgeons has grown in recent years for this procedure, according to a new study published in the Journal of Orthopaedic Trauma. 

UVA Health researchers analyzed hospital and surgeon charges and Medicare payments for 28,000 hip fracture treatments between 2005 and 2014. The study included patients with three different kinds of procedures and two hip fracture sites.

Approximately 25,000 patients were treated for femur fractures with surgery. During the study period, the average hospital charges for this group increased from about $37,000 to $66,000 per patient: a 77 percent jump over 10 years. Hospital payments increased by 39 percent (from about $10,500 to $14,700 per patient) in the same period.

On the other hand, surgeon charges increased by 22.2 percent ($3,100 in 2004 to $3,900 in 2014). However, payments to surgeons actually went down 7.5 percent, from $916 to $847 per patient.

To better compare trends, the researchers calculated a "charge multiplier" (CM) and a "payment multiplier" (PM). Both multipliers increased over time: the CM for surgery increased from 11.9 in 2005 to 17.2 in 2014, and the PM increased from 11.5 to 17.4.

Stated plainly, hospital payments were about 11 times higher than surgeon payments in 2005, but 17 times higher in 2014.

The researchers found similar trends among the 3,000 patients in the study who underwent closed reduction and percutaneous pining of femoral neck fractures. The CM increased from 10.1 to 15.6 for this procedure from 2005 to 2014, while the PM increased from 15.1 to 19.2. These trends were consistent across the country.

Based on a standard comorbidity index, the burden of health problems for hip fracture patients increased during the study period. Even with worsening health problems, though, patient outcomes improved as seen in lower mortality rates and a shorter average hospital length of stay (LOS).

One would assume that the decrease in LOS would lead to decreased hospital resource utilization, ultimately resulting in lower hospital charges and payments. However, the study found that as the average LOS shortened, hospital charges and payments increased compared to surgeon charges and payments.

"The results confirm our hypothesis that hospital charges and payments contribute significantly more to the increasing cost of treating a hip fracture patient than surgeon charges and payments do," the researchers wrote.

In a time when total charges for treating a patient with hip fracture are increasing, the study was unable to explain the widening gap between hospital and surgeon reimbursements. 

“Several potential causes may be speculated—increasing implant costs, increasing medical comorbidities requiring more resources, increasing administrative costs—but are beyond the scope of the present study,” the researchers explained. “These results should serve as the basis for future studies with more detailed cost breakdown to identify reasons for the current trend and areas for potential cost containment.”

Due to an aging American population, the incidence of hip fractures and the economic burden that comes with them will likely continue to increase.

“In the current cost-conscious and value-based healthcare environment, this current study demonstrates that surgeon reimbursement relative to hospital reimbursement is continually decreasing while the total charges in treating a patient with a hip fracture paradoxically increases,” they wrote.

“Identifying and rectifying the sources of increased hospital charges – rather than continually minimizing surgeon reimbursement – will be tantamount to minimizing the financial burden of hip fractures on the health care system while continuing to deliver effective and efficient patient care in the coming years," the UVA researchers continued.